Influence of Legal and Regulatory Environment Factor Loan Syndication and Financial Performance of Commercial Banks in Kenya
Author(s)
Thomas Acholla Ongallo , Mrs. Prof. Rachel K. Gesami , Dr. Gillian Mwaniki ,
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Abstract
Scientific literature has shown that loan syndication factors can have an impact on a bank's performance. Good financial performance rewards shareholders for their investing efforts, which pushes them to invest more and allows for economic progress. Underperformance, on the other hand, can result in bank failure and a crisis, both of which have negative consequences for economic growth. The purpose of this study was to see how the loan syndication factors affected the financial performance of Kenyan commercial banks. The specific goal of this study was to assess the impact of legal and regulatory environment on commercial banks' financial performance in Kenya. The study used a descriptive survey design to attain its goal. The study's goal was to take a census of all 39 commercial banks that had been open for at least a year. A self-administered questionnaire was employed in each bank to collect data from the 78 respondents, who were credit and operations directors. A multiple regression analysis was used to examine the impact of loan syndication parameters on commercial banks' financial performance in Kenya. Modern intermediation theory, Modern portfolio theory, and Loanable fund theory were among the theories that guided this research. Descriptive and inferential statistics were used to analyze the data. The study found that loan legal and regulatory environment has a statistically significant positive impact on commercial banks' financial performance in Kenya. The study recommends that bank's management should establish a specific unit to handle legal and regulation environment management in order to cope with credit rationing in the bank. This research adds to closing the knowledge gap on loan syndication and commercial bank financial performance in Kenya.
Keywords
Legal and Regulatory Environment Factor, Loan Syndication, Financial Performance
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