FIRM SIZE AND PERFORMANCE OF COMMERCIAL BANKS IN KENYA
Abstract
Research objective: The study sought to determine the impact of bank size on commercial bank performance in Kenya. The study used the natural logarithm of total assets as a measure of bank size.
Research Methodology: The population of the study included thirty-nine commercial banks in Kenya. Secondary data from audited annual financial statements was used in the study, which spanned an eight-year period from 2013 to 2020. The data collected was analyzed using descriptive statistics and multiple regression analysis.
Findings: Commercial banks had average total assets of Kshs 13.83 billion, according to descriptive findings. The results of the regression analysis showed that size of the bank has a statistically significant effect on performance.
Conclusion: The study concluded a statistically significant relationship between bank size and performance. Hence, there is a long-run and a short-run equilibrium between bank size and asset returns. It was found that as bank size increases, return on assets also increases.
Recommendations: Commercial banks should improve in a diverse range of ways relating to bank size. In addition, the banks should pay special attention to the estimation and supervision of their loan portfolio.
Keywords: Firm size, financial performance, Commercial banks, Kenya.
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