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© Hamisi, Otinga, Mukanzi 113 EFFECT OF LOAN REPAYMENT DETERMINANTS ON CUSTOMERS PERFORMANCE AMONG COMMERCIAL BANKS BRANCHES IN BUNGOMA COUNTY, KENYA 1*Hamisi Evelyne [email protected] 2**Dr. Otinga Hesbon (Ph D) [email protected] 3***Dr. Mukanzi Clive (Ph D) [email protected]1, 2 Jomo Kenyatta University of Agriculture and Technology, Kenya 3 Moi University ABSTRACT Commercial Banks as financial intermediaries play a cardinal role in an economy by mobilizing savings, reducing costs of financial transactions and managing risks. Careful management of banks’ credit portfolios is therefore essential for their stability as a significant amount of bank revenue is from interest income generated from lending. But over the years decline of loan performance by borrowers is growing and is becoming more complex task. The main objective of this study was to investigate determinants of loan repayment among customer performance of commercial banks in Bungoma County, Kenya. Specifically, the study sought to find out the effect of loan security, on customer performance among customers of commercial banks in Bungoma County. Both descriptive and inferential analysis revealed that all conceptualized predictor variables significantly influenced loan repayment among customers of commercial banks in Bungoma County (the outcome variable). That is; loan security (β=0.551 (0.112) on customer performance. The study concluded that first, commercial banks engaging in viable loan security measures reduce loan delinquency ratios which can consequently positively influence customer performance. The study recommended that first, commercial banks should engage in viable loan security measures meant to reduce loan delinquency ratios which can consequently influence positive customer performance; and secondly, commercial banks should craft feasible book keeping, debt and financial management programs to equip both lenders and borrowers with sound book keeping, budgetary, debt or financial management skills required to boost loan repayment performance. Keywords: loan repayment determinants, loan security, customer performance, commercial bank1.Background of the study Commercial banks are financial institutions that play a very important role in an economy. Specifically, they channel financial resources from savers to lenders (deficit units). In developing economies, they help borrowers who have no access to capital markets (Akkizidiz, 2012). According to Fallon (1996), commercial banks face three types of risks, financial risk-with credit risk being a component, operational and strategic risk. These risks have different impact on performance of commercial banks.
International Journal of Social Sciences and Information Technology ISSN 2412-0294Vol IV Issue IX, September 2018© Hamisi, Otinga, Mukanzi 114 The magnitude and the level of loss caused by credit risks compared to others are severe in causing banks failures (Njeru et al., 2014). The concept of credit can be tracked back in history and it was not appreciated

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