Effect of Cash Reserves on Performance of Commercial Banks in Kenya: A Comparative Study between National Bank and Equity Bank Kenya Limited
Journal Title: International Journal of Academic Research in Business and Social Sciences - Year 2019, Vol 8, Issue 9
Abstract
Banks optimize their liquidity risk by assuming the externalities posed by their choices on the overall risk of the financial system. The banking sector in Kenya has experienced liquidity challenges ranging from funding to market risks. The purpose of this study was to assess the effect of cash reserves on performance of commercial banks in Kenya. The study found that cash reserves had a strong negative correlation with return on equity giving a significant negative relationship with performance of Equity bank. The study recommended that banks should minimize cash reserves and instead invest this money in productive investments, diversify their sources of funding, diversify their investments of these funds.
Authors and Affiliations
Aloys Jared Oganda, Vitalis Abuga Mogwambo, Simeyo Otieno
Keywords
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- EP ID EP567127
- DOI 10.6007/IJARBSS/v8-i9/4648
- Views 60
- Downloads 0
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