Factors influencing capital structure choice of commercial banks in Kenya

Show simple item record

dc.contributor.author Kimoro, Joshua Ngundi
dc.date.accessioned 2019-08-06T12:54:41Z
dc.date.available 2019-08-06T12:54:41Z
dc.date.issued 2019-08-06
dc.identifier.uri http://hdl.handle.net/123456789/5194
dc.description Doctor of Philosophy in Business Administration (Finance Option) en_US
dc.description.abstract Banks play a significant role in a country’s economy by way of spurring growth. A sound financial system is full of largely banks with sufficient capital to withstand the most apparent adverse shocks. The purpose of the study was to examine the factors influencing capital structure choice of commercial banks in Kenya. The study explored the extent to which effective management of capital structure (debt-equity mix) has on commercial banks’ capabilities to respond to financial crises. The specific objectives of the study included; to examine the effect of collateral value of bank assets on capital structure choice of commercial banks in Kenya; to find out the effect of a bank’s size on capital structure choice of commercial banks in Kenya; to determine the effect of volatility of earnings on capital structure choice of commercial banks in Kenya; to establish the effect of profitability on capital structure choice of commercial banks in Kenya; and to examine the moderating effect of ownership on the relationship between collateral value of banks assets, bank’s size, volatility of earnings, profitability and capital structure choice of commercial banks in Kenya. A descriptive and explanatory survey approach was adopted to obtain information concerning factors affecting capital structure choice of commercial banks in Kenya from heads of finance in 39 banks. The study also used secondary data over the period 2004-2013 from 39 commercial banks’ annual financial reports filed with the Central Bank of Kenya. The data was analysed using Statistical Package for Social Sciences (SPSS) using multiple linear regression models to test the relationship between factors (collateral value of bank assets, bank size, volatility of bank earnings and profitability) and the capital structure choice (debt-equity ratio). The study found that volatility of earnings had the highest and significant effect on the capital structure choice and exhibited a negative and linear correlation with capital structure choice. Profitability followed in order of significance then collateral value of bank assets and bank size. These three factors had positive and linear correlation with capital structure choice. The study further found that there was a significant moderating effect of ownership on the capital structure choice predicting either higher or lower levels of debt-equity ratio depending on the bank manager’s risk aversion, the costs of monitoring and bankruptcy, the threat of takeovers, and the growth opportunities of the bank. The study recommended that future studies could extend these findings by seeking to; establish the effects of interest rate capping on credit access among commercial banks in Kenya, determine the role of financial supermarket model on the bank profitability in Kenya and explore the impact of mergers and acquisitions on the performance of commercial banks in Kenya. en_US
dc.description.sponsorship Dr. Mouni Gekara, PhD East African University, Kenya Prof. Willy Muturi, PhD JKUAT, Kenya en_US
dc.language.iso en en_US
dc.publisher JKUAT-COHRED en_US
dc.subject Commercial Banks in Kenya en_US
dc.subject Capital structure en_US
dc.title Factors influencing capital structure choice of commercial banks in Kenya en_US
dc.type Thesis en_US


Files in this item

This item appears in the following Collection(s)

Show simple item record

Search Repository


Browse

My Account