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Factors Affecting the Failure of Banks in Kenya in Kenya: a Case Study of Chase Bank

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Factors Affecting the Failure of Banks in Kenya in Kenya: a Case Study of Chase Bank CORE Metadata, citation and similar papers at core.ac.uk Provided by The Management Univesity of Africa Repository FACTORS AFFECTING THE FAILURE OF BANKS IN KENYA IN KENYA: A CASE STUDY OF CHASE BANK MELVIN VINCENT ODUOR A RESEARCH PROJECT SUBMITTED TO THE SCHOOL OF MANAGEMENTAND LEADERSHIP IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF BACHELOR OF MANAGEMENT AND LEADERSHIP OF THE MANAGEMENT UNIVERSITY OF AFRICA SEPTEMBER 2018 DECLARATION Declaration by the Student This project is my original work and has not been presented for a degree in any other University Signature…………………………… Date ……………………… MELVIN VINCENT ODUOR BML/12/00447/3/2015 Declaration by the Supervisor This project has been submitted for examination with my approval as University Supervisor Signature…………………………… Date ……………………… DR. JOHN CHELUGET (PhD) Management University of Africa ii DEDICATION This project is dedicated to my family members who have always been there for me. May God accord them good health, joy, peace, long life and above all, God’s everlasting love. iii ACKNOWLEDGEMENT This research Project is a result of support from several sources; first I would like to give praise and honour to the almighty God for giving me sufficient grace and power to write this project. I would also like to thank my supervisor Dr. John Cheluget whose comments and advice have been very useful to me. Lastly I would like to acknowledge the entity Management University of Africa or the good and conducive learning environment during my study period thanks a lot and God bless you. iv ABSTRACT The purpose of the study was to assess the factors affecting the failure of banks in Kenya. The Specific Objectives of this study was To examine the effect of corporate governance on the failure of Chase bank in Kenya. To analyze the influence of non- performing loans issues on collapsed Chase bank in Kenya. To analyze the influence of regulatory framework on the collapse of Chase bank in Kenya. To find out the effect of competition on the collapse of Chase bank in Kenya. The significance of the study is to the management of Chase bank, The Government, Other financial institutions and Other Researchers. The study adopted a cross-sectional survey design, The investigation will target a population of fouty three employee of Chase bank , for this study, the researcher selected census as the sampling design. Primary data was collected using a self administered questionnaire. The questionnaire was piloted in order to check for validity and reliability. Questionnaires was administered through drop and pick method. The data collected was analyzed using various statistical tools and instruments correlation and multiple regression analysis. The respondents were asked to give their opinion on whether corporate governance influences the failure of banks in Kenya. Majority of the respondents were in agreement corporate governance influences the failure of banks in Kenya. From the findings majority of respondents that non-performing loans issue has an influence on the failure of banks in Kenya. This implies that Non-performing loans issues have an influence on the failure of banks in Kenya. The analysis shows most of respondents were in agreement that regulatory framework has a great effect on the failure of banks in Kenya. From the findings majority of the respondents agreed that competition has an influence on the failure of banks in Kenya while a few of the respondents disagreed. It was concluded that competition has an influence on the failure of banks in Kenya. Based on the research findings it is recommended that For banks to have the stability, they should embrace best practices of corporate governance which should ensure that shareholders wealth is looked after in the best way possible, that adequate risk management measures are put in place and that standards are not only in writing but that they are practiced on a day to day basis. According to the Central Bank of Kenya Supervision Report (CBK, 2016), the level of non-performing loans has been increasing steadily in Kenya. The high level of non-performing loans persists as an issue of primary supervisory concern in the country. The government should promote transparency and accountability in the management and enforcement activities of the central bank of Kenya. Governments must make enforcement more transparent and accountable by publicly reporting this information. The management of chase bank needs to package their product in a more customer friendly way to enhance their acceptance and have a bitter and bigger customer base. v TABLE OF CONTENTS DECLARATION ........................................................................................................ ii DEDICATION .......................................................................................................... iii ACKNOWLEDGEMENT ......................................................................................... iv ABSTRACT ............................................................................................................... v LIST OF TABLES .................................................................................................. viii LIST OF FIGURES ................................................................................................... ix LIST OF ACRONYMS AND ABBREVIATIONS ..................................................... x OPERATIONAL DEFINITION OF TERMS ............................................................. xi CHAPTER ONE ....................................................................................................... 1 INTRODUCTION OF THE STUDY ....................................................................... 1 1.0 Introduction .......................................................................................................... 1 1.1 Background of the Study ....................................................................................... 1 1.2 Statement of the Problem ...................................................................................... 5 1.3 Objectives of the Study ....................................................................................... 6 1.4 Research Questions ............................................................................................... 7 1.5 Significance of the Research ................................................................................. 7 1.6 Scope of the Study ................................................................................................ 8 1.7 Chapter Summary ................................................................................................. 8 CHAPTER TWO ................................................................................................ 9 LITERATURE REVIEW ................................................................................... 9 2.0 : Introduction ........................................................................................................ 9 2.2 Empirical Literature Review ............................................................................... 10 2.3 Summary and Research Gap ............................................................................... 18 2.5 Operationalization of Variables ........................................................................... 22 2.6 Chapter Summary ............................................................................................... 23 CHAPTER THREE ................................................................................................ 24 RESEARCH DESIGN AND METHODOLOGY .................................................. 24 3.0 Introduction ........................................................................................................ 24 3.1 Research Design ................................................................................................. 24 3.2 Target Population ............................................................................................... 24 vi 3.3 Sample and Sampling Technique ........................................................................ 25 3.4 Instruments ......................................................................................................... 26 3.5 Pilot Study .......................................................................................................... 26 3.6 Data Collection Procedure .................................................................................. 27 3.7 Data Analysis and Presentation ........................................................................... 28 3.8 Ethical Considerations ........................................................................................ 28 3.9 Chapter Summary ............................................................................................... 29 CHAPTER FOUR .................................................................................................. 31 RESEARCH FINDINGS AND DISCUSSION ...................................................... 31 4.0. Introduction ....................................................................................................... 31 4.1 Presentations of Findings .................................................................................... 31 4.2 Limitations of Study ........................................................................................... 39 4.3 Chapter Summary ..............................................................................................
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