Influence of Liquidity Risk on Performance of Commercial Banks in Kenya.

Abstract

The main objective of the study was to determine the influence of liquidity risk on performance of commercial Banks Despite the banking sector stability and resilience in 2015, two non-systemic banks, were placed in receivership by the Central Bank of Kenya this was attributed to liquidity risk. Secondary data was used in the study. The population for secondary data were the 44 commercial banks in Kenya of which 2 were under receivership and one under statutory management. Panel data for 30 commercial banks that had data for 10 year period from 2006 to 2015 were obtained from the central bank of Kenya and banks website. Descriptive statistics, correlation analysis, and random and fixed effects were used using E-views software The findings were liquidity risk measured by Liquid assets to total assets ratio had a positive and significant relationship with performance