Abstract: The study's goal was to investigate how asset-liability management components, capital adequacy affected Tier II commercial banks' financial performance in Kenya from 2014 to 2023. The study's particular goals were to ascertain how capital adequacy affected the financial performance of Kenya's tier II commercial banks. Agency theory served as the study's guiding theory. A descriptive research design was used in the study. All eight of Kenya's Tier II commercial banks as of December 31, 2023, were included in the target population. The study made use of secondary data gathered from KBA reports, Central Bank of Kenya reports, and the audited and published financial statements of commercial banks since 2014. Data was analyzed using descriptive method inferential analysis. Descriptive analysis involved the use of means and standard deviation. Inferential analysis was done using correlation analysis and regression method. The analysis findings indicated that Capital adequacy had a positive and significant effect on ROE (β =.021, p =0.016<0.05), indicating that well-capitalized banks are better cushioned against shocks and sustain higher profitability. This highlighted the detrimental impact of inefficiencies, fraud, system failures, and weak internal controls on profitability. The study recommended tier II commercial banks to adopt proactive capital adequacy management techniques. The Central Bank of Kenya is recommended to continue enforcing capital adequacy requirements to improve resilience and safeguard financial stability.
Keywords: Asset-Liability Management, Capital Adequacy, Financial Performance, Tier II Commercial Banks in Kenya, Return on Equity.
Title: ASSET-LIABILITY MANAGEMENT AND FINANCIAL PERFORMANCE OF TIER II COMMERCIAL BANKS IN KENYA
Author: Phelix Omondi Oywer, Dr. Joshua Matanda
International Journal of Thesis Projects and Dissertations (IJTPD)
Vol. 14, Issue 2, April 2026 - June 2026
Page No: 1-9
Research Publish Journals
Website: www.researchpublish.com
Published date: 07-May-2026
