Abstract: Banks play a crucial role in stimulating economic growth and development, as they guarantee the accumulation of capital and investment within the economy. Nevertheless, the profitability of commercial banks is heavily dependent on the prudential regulatory systems that govern their operations. The study assessed interest rate effect on profitability of commercial banks in Kenya. The research was based on agency theory. A casual approach to investigation was adopted. The target population consisted of the 43 commercial banks in Kenya, and the inclusion criterion was institutions that have been operational for nine years (between 2013 and 2021). Due to the magnitude of the population, the response rate of a survey consisted of all 43 commercial banks that were selected via census sampling. The study acquired secondary data from the bank's financial statements and audited reports using a data collection schedule. Findings indicate that interest rate has a significant effect on commercial banks profitability in Kenya. The study recommends that bank managers should set interest rates in line with the prevailing market conditions.
Keywords: Interest Rate, Profitability and Commercial Banks.
Title: INTEREST RATES AND PROFITABILITY OF COMMERCIAL BANKS IN KENYA
Author: Okong’o Fred Arege
International Journal of Interdisciplinary Research and Innovations
ISSN 2348-1218 (print), ISSN 2348-1226 (online)
Vol. 11, Issue 4, October 2023 - December 2023
Page No: 8-12
Research Publish Journals
Website: www.researchpublish.com
Published Date: 09-October-2023
