Influence of Regulatory Compliance on Strategies Adopted By Commercial Banks in Kenya

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dc.contributor.author Maina, Milkah Wairimu
dc.date.accessioned 2018-09-25T10:30:35Z
dc.date.available 2018-09-25T10:30:35Z
dc.date.issued 2018
dc.identifier.uri http://erepo.usiu.ac.ke/11732/3985
dc.description A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA) en_US
dc.description.abstract The purpose of the study was to assess the influence of regulatory compliance on strategies adopted by commercial banks in Kenya. The study was guided by three research objectives namely: to examine the regulatory requirements that affect strategies adopted by Kenyan banks; to determine how regulatory compliance affects banks’ strategies; and to examine the strategies adopted by banks to enhance regulatory compliance. In the study, descriptive research design was adopted. The design was considered suitable for the study given its ability to show the relationship between variables. Target population constituted employees from Central Bank`s current commercial banks` categorization in terms of Tiers namely top and middle management as well as general support staff. To identify the sample elements, from the target population, stratified random sampling technique was applied. Both primary and secondary data were collected with secondary data collected from published sources of the banks, while primary data was collected using questionnaire which contained both open-ended and closed-ended questions. Data collected was analyzed using SPSS to obtain both descriptive and inferential statistics. Descriptive statistics included frequency tables, charts, statistical tests and inferential namely correlation, analysis of variance and regression analyses. In terms of regulatory requirements that affect strategies adopted by Kenyan banks the study revealed that in Kenya, the capital structure of commercial banks is highly regulated, and that capital requirements are essential for banks performance. Further, the study revealed that corporate governance in the banks plays a big role in determining the future of the bank and that the bulk of the profits of commercial banks are not influenced by the amount of credit and non-performing loans in the banks. A significant relationship was established between regulatory requirement factors and bank strategies, capital requirements, and maintenance of minimum cash balances. Regarding the effects of regulatory compliance on banks’ strategies, the study revealed that credit risk compliance was considered essential in influencing the various strategies adopted by commercial banks. It was also established that operational strategies were influenced by how a bank moves forward in an effort to streamline its operational strategies and capital regulation. Correlation analysis show a significant positive relationship between regulatory compliance and credit risk compliance, operational strategies, the performance of banks and financial stability. In terms of the bank strategies adopted by banks, it was found out that commercial banks continue to exploit income diversification strategies and that they are adopting bank policy on regulatory compliance to enhance bank performance. This study concludes that regulatory requirements on the banking sector have a significant impact on the strategies adopted by bank in Kenya and that capital requirement is essential for banks performance. Further, corporate governance in banks plays a significant role in determining the future of the bank and that credit risk compliance is essential in influencing the various strategies adopted by the banks. Further, corporate governance affects strategies adopted by commercial banks and that liquidity requirement influences the various strategies adopted by commercial banks. Strategies, adopted by commercial banks seem to be significantly influenced by the regulatory requirement. This in the process had made the banks to initiate financial innovations strategies that in the end bring in high returns but at reasonable risk levels. On the basis of the findings, it is recommended that commercial banks need to periodically formulate strategies that are in line with the regulatory requirement in the industry. This would ensure the sustainability of their business for the benefit of the stakeholders including the shareholders. It is also recommended that for the financial sector regulator to establish sound regulations in the banking sector, they need to understand that the regulation put in place will affect bank strategies and consequently their performance and that of the economy of the country as whole. The banks should establish strategies that help them conform to the credit risk requirements, capital regulations and liquidity requirements. Regarding strategies adopted, it is recommended that banks may consider adopting strategies that assure income diversification strategies financial innovations with high returns at a reasonable risk level, monetary, fiscal and prudential supervisory policies. en_US
dc.language.iso en en_US
dc.publisher United States International University - Africa en_US
dc.subject Regulatory Compliance en_US
dc.subject Strategies Adopted en_US
dc.subject Commercial Banks in Kenya en_US
dc.title Influence of Regulatory Compliance on Strategies Adopted By Commercial Banks in Kenya en_US
dc.type Thesis en_US

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