Effect of Bank Ownership on the Relationship between Credit Risk and Financial Performance of Commercial Banks in Kenya


  • Joseph Macharia Kihuro University of Nairobi
  • Dr. Winnie Nyamute University of Nairobi
  • Dr. Duncan Elly Ochieng' University of Nairobi
  • Dr. Michael Ndwiga University of Nairobi




Commercial banks in Kenya have faced daunting challenges that touch on various key financial performance indicators and therefore impacting on performance. Credit risk affects the key financial indicators that are likely to impact performance of any lending institution. The main goal of this study was to ascertain the moderating effect of ownership structure on the relationship between credit risk and financial performance of Commercial banks in Kenya. Longitudinal research design was utilized on data from 41 licensed banks in the country. The study relied on secondary panel data and multiple regression was used and analysis was through STATA analytical tool. The study established that bank ownership has a significant effect on the financial performance. The outcome of the study demonstrates that a more diversified ownership structure is helpful in improving bank’s financial performance. Introduction of ownership structure has added knowledge by demonstrating that the link between credit risk and financial performance cannot be studied in isolation.

Key Words: Ownership Structure, Credit Risk, Financial Performance.

Author Biographies

Joseph Macharia Kihuro, University of Nairobi

Ph.D. Candidate, School of Business, University of Nairobi

Dr. Winnie Nyamute, University of Nairobi

Senior Lecturer, Faculty of Business and Management Sciences, University of Nairobi

Dr. Duncan Elly Ochieng', University of Nairobi

Senior Lecturer, Faculty of Business and Management Sciences, University of Nairobi

Dr. Michael Ndwiga, University of Nairobi

Lecturer, Department of Economics, University of Nairobi


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How to Cite

Kihuro, J. M. ., Nyamute, W., Ochieng’, D. E., & Ndwiga, M. (2023). Effect of Bank Ownership on the Relationship between Credit Risk and Financial Performance of Commercial Banks in Kenya. Journal of Finance and Accounting, 7(1), 91–99. https://doi.org/10.53819/81018102t2121