This paper examines the effect of macroeconomic developments on performance, credit quality and lending behaviour of banks in Kenya, by estimating a dynamic panel data model using Generalized Method of Moments. The paper finds banks’ behaviour to be largely influenced by macroeconomic developments. During down turns, banks tend to lend less on account of increased credit risk, rationing credit as dictated by macroeconomic developments. The study suggests that banks need to continue pursuing risk sensitive loan pricing policies to ease the extent of procyclical/countercyclical behaviour during economic upswings/downswings respectively, which in turn reduces the chances of supply-driven credit crunch effects.

(2010). Macroeconomic developments and banks' behaviour in Kenya: a panel data analysis [journal article - articolo]. In SAVINGS AND DEVELOPMENT. Retrieved from http://hdl.handle.net/10446/27461

Macroeconomic developments and banks' behaviour in Kenya: a panel data analysis

2010-01-01

Abstract

This paper examines the effect of macroeconomic developments on performance, credit quality and lending behaviour of banks in Kenya, by estimating a dynamic panel data model using Generalized Method of Moments. The paper finds banks’ behaviour to be largely influenced by macroeconomic developments. During down turns, banks tend to lend less on account of increased credit risk, rationing credit as dictated by macroeconomic developments. The study suggests that banks need to continue pursuing risk sensitive loan pricing policies to ease the extent of procyclical/countercyclical behaviour during economic upswings/downswings respectively, which in turn reduces the chances of supply-driven credit crunch effects.
articolo
2010
Ce document examine l’effet de l’évolution macro-économique sur les performances, la qualité du crédit et le comportement des banques au Kenya au niveau du prêt, en estimant un modèle de données de panel dynamique en utilisant le ‘Generalized Method of Moments’. Cette étude conclut que le comportement des banques est largement influencé par l’évolution macroéconomique. Lors des virages vers le ba, les banques ont tendance à prêter moins pour l’augmentation du risque du crédit; en rationnant le crédit comme dicté par l’évolution macroéconomique. L’étude suggère que les banques doivent continuer à poursuivre les politiques de loan pricing sensibles au risque afin de faciliter la mesure du comportement procyclique / anticyclique respectivement pendant les périodes de haute conjoncture / ralentissements économiques, ce qui réduit les chances des effets supply-driven de crise de crédit.
Njoroge, Lucas; Kamau, ANNE WANGARI
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10446/27461
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