Assessing effects of Interest Rates Spread on Non-Performing Loans: A Case of Commercial Banks in Trans-Nzoia County, Kenya

In the spike of increasing occurrences of non-performing loans among commercial banks in Trans-Nzoia County, Kenya, interest rate spread should be given serious consideration through more empirical research. This study therefore sought establish the relationship between the interest rate spread and occurrence of non-performing loans among commercial banks in Trans-Nzoia County. It specifically; looked into the credit risk management impacts non-performing loans, bank regulation impacts non-performing loans, and the capital sufficiency impacts non-performing loans. Adopting descriptive research design, the study used the 78 employees of commercial banks in Trans-Nzoia County as its targeted. The entire population participated in the study as respondents. Data, which was gathered using a questionnaire, was using quantitative approach to yield descriptive and inferential statistics. Multiple regression analysis was used to draw inferences from the findings. All factors were found to be statistically significant (p,0.05). Thus, credit risk management, bank regulation impacts, and the capital sufficiency have a positive significant effect on non-performing loans among commercial banks in Trans-Nzoia. The study recommended for; credit staff training programmes, applying strict interest rate rules and strict lending advances policies.

In the spike of increasing occurrences of non-performing loans among commercial banks in Trans-Nzoia County, Kenya, interest rate spread should be given serious consideration through more empirical research. This study therefore sought establish the relationship between the interest rate spread and occurrence of non-performing loans among commercial banks in Trans-Nzoia County. It specifically; looked into the credit risk management impacts non-performing loans, bank regulation impacts non-performing loans, and the capital sufficiency impacts non-performing loans. Adopting descriptive research design, the study used the 78 employees of commercial banks in Trans-Nzoia County as its targeted. The entire population participated in the study as respondents. Data, which was gathered using a questionnaire, was using quantitative approach to yield descriptive and inferential statistics. Multiple regression analysis was used to draw inferences from the findings. All factors were found to be statistically significant (p,0.05). Thus, credit risk management, bank regulation impacts, and the capital sufficiency have a positive significant effect on non-performing loans among commercial banks in Trans-Nzoia. The study recommended for; credit staff training programmes, applying strict interest rate rules and strict lending advances policies.