The Effect of Credit Information Sharing on Credit Risk in Kenya Commercial Banks

Authors

  • Rosemary Wanjiku Ngugi Jomo Kenyatta University of Agriculture and Technology
  • Tabitha Nasieku

Keywords:

Credit risk, Credit history, Creditworthiness, Repayment history

Abstract

This study sought to examine the effect of credit information sharing on credit risk in Kenya commercial banks. The specific objectives of the study were to establish the effect of information sharing on borrower’s credit history, credit worthiness and repayment history on credit risk in Kenya commercial banks. The study adopted a descriptive survey research design. The target population of the study was the 42 commercial banks in Kenya as licensed by the Central Bank of Kenya. The study was based on both primary and secondary data. The primary data was collected through a questionnaire from the credit managers of the 42 commercial banks while the secondary data was retrieved from the CBK annual reports. The study was based on quantitative data which was analysed using descriptive and inferential statistics. The study established that borrowers’ credit history, credit worthiness and repayment history had an inverse relationship with the banks’ credit risk level. The study concluded that information sharing on borrower’s credit history, comparing the past history of debt repayments as well as the current debt and information on borrower’s credit worthiness reduces credit risk. In conclusion credit information sharing has been helpful in credit risk reduction in Kenya commercial banks. Based on the study findings the study recommends that commercial banks and other lenders should adopt adequate credit information sharing systems.

Author Biography

Rosemary Wanjiku Ngugi, Jomo Kenyatta University of Agriculture and Technology

Partner KG Steven & Associates

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Published

2016-10-30

How to Cite

Ngugi, R. W., & Nasieku, T. (2016). The Effect of Credit Information Sharing on Credit Risk in Kenya Commercial Banks. Asian Journal of Business and Management, 4(5). Retrieved from https://ajouronline.com/index.php/AJBM/article/view/4212

Issue

Vol. 4 No. 5 (2016): October 2016

Section

Articles

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