BANK SIZE AS A MODERATING FACTOR ON THE RELATIONSHIP BETWEEN BANK RESTRUCTURING AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Citation:
Kithinji AM. "BANK SIZE AS A MODERATING FACTOR ON THE RELATIONSHIP BETWEEN BANK RESTRUCTURING AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA ." International Journal of Business Management and Economic Review. 2018;5(1):298-307.

Abstract:

ABSTRACT
The main goal of this research was to examine how bank size moderates the relationship between
bank restructuring and financial performance of commercial banks in Kenya. This study
employed descriptive research design. The study was a census of all the 44 commercial banks in
Kenya which were in operation as at 31st December 2014. This research collected secondary
data gotten from banks annual report for the period of ranging from 2002 to 2014. The regression
analysis model was used to estimate the moderating effect of size on the relationship between
bank restructuring and profitability. The study established that moderation of the relationship
between bank restructuring and financial performance using bank size was not significantly
influenced by financial restructuring, operational restructuring and asset restructuring on
financial performance of commercial banks. However, when bank restructuring variables were
interacted with bank size the findings are that only capital restructuring had a significant
interaction. It was therefore, concluded that bank size therefore moderates the relationship
between bank restructuring and financial performance. The study recommends that there is need
to institute policy reforms geared towards increasing the size of banks either internally by
increasing their asset size or through mergers to expand their size. The regulator can also embark
on setting a minimum size threshold with a view to significantly reducing the number of banks
which would translate into the remaining ones becoming larger. Furthermore, there is need for
commercial banks to strike a balance between enhancing their operations through operational
restructuring or improving profits by focusing on aspects that have a direct positive effect on
profits.

Keyword: Bank Size, Bank Restructuring, Financial Performance, Commercial Banks

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