Assessment of effects of monetary policies on lending behaviour Of commercial banks in Kenya

摘要

The purpose of this paper was to investigate the effect of monetary policies on the lendingudbehaviour of commercial banks in Kenya. Previously the government did not develop monetaryudpolicies but instead gained their legitimacy by acting as lenders of last resort (through the CBK)udin the midst of financial crises. Today there is considerable debate surrounding the effects ofudmonetary policies with the emergence of active foreign trading and the need to formulate policiesudwhich will stimulate economic growth and maintain a low inflation. Commercial banks are in theudbusiness of mobilizing and lending financial resources to borrower's .The bank lending channeludsuggests that banks play a special role in the transmission of monetary policies. Commercialudbanks are profit motivated institutions and their response to monetary policies largely influenceudtheir profit margins. The study analysed the response of commercial banks to monetary policiesudin context of interest rates (cost of lending) and reserves available for lending. The studyudemployed a descriptive research design. The study target population was drawn from the fiveudmost profitable commercial banks in Kenya. Purposive sampling was used to select respondentsudfrom credit department - lending department of each commercial bank. This study collected bothudprimary and secondary data. Before processing the responses, the completed questionnaires wereudedited for completeness and consistency. A content analysis and descriptive analysis wasudemployed. The content analysis was used to analyse the respondents' views about to establishudeffects of central banks' monetary policies on the lending behaviour of commercial banks inudKenya. The data was coded to enable the responses to be grouped into various categories.udDescriptive statistics such as means, median mode and standard deviation were used to help inuddata analysis. Tables and other graphical presentations as appropriate were used to present theuddata collected for ease of understanding and analysis. Further, correlation and regression analysisudwas conducted to to study the relationship between monetary policies and the lending behaviorsudof commercial banks. The study established that CBR, cash reserve ratio, open market operationudand uncertainty caused by possible outcomes caused by monetary policy changes influencesudlending behaviour by commercial banks in Kenya.