Commercial Banks are in the business of mobilizing and lending financial resources toudborrowers. In the process of providing financial services, they assume various kinds ofudfinancial risks which affect their performance. Various studies have been done onuddeterminants and measurement of bank performance. However, little research studies haveudbeen done on effects of credit information sharing on performance of commercial banks inudKenya. This research study was undertaken to establish how the diffusion of informationudsharing has affected performance of commercial banks in Kenya. The main objective of thisudstudy was to establish the relationship between credit information sharing and performanceudof commercial banks in Kenya. Specific objectives were: to determine the effect of creditudinformation sharing on non-performing loans portfolio, to evaluate the effect of creditudinformation sharing on volume of lending, to establish the effect of credit informationudsharing on the level of interest rates and to determine the effect of credit information sharingudon operating costs. The target population of this study was all credit managers of all the 43udlicensed commercial banks in Kenya. The study adopted census survey of the all the banksudlicensed under the Banking act (Cap 488 Laws of Kenya). The study used primary data andudsecondary data. Primary data was collected using questionnaires which were administeredudusing drop and pick method. Secondary data was collected from Central Bank Supervisionudreports and annual audited reports of commercial banks. Data was analyzed using bothuddescriptive and inferential statistics. The data collected was analyzed using multipleudregression analysis. The regression output was obtained using Statistical Package for SocialudSciences (SPSS version 18) and computation of financial ratios from the financial statementsudand hence the interpretation of the study model. The study used both qualitative andudquantitative data. Qualitative data was analyzed using interpretive approach which includedudsorting and coding raw data and use of SPSS. Quantitative data was analysed using multipleudregression technique between variables which showed that the variables under study wereudsignificant in explaining the relationship between credit information sharing and bankudperformance. The study found that there are systematic written down steps in the handling ofuddefaulting customers in the commercial banks in Kenya and that most commercial banksudutilize information from reference bureaus in appraising the customer credit. The studyudfurther revealed that central bank rate is the major factor that affects the pricing of loans inudKenya. The study established that non-performing loans, volume of lending, level of interestudrate and operating costs significantly affect the performance of commercial banks in Kenya.udThe study concluded that there was inadequate information sharing among commercial banksudin Kenya and recommends that central bank should roll out CIS mechanism to all financialudsectors like SACCOs and NBFs and also improves CIS mechanisms in Kenya by enacting audbetter legal framework.
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