Determinants of Net Interest Margin in Kenyan Commercial Banks

DOI: 10.5176/2010-4804_2.1.149

Authors: Daniel K. Tarus, Yonas Chekol

Abstract:

We investigate the determinants of net interest margins of commercial banks in Kenya using secondary data derived from Central Bank of Kenya. We apply fixed effects regression to a panel of 44 Kenyan banks that covers the period 2000-2009. The results indicate that operating expenses and credit risk has a positive and significant effect on net interest margin, however, we found that that the higher inflation the wider the net interest margin. We also found that economic growth and market concentration have negative and significant effect on net interest margin.

Keywords: Determinants, Commercial Banks, Net Interest Margin

LinkOut:    ScienceDirect