Real Estate loans and Financial performance of Commercial Banks in Kenya

Abstract

The main purpose of the study was to determine the influence of real estate loans on financial performance of commercial banks in Kenya and a corresponding hypothesis was formulated and tested. A census of 42 fully operational commercial banks in Kenya was done for a period of ten years from 2006-2015 because of increased loan portfolio, using across-sectional survey design. A questionnaire was used to collect primary data from one key person in the finance/credit department of each bank. Secondary data was collected from audited financial statements and other relevant financial sources using data analysis sheet. Both descriptive and inferential statistics were used. Statistical package for social sciences (SPSS) and STATA version 14 were used to analyze data. Research findings established that real estate loans influence the financial performance of commercial banks. The study findings are supported by the Utilization of modern portfolio theory.