International Research Journal of Accounting and Taxation

International Research Journal of Accounting and Taxation (IRJAT) ISSN: 1873-2100,  Vol. 1(2), pp. 016-024, November, 2020. © Advanced Scholars Journals

Full length Research paper

An evaluation of the effect of off balance sheet risks on financial performance of commercial banks listed at Nairobi security exchange in Kenya

*1Simba MH, Nyangau A2 and Ngacho C3

*1Mba Stundent Kisii University

2PhD, Lecturer, Department of Accounting & Finance Kisii University

3Associate Professor, Department of Management Science, Kisii University, School of Business and Economics 

Accepted 28th November, 2020.

Abstract 

The purpose of this study was to evaluate the effect of off balance sheet risks on financial performance of listed commercial banks in Kenya. The study was guided by two research objectives; to assess the effects of credit risk and market risk on financial performance of listed commercial banks. Descriptive research design was used. A sample of 10 listed commercial banks was calculated using this provided necessary financial information for analyzing each research objective. Secondary data through published financial reports were used for a period of 2014 to 2018. The study concluded that credit risk had a strong negative relationship and statically significant on financial performance. Market risk had insignificant effect on financial performance of commercial banks. The recommended that banks should manage different credit facilities.

Keywords: balance sheet risks, credit facilities, financial performance, commercial banks, market risk.

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