Abstract
Purpose- It is complicated to efficiently manage the bank’s portfolio, simultaneously maximize returns and minimize risks while being subject to managerial and regulatory constraints. In the financial industry, the size of a bank is used to assist in capturing economies as well as diseconomies of scale.
 Design/Methodology- As in cases of most literature from finance, natural logarithms of banks' total assets were made use of to measure commercial banks’ size. The 43 commercial banking institutions having an official license from CBK by December 2017 were the target population of this study. The study analyzed Time-Series Cross-Sectional unbalanced secondary panel data obtained from all the 43 commercial banking institutions in Kenya for fifteen years ranging from 2003 to 2017.
 Findings- Study findings revealed a positive effect of bank size on ROE and ROA that was significant. Correlation analysis revealed a positive association of bank size on the financial performance of banks in Kenya, which was significant. Bank size had a significant moderating effect on the relationship of banks portfolio diversification and financial performance of banks in Kenya.
 Practical Implications- The findings on bank size insinuated that a higher size of entire asset of banks is most probable to accelerate the bank to diversify into feasible opportunities on investment, traverse more enhanced lines of business, increase capacity in market power and, produce increased value that boosts the firm to profit from economies of scale and wider scope and henceforth superior and increased financial performance.
Highlights
Institutions of Commercial Banking, to many others for profit-making institutions, are anticipated to generate revenues profitably through efficient, effective portfolio utilization of available capital resources to make certain of progression and delivering on the expectations by the shareholders of maximum returns on their investments
It was concluded that bank size had significant moderating on the effect of banks portfolio diversification on Return on Asset (ROA) of commercial banks in Kenya
It was concluded that bank size had significant moderating on the effect of banks portfolio diversification on ROA of banking in bottom line of Kenya
Summary
Institutions of Commercial Banking, to many others for profit-making institutions, are anticipated to generate revenues profitably through efficient, effective portfolio utilization of available capital resources to make certain of progression and delivering on the expectations by the shareholders of maximum returns on their investments. Financial intermediation is the core role of commercial banks to a large extent can be defined as receipt of funds from units with surpluses in the form of varying deposit accounts to extend units experiencing deficit through lending and advances at distinct prices Banks in their mandate of performing their core functions of intermediation should be aligned to the circle of development economically and socially of a nation. There is a need to put in place strategies to help savage the banking system. It is, imperative to strengthen the portfolio mix of the banks
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