Commercial Banks In Kenya Research Articles

Do income diversification and capital adequacy affect liquidity creation? A case study of commercial banks in Kenya

Do income diversification and capital adequacy affect liquidity creation? A case study of commercial banks in Kenya

Influence Of Strategic Orientation on Performance of Commercial Banks in Kenya: Case of Study Family Bank Limited

Influence Of Strategic Orientation on Performance of Commercial Banks in Kenya: Case of Study Family Bank Limited

EFFECT OF MORTGAGE FINANCING ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

<p>The financial performance of commercial banks has been unstable as evidenced in Annual Supervision Report of 2011 to 2020, where the Return on Assets (ROA) rose to 6.2% in 2012 from 3% in 2011; and to below 3% in the years 2016 to 2020. Literature reveals that commercial banks’ lending criteria are pro-cyclical, implying a less strict lending criteria during the real estate boom, and very strict during burst; resulting in likely underestimation of the default risk on loans during periods of high demand by the commercial banks. The objective of the study was to establish the effect of mortgage financing on the n financial performance of commercial banks in Kenya for the period 2015 to 2022. Using secondary balanced panel data from 27 mortgage-offering banks in Kenya, with 189 data points and employing moderated multiple regression to achieve the study objectives. The regression analysis revealed that the independent variables explained 86.69% (R<sup>2 </sup>= 0.8669, p-value = 0004) of variance in of financial performance of commercial banks in Kenya, the coefficient of mortgage financing is 0.004434, (p=0.0004); implying that a unit increase in mortgage loan would result to significant increase in the return on assets by 0.004434 units. Therefore, the null hypothesis was rejected. The study concluded that an increase in the amount of mortgage loans offered as well as other activities that augment the total value of mortgage loans extended by the commercial banks leads to a significant improvement in the financial performance of commercial banks in Kenya. The study recommends that commercial banks in Kenya should target to increase the amount of mortgage offered as well as other activities that augment the total value of mortgage loans extended in order to improve their financial performance.</p><p><strong> </strong></p><p><strong>JEL</strong>: D10; D14; G21</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0081/a.php" alt="Hit counter" /></p>

Assessing the Impact of Liquidity Ratio Requirements on the Financial Performance of Commercial Banks in Kenya

In practice, some commercial banks in Kenya are presently facing liquidity challenges for instance the National Bank, Consolidated Bank, and Development Bank of Kenya. For instance, as of December 2017, the Development Bank of Kenya posted a negative liquidity position at 21.6% against the required legal threshold of 20%. For the National Bank of Kenya, the close of 2017 saw the total deposit liability standing at negative 5.5%, while core capital to total assets averaged negative 7.9%. As of 2018, NBK registered a drop in profit by 84% to stand at Kshs. 21.97 billion. The findings were that liquidity ratio requirements (β=0.345, p<0.05); cash reserve ratio requirement β=-0.008, p<0.05); loan deposit ratio requirement (β=-0.020, p<0.05) & capital adequacy ratio requirement (β=0.032, p<0.05) are significant predictors of financial performance of commercial banks in Kenya. The study concludes that liquidity requirements are a significant predictor of the financial performance of commercial banks in Kenya. The study recommends that finance managers of commercial banks in Kenya should strive to balance current assets and current liabilities to ensure they meet their obligations as they arise. The marketing managers of commercial banks in Kenya should invest more efforts in acquiring more customers for increased mobilisation of deposits. The loan officers and credit managers working in the commercial banks in Kenya should speed up the process of credit appraisal of customer loan application process to increase the uptake of loans which are key sources of interest income to these institutions. The shareholders of the commercial banks in Kenya should ensure that their institutions are adequately capitalised so that they are able to withstand inherent shocks occasioned by liquidity constraints likely to negatively impact financial performance. The findings are expected to shed more light on the critical role played by liquidity requirements as far as financial stability and resilience of the banking sector in Kenya are concerned

Influence of Liquidity Risk Management on Financial Performance of Commercial Banks in Kenya

The management of liquidity risk in commercial banks determines the banks' financial performance, which predominantly influences the quality of the loan portfolio and the nature of credit administration programs as a whole. By ensuring that liquidity risk is effectively managed, the primary objective of liquidity risk management is to generate a high-quality, stable, large, and growing flow of net interest income for banks. This objective is achieved by ensuring that banks can meet the needs of their customers. This study determined the effect of liquidity risk management on the financial performance of Kenyan commercial banks. The investigation was founded on the theory of liquidity management shiftability. The paradigm of Positivism served as the philosophical foundation for the investigation. The study incorporated both explanatory and longitudinal research designs into its methodology. The study's target population consisted of 32 Commercial Banks in Kenya. The study utilized panel data consisting of time series and cross-sectional data spanning a decade from 2010 to 2019. Using Eviews, descriptive and inferential statistics were used to analyze the collected data, which was then presented in tables and figures. The study found out that Liquidity risk management had an insignificant negative relationship with ROE (F=0.583912, p<0.05) and ROA (F=2.770410, p<0.05). Arising from the study findings, it is observed that liquidity risk management has a negative effect on financial performance measure either in ROA or ROE, it is recommended that commercial banks should keep this parameter as minimum as possible so as not involve in loss making undertakings.

Influence of Predatory Lender Practices on Loan Performance: Evidence from Commercial Banks in Kenya

Influence of Predatory Lender Practices on Loan Performance: Evidence from Commercial Banks in Kenya

Strategies Adopted by Commercial Banks to Enhance Customer Retention in Kenya

Customer retention is increasingly being seen as an important managerial issue, especially in the context of a saturated market or lower growth of the number of new customers. The purpose of the study will be to assess the influence of strategic responses by commercial banks on customer retention in Kenya, the case of Kenya Commercial Bank Kisii branches. The data was coded to enable the responses to be grouped into various categories. Data collected in this study was quantitative. The quantitative data was analysed descriptively using Statistical Package for Social Statistics. The findings were presented by the use of frequency distribution tables. The study sought to establish the strategic responses adopted by commercial banks in Kenya to enhance customer retention. The study deduced that the level of service quality in the bank was high. The study established that technology adoption affected customer retention to a moderate extent. To a moderate extent, the bank had adopted new technologies on time, adoption of new technologies had improved the task completion rate among staff, adoption of information technologies had improved the bank’s agency banking management, adoption of information technology had increased the modes of service delivery in the bank and adoption of information technology had improved the portability of the bank’s services internationally. The study further established that product differentiation had been adopted by the banks to a moderate extent. To a moderate extent, the Banks had well-differentiated financial products from other banks; the bank had a well-differentiated market segment from other banks; The Banks had unique financial products for their customers and financial product differentiation has allowed the bank to position itself better on the market. The study concluded that customer relationship management strategy had affected customer retention. Commercial banks had created a platform to manage interactions; the interaction system with customers had improved customer satisfaction levels; the interaction system with customers had reduced the number of customer complaints; and the interaction system with customers had enabled the banks to learn the expectations and needs of its customers. From the findings, it was evident that customer relationship management had affected customer retention; thus, the study recommends that commercial banks should improve customer satisfaction, interaction with customers and systems to know their needs. Technology adoption, commercial banks should adopt new information technologies which would meet customer needs and improve efficiency in the banking industry in Kenya.

Mobile Banking and Technical Efficiency of Commercial Banks in Kenya

Purpose: The financial sector is being revolutionized as a direct result of technological progress, with banks and other financial institutions embracing new technologies to better serve their customers online. Technological developments in the financial sector are simplifying access to financial services. The study set out to dissect the effects of Fintech on Kenya's commercial banking sector. The general objective was to establish the effect of mobile banking on technical efficiency of commercial banks in Kenya. The study was anchored on Theory of Constraint-Induced Innovation.
 Methodology: The entire study relied on collecting empirical data and evaluating hypothesis in a positivist way. A causal-comparative research design was used in this research. The study targeted population of Seventeen Kenyan commercial banks from the first and second tiers. The analysis relied on secondary sources of information. The gathered quantitative data was analyzed using both descriptive and inferential statistics. Numbers, medians, and standard deviations were used to characterize the data, and frequency distributions were used to determine the sample size. Models for analyzing correlations and regressions are inferential statistics. STATA was used for the data analysis.
 Findings: The study established that mobile banking has a positive and significant effect on technical efficiency of commercial banks in Kenya.
 Unique contribution to theory, practice and policy: Commercial banks in Kenya are recommended to improve their mobile banking services in light of the study's findings.

Mobile Banking and Technical Efficiency of Commercial Banks in Kenya

Purpose: The financial sector is being revolutionized as a direct result of technological progress, with banks and other financial institutions embracing new technologies to better serve their customers online. Technological developments in the financial sector are simplifying access to financial services. The study set out to dissect the effects of Fintech on Kenya's commercial banking sector. The general objective was to establish the effect of mobile banking on technical efficiency of commercial banks in Kenya. The study was anchored on Theory of Constraint-Induced Innovation.
 Methodology: The entire study relied on collecting empirical data and evaluating hypothesis in a positivist way. A causal-comparative research design was used in this research. The study targeted population of Seventeen Kenyan commercial banks from the first and second tiers. The analysis relied on secondary sources of information. The gathered quantitative data was analyzed using both descriptive and inferential statistics. Numbers, medians, and standard deviations were used to characterize the data, and frequency distributions were used to determine the sample size. Models for analyzing correlations and regressions are inferential statistics. STATA was used for the data analysis.
 Findings: The study established that mobile banking has a positive and significant effect on technical efficiency of commercial banks in Kenya.
 Unique contribution to theory, practice and policy: Commercial banks in Kenya are recommended to improve their mobile banking services in light of the study's findings.

Managerial Innovation and Competitiveness of Commercial Banks in Kenya

This study investigated on the influence of managerial innovation on competitiveness of Commercial Banks in Kenya. This study used the descriptive and correlational research designs with the sample of 175 middle level management employees (directors and general managers) through stratified and simple random sampling. The study used a questionnaire as the main source of data from the field. The questionnaire was developed by the researchers through the reading of literature and previous studies. Data was analyzed using the descriptive statistics and Pearson Correlations. The bank showed proof of existing elements of competitiveness. Managerial innovation has a significant positive influence on competitiveness of commercial banks in Kenya. The study recommends that commercial banks in Kenya should continue to embrace subjects of managerial innovation. The study also recommends that commercial banks should regularly review elements that exhibit competitiveness and act accordingly for improvement. Finally, the study recommends that commercial banks should apply practices associated with managerial innovation in order to be competitive.

Digital Lending and Technical Efficiency of Commercial Banks in Kenya

Purpose: The financial sector is being revolutionized as a direct result of technological progress, with banks and other financial institutions embracing new technologies to better serve their customers online. Technological developments in the financial sector are simplifying access to financial services. The study set out to dissect the effects of Fintech on Kenya's commercial banking sector. The general objective was to establish the effect of digital lending on technical efficiency of commercial banks in Kenya. The study was anchored on Theory of Financial Intermediation.
 Methodology: The entire study relied on collecting empirical data and evaluating hypothesis in a positivist way. A causal-comparative research design was used in this research. The study targeted population of Seventeen Kenyan commercial banks from the first and second tiers. The analysis relied on secondary sources of information. The gathered quantitative data was analyzed using both descriptive and inferential statistics. Numbers, medians, and standard deviations were used to characterize the data, and frequency distributions were used to determine the sample size. Models for analyzing correlations and regressions are inferential statistics. STATA was used for the data analysis.
 Findings: The study established that digital lending has a positive and significant effect on technical efficiency of commercial banks in Kenya.
 Unique contributions to theory, practice and policy: The results suggests that conventional banks might benefit from forming partnerships with FinTech firms that specialize in digital lending.

Effect of Financial Technology on Financial Performance of Commercial Banks in Kenya

Performance in the financial markets is an essential component in the study of finance. Over the last decade, Kenya's commercial banks have increased their use of different types of financial technology (2011-2021). Mobile banking, agency banking, internet banking, and automated teller machines are just some of the various forms of financial technology available today. The purpose of this study was to evaluate the impact that financial technology has had, if any, on the overall financial performance of commercial banks in Kenya. The specific goals were to establish the effect of mobile banking on financial performance; to determine the effect of internet banking on financial performance; to determine the effect of agency banking on financial performance; to determine the effect of ATMs on financial performance; and to establish the moderating role of bank size on the relationship between financial technology and the financial performance of commercial banks. The research was predicated on the technological adoption model, the financial intermediation theory, the diffusion of innovation theory, and the profit maximization theory. The positivist research philosophy was used for this study, and a panel longitudinal research methodology was used for the research. The population of the study was the 38 commercial banks that have been in continuous operation throughout the last decade. The study was a census. Secondary information was gathered on an annual basis, and it covered a span of ten years (January 2012 to December 2021). The data was evaluated making use of descriptive statistics as well as inferential statistics entailing correlation and panel multiple linear regression analysis. The current research conclusions revealed that financial technology fairly explains financial performance and the current research discoveries also revealed that the financial technology is sufficient in predicting financial performance. Additional study findings were that mobile banking, internet banking, agency banking, adoption of ATMs, and bank size had positive significant correlations with financial performance. Moreover, findings were that adoption of ATMs had a significant negative link with financial performance. Meanwhile, mobile banking and agency banking had negative insignificant link with financial performance. Finally, both internet banking and bank size had a positive insignificant relationship with financial performance. Policy recommendations to the government officials and policy formulators in the Treasury and the CBK to not mainly advocate for financial technology policy as a means of boosting bank financial performance and it is recommended to the policy makers to utilize other policies when aiming to boost bank financial performance. Recommendations are also generated to the bank management and consultants not to mainly consider financial technology will significantly boost the banks’ financial performance. Keywords: Financial Technology, Financial Performance, ATM, Mobile banking, Internet banking, Agency Banking

Liquidity Capacity and Financial Performance of Commercial Banks in Kenya

Purpose: The objective of the study was to assess the impact of liquidity capacity on the financial performance of commercial banks in Kenya.
 Methodology: This study employed the explanatory research design. The 42 Kenyan commercial banks were the study's target population. The essential financial data for analysis was extracted and compiled using a data collection routine from the yearly reports. Panel data was mined from 42 commercial banks for six years between 2012 and 2018. The data were assessed by employing descriptive statistics as well as inferential statistics. Descriptive statistics employed involved the standard deviation, median, and average. Inferential statistics used involved panel regression. The data analysis was aided by STATA software.
 Findings: The findings from the regression analysis indicate that Net Stable Funding and Liquidity Coverage exert a significant positive impact on the financial performance of commercial banks in Kenya. Conversely, provisioning for Non-Performing Loans, Liquidity Gap, and Provisioning for Nonperforming Loans demonstrate a notable negative effect on the financial performance of commercial banks in the country. Moreover, the study reveals that bank competition plays a significant moderating role in the relationship between liquidity capacity and the financial performance of commercial banks in Kenya.
 Unique Contribution to Theory, Practice and Policy: The study was anchored on Anticipated Income Theory and Liquidity Preference Theory. The study recommended that the regulatory body for commercial banks, the CBK, facilitates open channels of communication between policy makers and senior management of commercial banks in Kenya. This discussion is critical to ensuring that the monetary policies developed are practical and beneficial to the expansion of the commercial banking industry. Lastly, the study suggests that all commercial banks in Kenya integrate considerations of liquidity costs, benefits, and risks into their performance measurement, pricing, and approval processes for significant business activities.

Product Innovation and Competitiveness of Commercial Banks in Kenya

The dynamics of change in the business environment catalysed by globalization, changing consumer preferences, and a whirlwind of technological development have exerted immense pressure on commercial banks to introduce up-to-date products and services for sustainability. Product innovation has thus become a vital tool for survival and development. This study examined the influence of product innovation on the competitiveness of commercial banks in Kenya. The theory of creative destruction served as the study's guide. The study utilized a positivist research philosophy. Descriptive and correlational research designs were used. The target population consisted of 175 directors and general managers of Tier 1 commercial banks. Stratified and simple random sampling was then employed to select 122 respondents. Primary data was collected using closed and open-ended questionnaires. A pilot study was done on Equity Bank. To test validity, the study used content and construct validity. The study utilized descriptive and inferential analysis. Descriptive analysis included the use of frequencies, percentages, mean, and standard deviation, while inferential statistics employed correlation and simple linear regression analysis. Data collected from open-ended questionnaires was analysed using content analysis. The results were presented in tables. The study found that product innovation had a positive and significant influence on the competitiveness of commercial banks in Kenya (t = 0.6.438, P = 0.000). The study thus recommends that commercial banks embrace product innovation as a tool to achieve competitiveness. Product innovation should be enhanced by carrying out regular surveys, seeking client views in the development of mobile and internet product innovations, and training clients on the usage of mobile and internet banking products before onboarding.

Effect of Internal Audit on Financial Performance of Commercial Banks Listed in Nairobi Securities Exchange, in Nairobi County, Kenya

The recent collapse of major commercial banks in Kenya, including Imperial and Chase bank, which are currently under receivership, has raised concerns about the effectiveness of their audit practices in ensuring stability and improved financial performance. These failures have put pressure on commercial banks to reconsider how they align their internal audit processes to ensure stability and financial improvement. Consequently, this study aimed to assess the impact of internal audit on the financial performance of commercial banks listed on the Nairobi Securities Exchange (NSE). The study was guided by reliability theory. Using a descriptive survey design, the target population consisted of 10 commercial banks listed on the NSE. The unit of observation included 86 respondents from various roles within these banks, such as senior finance managers, credit managers, operations managers, risk managers, and internal auditors. Both primary and secondary data were utilized in the study. Primary data on internal audit practices were collected through a semi-structured questionnaire employing a Likert-type scale, while secondary data on the financial performance of the commercial banks were obtained from their audited financial reports. The gathered questionnaire data were quantitatively analyzed using SPSS software, incorporating descriptive statistics (mean and standard deviation) as well as inferential statistics, specifically regression coefficients and bivariate correlation, to examine the relationship between the dependent and independent variables. The study's findings revealed a significant relationship between internal audit, asset safeguarding, risk management, compliance with laws, and the dependent variables, which included return on assets, net income, and liquidity. These relationships were evident from the regression analysis conducted. Consequently, the study concluded that internal audit systems have an impact on the financial performance of commercial banks. The study recommends that commercial banks listed on the NSE reassess their internal audit systems and strengthen any identified weaknesses to enhance their financial performance. Furthermore, the study suggests that future research could explore the effects of new banking regulations, such as Basel Accord III, on the financial performance of commercial banks.

Funding Sources, Competitiveness and Performance of Commercial Banks in Kenya

The nature of the funding source a commercial bank decides to adopt is a key performance determinant. Ideally, banks make use of either shareholders’ equity, borrowed funds, or customers' deposits to finance their operations. The liberalization in the sector has made it possible for many players to exist and as a result, each player has had to come up with a unique competitive way that allows them to attract and retain the best funding sources capable of yielding positive performance. Much as there are studies that have sought to investigate the concept of funding and performance among commercial banks, both in developing and developed economies, the studies yield mixed findings. This study sought to determine the mediating effect of the bank’s competitiveness on the relationship between funding sources and performance. A descriptive research design was adopted and used to evaluate the two hypotheses formulated for each of the study’s objectives. Secondary data obtained from 35 commercial banks that have been consistently operating in Kenya was gathered between the years 2011 to 2021. Findings obtained from the fixed effect regression model after performing a four-step regression mediation procedure indicate that bank competitiveness has a mediating effect on the relationship between funding sources and performance. This finding point to the need for both policymakers and implementers to come up with clear policies that can enable banks to utilize funds obtained from various sources more prudently and in the process ensure their performance remains optimum.

Capital Buffer, Credit Standards and Financial Performance of Commercial Banks in Kenya

Capital Buffer, Credit Standards and Financial Performance of Commercial Banks in Kenya

Effect of Financial Innovations on Banks’ Return on Assets and Equity: A Case of Commercial Banks in Kenya

Purpose: The study sought to investigate the effect of financial innovation on banks’ return on assets and return on equity in Commercial Banks in Kenya. The main problem was that banks have implemented financial innovations, but the influence it has on financial performance has not been exhaustively and extensively evaluated especially in the emerging LDC markets. The effect it has on Return on Assets and Return on Equity remains unclear.
 Methodology: This study adopted Pragmatic research philosophy. The choice of philosophy was determined by the research problem. The study was based on correlational research design. The study area was Kenya, focused on its Commercial banks. The target population comprised of all of the 42 commercial banks licensed by the Central Bank of Kenya. Purposive sampling technique was used to obtain a sample of 12 CMA / NSE listed banks. Secondary data from individual bank level, CMA and the CBK for the period 2007 to 2017 was used. The data analysis was based on fixed effect, random effect models or pooled regression of panel data analysis.
 Results: The findings of the study indicated that financial innovations had higher correlation with, and influence on ROA as indicated by overall R-squared of 0.5134. This means that the financial innovations under study had 51.34% influences on return on assets, holding all other factors constant. The overall R-squared for ROE was 0.2077. This means that on financial innovations studied had 20.77% influence on return on equity. Thus, there is positive and significant effect between financial innovations and Return on Assets and Return on Equity. Positive effect is an indication that if commercial banks in Kenya increased their asset and equity levels, their profitability as measured by ROA and ROE would improve. The study therefore finds the relevance of technology in improving performance of commercial banks in the country. Based on the findings, the study concluded that it is important for commercial banks in Kenya to continue investing in cost- effective technology to remain competitive in the industry.
 Unique contribution to theory, practice and policy: The study recommended that Commercial banks should implement effective financial innovations that would positively influence ROA and ROE. The findings of this study shall assist commercial banks and related financial institutions to monitor outcomes including effects of financial innovations with projections for profits as well as higher returns on ROA, ROE. It shall guide academic reference and policy making.

Effect of Financial Innovations on Banks’ Loan Portfolio: A Case of Commercial Banks in Kenya

Purpose: The study sought to investigate the effect of financial innovations on loan portfolio of Commercial Banks in Kenya. The main problem was that even though banks have implemented financial innovations, the level of loans uptake in terms of volume and quality remains unclear as indicated by opposing findings by different studies. Most past studies on Kenya have covered relatively shorter study periods which may not reliably capture the financial trends, more so given the short shelf life of financial studies caused by rapid changes in the financial sector. 
 Methodology: This study adopted Positivism philosophy. It was based on correlational research design. The target population for the study comprised of all of the 42 commercial banks licensed by the Central Bank of Kenya to provide financial and other banking services in Kenya. Purposive sampling technique was used to select the sample of 12 CMA / NSE listed banks. Secondary data was used. They were obtained from audited financial reports of listed commercial banks, CMA and the CBK in the period 2007 to 2017. The data was analyzed using fixed effect and pooled regression of panel data analysis.
 Results: The findings of the study indicated that there is positive and significant effect between financial innovation and loan portfolio of commercial banks. The findings indicated that the overall R-squared was 0.5928. This means that on average, 59.28 percent of all variations in loans are explained by financial innovation, holding all other factors constant. This indicates that if the banks in Kenya implemented more financial innovations, the financial performance measured by loan portfolio would increase. Based on the findings, the study concluded that commercial banks have implemented technological innovations in various areas such as EFT, Branch networking and Mobile banking which have improved the banks’ loan portfolios.
 Unique contribution to theory, practice and policy: The study recommended that Commercial banks should adopt financial innovations that would positively influence loan portfolio. It shall signal the government, policy institutions, industry players and stakeholders to re-strategize finance-oriented innovations with the view to improve policy framework in order to streamline the financial sector, especially banking. The study offers literature and data for academic reference as well as guidance for investment by banks and other investors

Interest Rates Capping and Credit Uptake of Commercial Banks in Kenya

In 2016, Kenya enacted the Banking (amendment) Act 2016 which allowed lending interest rates charged by Commercial Banks in Kenya to be fixed at the Central Bank Rate plus a spread of 4% and deposit rates at 70% of the Central Bank Rate. Many banks protested this move since it meant reduced profitability. As a result, commercial banks introduced stringent credit qualification criteria locking out many borrowers who would have otherwise qualified for credit. Therefore, this study sought to establish how interest rate capping affects credit uptake of Commercial Banks in Kenya. The objectives of the study were; to determine the effect of capping lending interest rates, capping deposit interest rates, deposit interest rate spread on credit uptake of commercial banks in Kenya and the moderating effect of inflation risk premium on the relationship between interest rate capping and credit uptake of commercial banks in Kenya. The study was guided by four theories namely: Irving Fisher's Theory of Interest Rates, the Fisher Effect, Loan Pricing Theory and Loanable Funds Theory. The study conducted diagnostic test on multicollinearity normality test and Heteroscedasticity test. The study adopted descriptive research design. The target population for the study was all the 40 licensed commercial banks in Kenya. The sampling frame for the study was all (40) licensed commercial banks in Kenya. This study collected both primary and secondary data because both data reinforced each other. Primary data was collected using semi-structured questionnaires, while secondary data was collected from audited and released financial statements of Commercial Banks in Kenya for the period 2014–2019. The data was analyzed using multiple regressions and descriptive statistics namely: mean median, mode and standard deviation. Quantitative data was presented using tables, pie charts and bar graphs while qualitative data has been presented descriptively. The study established that while capping lending interest rates and interest rate spread had a significant effect on credit uptake of commercial banks in Kenya, capping deposit interest rates was insignificant and the relationship was significantly moderated by inflation risk premium. The study concluded that interest rate spread had the largest effect on credit uptake of commercial banks in Kenya followed by capping lending interest rates and lastly capping deposit interest rates. The study recommends that when formulating policies on interest rate capping, the Central Bank of Kenya should focus more on the lending side as compared to the deposits side. Keywords: Interest rates capping, Credit uptake, Lending interest rates, Deposit interest rates, Interest rates spread, Inflation risk premium.