The Effect Of Demographic Characteristics On Loan Performance Of Commercial Banks In Kenya

Abstract

Over the years, most banks have experience to a varying degree problem of non performing loans some of which have been closed down by regulatory authorities. This in turn led to contraction of activities, decline in output, and imposition of substantial costs on loans. This study sought to find out how demographic characteristics of borrowers affect loan performance of commercial banks. The purpose of this study was to investigate the effects of demographic characteristics on loan performance of commercial banks in Kenya. The study was conducted through descriptive research design; a survey method was employed and the study population comprised all the 43 commercial banks in Kenya. Data was collected by means of a self-administered questionnaire. The data was subsequently analyzed using quantitative techniques of descriptive statistics and regression analysis. Four variables namely income level, level of education, gender and age of the borrowers were regressed against level of performance of banks, from the regression analysis the P values were found to be greater than 0.05(P>0.05) therefore the null hypothesis was accepted while the alternative hypothesis rejected. The conclusion is that there is no statistical significant relationship between income levels, level of education, gender and age on loan performance. The study found that there is was no relationship between the demographic characteristics of borrowers and the performance of loans of commercial banks in Kenya.