The Relationship Between Credit Risk Management Techniques and Loan Default Rates Among Commercial Banks in Kenya

Abstract

This Study sought to investigate the relationship between credit risk management techniques and loan default rates among commercial banks in Kenya. It was necessitated by the high and increasing numbers of loan default rates among commercial banks in Kenya. It used quantitative methods in applying regression and correlation analysis on the secondary data of all commercial banks operating in Kenya. The result found out that there is a negative correlation between loan default and credit risk management techniques among commercial banks in Kenya. Hence commercial banks must efficiently manage their credit risks so as to lower the rates of default on loans. An efficient credit risk management also leads to low interest rates thereby further reducing default.