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The main objective of the study was to assess the influence of asset quality on the financial performance of tier IV commercial banks in Kenya. The study was guided by the scientific theory of management, Transaction Cost theory and Contingency theory. This study employed a longitudinal research design. The target population was 13 tier IV commercial banks in Kenya as at 2022 from the Central Bank of Kenya’s website. Panel data was analyzed using STATA. Pearson’s product-moment correlation coefficient depicted r = -0.4306, a p-value of 0.0000 which is significant for asset quality. The regression coefficient was -0.14, a p-value of 0.013, for asset quality (AQ) and financial performance (ROE) at a 5% level of significance. These results indicate that Asset Quality had a significant influence on financial performance. It was recommended that commercial banks should use their assets efficiently and effectively to yield optimum results.JEL: G21; G29; G38 Article visualizations |
