Investment in Financial Assets and Financial Performance of Commercial Banks Listed at Nairobi Securities Exchange, Kenya
DOI:
https://doi.org/10.47604/ijfa.3746Keywords:
Investment, Financial Assets, Financial Performance, Commercial Banks, NSEAbstract
Purpose: The concept of diversification has taken a universal centre stage in the process of management and continues to be an increasingly important aspect of doing business in today's world of today. The study examined the effect of investment in financial assets on the financial performance of commercial banks listed at the NSE in Kenya. The study is anchored on asset quality theory. The study adopted a descriptive research design on a target population of 11 commercial banks listed at the NSE, Kenya. The study was conducted through a census. The study was conducted for a period of 5 years from 2020 to 2024.
Methodology: Secondary data was utilized to collect financial information from the bank’s annual reports and financial statements for analysis. Data was gathered from secondary sources with the aid of a secondary data collection sheet. Data was obtained from financial and statistical reports released by the CBK and the KNBS. Data was analyzed using descriptive and inferential statistics. The descriptive statistical tools included frequencies, percentages, means, variances, and standard deviations. Inferential statistical tools included Pearson’s product-moment correlation and panel regression analysis.
Findings: Investment in financial assets revealed a coefficient result of 0.138. The overall results revealed that 62.1% of the variation in the financial performance of commercial banks listed at the NSE, Kenya, is explained by investment in financial assets, while factors not studied in this research contributed to the remaining 37.9% of the variation, which is attributed to other factors not captured in this model. The findings therefore concluded that investment in financial assets has a significant positive effect on the financial performance of commercial banks listed at the NSE, Kenya. Lastly, the study found that investment in financial assets explains 62.1 % of the financial performance of commercial banks listed at the NSE in Kenya.
Unique Contribution to Theory, Practice and Policy: This study therefore suggests that further studies be conducted on other factors affecting the financial performance of these listed commercial banks to establish the 37.9% of the factors affecting financial performance for commercial banks listed at the NSE, Kenya.
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