Title: Effect Of Debt Securities On Financial Performance Of Commercial Banks Listed In Nairobi Securities Exchange
Authors: Onderi Kerima Geoffrey Mark Ogembo Onchari
Volume: 10
Issue: 4
Pages: 121-129
Publication Date: 2026/04/28
Abstract:
Financial instruments are used on a wider scale mainly due to the global financial crisis. These tools have played a central role in averting financial risks in many countries for a long time. The banking sector' earnings fell drastically in 2020. ROA was 2.0% in year 2020 while in 2019 it was 3.2%. Such decline was contributed by an increase in loan loss provisions as asset quality of the banking sector reduced, an increase in impairment losses and the impact of the monetary policy rate cut on interest margins (SBI, 2021). The study's general objective was to assess the effects of debt securities on financial performance of Commercial banks listed in Nairobi Securities Exchange as moderated by inflation rates. The study's specific objectives were; to determine the effect of debt securities on financial performance of Commercial banks listed in Nairobi Securities Exchange. The study was supported by preferred habitat theory. The study utilized a descriptive design. The study's target population comprised 11 Commercial banks listed on the Nairobi Security Exchange. This study also embraced simple random sampling technique to pick a sample size of 10 listed commercial banks. The study used secondary data, which was collected by a data collection sheet. Data was obtained from financial reports for 10 years from 2011-2020. Descriptive statistical methods such as standard deviation, maximum, minimum and mean and were used to analyse the data. In addition, inferential statistical methods such as correlation and panel data regression analysis were utilised to determine the effect of the financial instruments on the financial performance of commercial banks listed in NSE. The findings of the study were presented in figures and tables. The study established that debt securities had a weak but direct and significant linkage with financial performance of listed commercial banks in NSE. Similarly, the study established that debt securities had a positive and significant correlation with financial performance of listed commercial banks at NSE. The study concluded that debt securities had a weak, positive and significant effect on financial performance of listed commercial banks in NSE. Similarly, the study concluded that debt securities had a positive and significant effect on financial performance of listed commercial banks at NSE. The study recommends that listed commercial banks at NSE should increase the amount of debt securities more, especially long-term debt in their financial structure.