3.1 Research Design
This explanatory study is based on secondary data obtained from published statements of accounts
of all commercial banks in Kenya, CBK, IMF
and World Bank publications for ten years from 2001 to
2010. It uses panel data due to the advantage that it has. It helps to study the behavior of each bank over time and across space (Baltagi, 2005; Gujarati, 2003).
3.1.1 Unit of Analysis
The unit
of analysis
in this
study was all the licensed domestic and foreign commercial banks
operating in Kenya. All the licensed commercial banks in the country are the target population of this study.
Figure 1. Schematic Diagram showing the relationship between variables
Independent Variables
Dependent Variables
Bank Specific Variables
· Capital Adequacy
· Asset Quality
· Management Efficiency
· Liquidity Management
Macroeconomic Variables
· GDP Growth Rate
· Inflation Rate
Bank Performance
Indicators ROA ROE NIM
Moderating variable
Foreign Vs Domestic ownership
3.1.2 Sample
Design
In this study 37 commercial banks were considered. Out of these 13 of them are foreign owned banks
and 24 are owned
by
locals. Those banks that started operation
and
discontinued in
the
middle of the
period under review were excluded.
3.1.3 Data Collection, Analysis and Presentation
The secondary data used in this study were obtained from the statements of the commercial banks,
CBK, IMF and World Bank database. The data collected using data collection sheet were edited,
coded and
cleaned. Then the data was analyzed using Microsoft Excel and econometric views (e- views) software.
A multiple linear regression model and t-statistic were used to determine
the
relative importance
(sensitivity) of each explanatory variable in affecting the performance of banks. The moderating effect
of
ownership identity was also evaluated by using ownership as a dummy variable.
