IJSSE - International Journal of Social Sciences and Entrepreneurship Upcoming Journals: International Journal of Innovation and Management (IJIM), International Journal of Engineering and Architecture (IJEA) & International Journal of Science and Agriculture | IJAE, IJEF & IJHRP Call for Papers - Forthcoming Issue (Decemer 2014). Submission deadline: 25th December 2014 |

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Eunice Wambui Macharia
MBA Student, Jomo Kenyatta University of Agriculture and Technology



The global financial crisis which first showed signs in the United States of America (USA) is becoming contagious and is apparently affecting directly or indirectly, every economy on the globe. In order to increase their profitability, commercial banks in Kenya moved into housing and consumer lending, thus exposing themselves to the burst of the bubble in real estate markets or to the risk of a potential increase in the level of household indebtedness as a consequence of the current turmoil. This study sought to establish the effects of global financial crisis on the financial performance of commercial banks offering mortgage finance in Kenya. The study also sought to determine the influence of inflation, interest rates, capital flow and foreign exchange rates on the financial performance of commercial banks offering mortgage finance in Kenya. This study was carried out through a descriptive research design. The target population of this study therefore was 330. The sample size of this study was therefore 99 respondents. The study collected primary data which was largely quantitative, using semi-structured questionnaire. In addition the researcher used both descriptive and inferential statistics to analyze the data. In descriptive statistics, the researcher used frequencies, percentages, mean and standard deviation. In inferential statistics, the researcher used multivariate regression analysis to determine the relationship between variables (dependent and independent). This study established that capital flow as a result of global financial crisis was influencing financial performance of commercial banks offering mortgage finance in Kenya followed by foreign exchange rates, inflation and interest rates. This study recommends that financial institutions should avoid high level of debts. This study also recommends that financial institutions should ensure that their interest rates are well regulated so as to avoid poor financial performance.

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