The main purpose of the study was to determine the influence of personal loans on financial
performance of commercial banks in Kenya and a corresponding hypothesis was formulated
and tested. A census of 42 fully operational commercial banks in Kenya was done for a period
of ten years from 2006-2015 due to increased loan portfolio, using across-sectional survey
design. A questionnaire was used on primary data that involved collecting data from one key
person in the finance/credit department of each bank. Secondary data was collected from
audited financial statements and other relevant financial sources using data analysis sheet.
Both descriptive and inferential statistics were used. Statistical package for social sciences
(SPSS) and STATA version 14 were used to analyze data. Research findings established that
personal loans influence the financial performance of commercial banks. The study findings are
supported by the Utilization of loan pricing theory and Asymmetric information theory.