An Assessment of the Effects of Monetary Policies on Lending Strategies at CFC Stanbic Bank Kenya

Abstract

The Kenya Central Bank is responsible for formulating and implementing monetary policy and fostering the liquidity, solvency and proper functioning of financial institution hence the need for carrying out the study on how monetary policy affect lending strategies in commercial banks in Kenya. The purpose of the study was to assess the effects of monetary policy on lending strategies at CFC Stanbic Bank. Its objectives were to determine the effect of monetary policy on lending strategies at CFC Stanbic Bank Kenya, to identify the lending strategies used by commercial banks in Kenya, and to establish the challenges facing lending strategies at CFC Stanbic Bank Kenya. The study adopted a descriptive research design with the target population being the management team of the 13 Stanbic branches located within Nairobi. Stratified sampling technique was used to select 71 respondents. Statistical Package for Social Sciences (SPSS) version 20 was used for data analysis. The study found out that revenue growth was the most lending strategies used at CFC bank. The majority of the respondents indicated that monetary policy affected the lending strategy to a great extent. Availability of affordable credit for investment and consumption usually led to an increase in the overall rate of economic growth. The study recommended that the government should restructure the economic environment where banks operate to help control the fluctuation which ensure that the rates in borrowing are stable and that the government should restructure the economic environment in which banks operate to help control the fluctuation in Central Bank rate hence ensuring stable borrowing rates and finally, the study concluded that uncertainty caused by expected changes in monetary policies influenced banks’ lending behaviour.