| dc.description.abstract | Financial performance of commercial banks has become a challenge due to loans becoming costly as banks are varying interest rates. Various researchers have determined an existence of a link between the management of loan portfolio and banks’ performance on finances but little information is available on the relationship between personal loans and bank performance. The purpose of this study was to assess the effects of controlling quality of personal loans on the performance of commercial banks in Siaya County, Kenya. The study specific objectives are: to establish the effect of quality of school fees loans on the financial performance of commercial banks, find out the effect of quality micro-lending loans on the financial performance of commercial banks; evaluate the effect of quality Check offs loans on the financial performance of commercial banks; and determine the effect of quality Salary Advance and Overdraft loans on the financial performance of commercial banks. The study was guided by Asymmetric Information Theory, Modern Portfolio Theory, Lifecycle Theory and CAMELS Model. The study adopted a descriptive survey research design. The study unit of analysis was the commercial banks operating in Siaya County Bondo sub county The target population was three bank managers, three credit managers, three credit administrators and 18 credit officers making a total of 27 managers from the three commercial banks operating in Bondo sub-county namely, KCB, Equity and Cooperative bank. The study adopted census sampling technique. The study used both primary data and Secondary data. The data collected was analyzed using descriptive statistics and inferential statistics to establish the relationship between the variables in this study. The descriptive analysis involved the use of percentages, frequencies, means and standard deviations while inferential statistics involved the use of regression analysis and correlation analysis. The coefficient of determination quality school fees loans (r=0.315) indicate that the variable can explain up to 31.5 % of the variance in financial performance of commercial banks and a strong association existed between the variables (R= .561; F=10.558), and is statistically significant. The proportion of variance in commercial banks financial performance of banks as explained by the quality of micro-lending loans is explained up to 34.4% (r2=0.344; F= 12.087, P=0.000). This implies that micro-lending loans was a useful predictor of financial performance of commercial banks. The coefficient of determination (r2) of 0.454 indicate that quality of check offs loans explained up to 45.4% of the variance in financial performance of commercial banks. The F value = 19.127, P<0.01, which supports the goodness of fit of the model in explaining the variation in the dependent variable. This implied that check off loans had a statistically significant influence on the financial performance of commercial banks. The proportion of variance in commercial banks financial performance of commercial banks can be explained quality of salary advance and overdraft loans up to 46.1% or r2=0.461, F= 19.680, P=0.000. This implies that quality of salary advance and overdraft loans is a useful predictor of performance of commercial banks in Bondo Sub County. This implies that salary advance and overdraft loans have a statistically significant influence on the financial performance of commercial banks. Based on the findings on school fees loans, micro-lending loans, check offs loans and salary advance and overdraft loans which have a statistically significant influence on the financial performance of commercial banks; the study concludes that personal loans positively influence financial performance of commercial banks. | en_US |