Influence of credit risk on shareholder market value of commercial banks listed in Nairobi Securities Exchange

Abstract

This study examines the influence of credit risk on the shareholder market value of commercial banks listed in the Nairobi Securities Exchange. A mixed-method approach and concurrent design were used in this study. Logistic regression was performed to ascertain the influence of credit risk on shareholder market value of commercial banks listed in the Nairobi Securities Exchange as a quantitative method and processes tracing as a qualitative approach to trace the causal mechanism by which credit risk contributes to shareholder market value. This research demonstrated that (i) there is a relationship between credit risk and shareholder market value among the commercial banks listed in NSE; (ii) Wald (1) =41.475, p=.000, sig <05 2-tailed is below the permissible value of likelihood above which null hypothesis is accepted. The study concludes that there is a relationship between credit risks and Shareholders Market Value in commercial banks listed in NSE.