Moderating Effect Of Board Size On The Relationship Between Risk Committee And Financial Performance Of Commercial Banks In Kenya

Abstract

Commercial banks have put in place mechanisms to reduce and eliminate the risk exposures. However, there is limited knowledge on the moderating effect of board size on the relationship between risk committee and financial performance of commercial banks in Kenya. This study therefore sought to investigate the moderating effect of board size on the relationship between risk committee and financial performance of commercial banks in Kenya. The study adopted longitudinal research design for the year 2013-2017. The target population being all 42 commercial banks regulated by the Central Bank of Kenya. The study extracted secondary data from published annual financial reports. The study found a regression coefficient of R=0.299 between risk committee and financial performance, a coefficient of R=0.303 between board size and financial performance and when the moderator was introduced, the regression coefficient changed to R= 0.328. It was also established that when the moderator was introduced, the R2 changed from a coefficient of 0.090 to 0.143. The study concludes that there is a moderating effect of board size on the relationship between risk committee and financial performance of commercial banks in Kenya. The study recommends that commercial banks should adopt risk committees and also larger boards to enhance financial performance.