Abstract:
The primary objective of managing banks is to improve bank performance so as to maximize
shareholders returns. This objective is met at the expense of increased risk which is not always
accompanied with the high returns and hence may sometime lead to underperformance. Risk
management is essential to finding better performance because most banks are in risk business.
The main objective of the study was to examine the effects of risk management practices on the
profitability of listed commercial banks in Kenya. The specifics seek; to evaluate the effect of
liquidity risk management on the profitability of listed commercial banks in Kenya. To
determine the effect credit risk management on the profitability of listed commercial banks in
Kenya. To find out the effect of operational risk management on the profitability of listed
commercial banks in Kenya. The study was be guided by stakeholders’ theory, contingency
theory and agency theory. Both descriptive and correlation design were used to achieve the study
objective. Purposive sampling technique was used to select 8 listed commercial banks in Nairobi
Securities Exchange. Secondary panel data was collected from annual audited financial
statements. Both descriptive and inferential statistics were used to analyze the data. Panel
regression analysis was used to test the hypothesis of the study.
