Thesis:

Effects of spreading interest rates on financial performance of commercial banks in Kisii town

Banks hold a central role in daily financial transactions, making it crucial for them to operate with effectiveness, efficiency, and competitiveness. One sensitive economic variable in this context is the interest rate spread, which should be harmoniously balanced to assure savers of optimal returns on their investments and to provide borrowers with reasonable lending rates. This study aimed to evaluate the influence of interest rate spreads on the financial performance of commercial banks in Kisii town. The study has multiple objectives, including assessing the impact of cash lending on the financial robustness of these institutions, investigating how loan repayment rates affect their financial health, and examining the influence of domestic savings rates on their performance. The research was grounded in the Profit Maximization and Dealership models, which offer theoretical frameworks for understanding the operational and financial dynamics at play. The methodology featured a descriptive survey research design. The target population comprised of 227 individuals employed in commercial banks in Kisii town. A census technique will be used to determine the sample size for the study. Data collection was primarily carried out through questionnaires and semi-structured interviews. To ensure the reliability and validity of the research instruments, a test- retest method was used for the former, while the latter will underwent validation through academic supervision. For data analysis, a combination of descriptive and inferential statistical tools were employed. Frequencies, percentages, and chi-square tests were utilized to interpret the collected data. Qualitative data gathered from interview schedules was subject to thematic analysis. The research findings were displayed through various graphical representations such as tables, figures, graphs, and charts. The study anticipated that its findings served as a valuable resource for commercial banks in Kisii town, aiding in the enhancement of their profitability and growth.