Capital Level and Financial Stability of Commercial Banks in Kenya

The soundness of banks' finances serves as the foundation for the entire financial sector because they are essential to promoting economic growth. A commercial bank's financial stability should be assessed with specific emphasis given to domestic and foreign issues that affect how the bank operates and figuring out the amount of their influence on the status and operations of the commercial bank. Nevertheless, the impact of the company's capital, liquidity, and asset quality on the financial stability of commercial banks has not been studied. This study aimed to evaluate the effect of capital level on licensed commercial banks’ financial stability in Kenya. The research was anchored by capital buffer theory. The explanatory research design was adopted to analyze thirty-nine banks for the period 2016 to 2022 based on the census approach. The study outcomes were arrived at using secondary data obtained under the guidance of the secondary data collection schedule. The assessment of the investigation was evaluated premised on descriptive and panel approaches. The findings indicated that capital level had a positive and significant effect on the financial stability of commercial banks. The study recommended that commercial banks should adopt strategies and measures that will enable them to increase the capital level leading to an increase in financial health.