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March 26, 2026Open Access

Liquidity Risk Compliance Levels and Technical Efficiency of Commercial Banks in Kenya: Application of Non-Parametric Data Envelopment Analysis Model

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Authors

SKStephen KisuliTNTabitha NasiekuGOGordon Opuodho

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Overview

This quantitative study analyzes liquidity risk compliance impact on technical efficiency in commercial banks, highlighting implications for operational practices.

Key Points

  • The study aims to examine how liquidity risk compliance levels affect the technical efficiency of commercial banks in Kenya.
  • Quantitative research design over ten years (2013-2022)
  • Analysis of 37 licensed commercial banks with 370 firm-year observations
  • Used Data Envelopment Analysis (DEA) for technical efficiency estimation
  • Employed two-limit Tobit regression model with Maximum Likelihood Estimation (MLE) technique
  • A positive correlation between liquidity risk compliance levels and technical efficiency was found
  • Bank size significantly influences technical efficiency; larger banks are more efficient
  • The interaction between liquidity risk compliance levels and bank size is positive, suggesting larger banks utilize liquidity buffers better

Cite This Study

Kisuli et al. (2026) studied this question.

synapsesocial.com/papers/69c4cd49fdc3bde448919600https://doi.org/10.5281/zenodo.19208245
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Also Consider

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  1. 1Bank Specific Factors and Liquidity of Commercial Banks in Kenya2024
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  4. 4Financial Risk Management, Bank Size and Commercial Banks Profitability in Kenya2026
  5. 5Effect of Capital Adequacy on Operational Efficiency of Commercial Banks in Kenya2024 · 1 citations