Credit Risk Management Impact on Islamic and Conventional Banks in Kenya

The aim of this study was to analyse the relationship between credit risk management practices and financial performance of both Islamic and conventional banks in Kenya. In order to achieve this objective, the study assessed the current credit risk management practices of these banks and linked them with various banks’ financial performance. The study used both the primary (survey questionnaires) and secondary data (annual reports). Results were analysed descriptively and statistically and the study revealed the importance of coordinating the entire risk management policies strategically to avoid duplication and enhance efficiency. Anotable outcome from this research was that Islamic banks adopt some extra measures to manage their specific risks due to the innovative and unique banking nature. The study hopes to contribute to the enhancement of credit risk management practices of both the Islamic and conventional banks to increase the overall competitiveness in the banking industry in Kenya.