Effect of the COVID period central bank rate on liquidity of commercial banks in Kenya

Ngure Sophia, Jesse Gitahi

Scirj Volume XIII, Issue X, October 2025 Edition
ISSN: 2201-2796

Effect of the COVID period central bank rate on liquidity of commercial banks in Kenya

Authors: Ngure Sophia, Jesse Gitahi

Abstract: The study objective was to determine how Kenyan commercial banks liquidity was impacted by the COVID period cash reserve ratio. The descriptive survey design was employed in the investigation. The study target population comprised the 39 commercial banks in Kenya that have been operational since before and during the COVID-19 pandemic, specifically from January 1, 2018, to December 11, 2021. Non-probability sampling procedures were used in the study, and Tier 1 commercial banks were included in the sample. The study made use of quantitative secondary data that was gathered from Tier I commercial banks annual integrated financial reports. Quantifiable data were analyzed in this study using both descriptive and inferential statistics. It was revealed that COVID period cash reserve ratio significantly influenced the liquidity of commercial banks in the country (β = .605, Sig. = .010<.05). COVID period cash reserve ratio has a significant effect on liquidity of commercial banks in Kenya. Regarding COVID period cash reserve ratio, regulatory authorities should actively use these tools to manage liquidity. Lowering the cash reserve ratio during economic uncertainties can stimulate lending and offer stability to commercial banks.

Reference this Paper:
Ngure Sophia, Jesse Gitahi (2025). Effect of the COVID period central bank rate on liquidity of commercial banks in Kenya. Scientific Research Journal (Scirj), Volume XIII, Issue X, October 2025 Edition, Page 14-21.

Keywords: COVID, liquidity, commercial banks, economic uncertainties

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