MARKET RESILIENCY LIQUIDITY DIMENSION EFFECT ON THE USE OF FINANCIAL DERIVATIVES IN INTEREST RATE RISK MANAGEMENT IN COMMERCIAL BANKS IN KENYA

Abstract

The main objective of this research was to establish market resiliency effect on the Internet Rate risk management with Financial Derivatives in Kenyan commercial banks. In order to request information, this research incorporated a descriptive research design. The target population was made up of 44 commercial banks in Kenya. The study gathered data from 108 market makers from 39 commercial banks using email or drop - and - pick method questionnaires. Employing the use of statistical package (SPSS version 22), the analysis of data was undertaken using descriptive (percentages, frequencies and means) as well as inferential statistics for instance Pearson correlation and also regression analysis towards the determination of the relationship connecting the variables (that is the independent and dependent variables). Market resiliency was found to have an insignificant positive effect on the use of financial Derivatives on interest rate risk management. The study recommends that Kenya's commercial banks should increase their active participation in the market for interest rate derivatives as the results of the study have shown a huge presence of market makers. The government should consider strengthening the market makers system in the country. The study also recommends that market makers in commercial banks need to increase the use electronic trading platforms such as Bloomberg and Citi velocity to provide core services to support the real economy.