Strategic Alliances and Financial Stability: Perspectives from Commercial Banks Listed at the Nairobi Securities Exchange, Kenya
DOI:
https://doi.org/10.53819/81018102t4404Abstract
Commercial banks listed at the Nairobi Securities Exchange continue to experience episodes of financial instability despite operating under comprehensive corporate governance regulations and supervisory frameworks. This persistent instability raises concerns about whether conventional governance mechanisms adequately address the ownership structures, strategic relationships, and internal controls that shape the behaviour and resilience of banks in emerging markets. The purpose of this study was to examine the effect of strategic alliances on the financial stability of commercial banks listed at the Nairobi Securities Exchange. Financial stability was assessed using capital adequacy and liquidity. The study was anchored on Resource Dependence Theory (RDT). Guided by a pragmatist philosophical stance, the study adopted a mixed-methods approach with an explanatory design as the primary structure, complemented by descriptive elements for contextual understanding. The unit of analysis comprised the eleven commercial banks listed on the Nairobi Securities Secondary quantitative data was extracted from annual reports, audited financial statements, and regulatory publications. The study found that strategic alliances had a positive and statistically significant effect on both capital adequacy and liquidity among commercial banks listed at the Nairobi Securities Exchange. A unit increase in strategic alliances leads to a 0.0184 increase in capital adequacy and a 0.0246 increase in liquidity. The study concludes that strategic alliances enhance financial stability by improving resource mobilization, risk-sharing, and operational coordination, ultimately supporting banks' resilience and competitiveness. The study therefore recommends that the Central Bank of Kenya (CBK) and commercial banks should collaborate to develop credit guarantee schemes that enable firms to secure long-term loans for capital-intensive investments.
Keywords: Strategic Alliances, Financial Stability, Commercial Banks, Nairobi Securities Exchange, Capital Adequacy
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