Banking Regulations and Financial Crisis: An investigation into recent Banking Crisis in Kenya between 1980 and 2018

There are different types of financial crisis with one of the major ones being the banking crisis. A banking crisis can nipple any economy due to the major role banks play in the economy. This role that they play necessitates the need for any county to shield themselves from potential financial crisis. It is becoming clear that even if there are various factors, some of which are unpredictable or are unforeseen, that cause financial crisis proper regulations can play a major role in averting the likelihood of financial crisis. Kenya has encountered various banking crisis since 1986 culminating in major bank failures (37 failed banks as at 1998) following the crises of 1986-1989, 1993/1994, 1998 and 2003 and consequently 2015. It is quite unfortunate that this crisis have occurred even after the government has formulated policies to curb banking crisis. Whilst it is clear that the occurrence of banks collapsing has reduced with the implementation of various legislations, it is also true that Kenya has continued to experience bouts of bank's collapsing. This study sought to evaluate the impact of regulations on banes stability whilst seeking to investigate other extraneous factors that cause the banking crisis. The study investigated and sought to ascertain why despite several legislations and guiding principles being introduced in the Banking sector, Kenya continues to experience banking crisis. The study was involve an analysis of the effect of banking regulations on banking crisis and seek to ascertain the role of regulations in reducing the occurrence of a crisis. It was guided by public interest theory of regulation and self-interest theory of regulation. These theories show the relevance, appropriateness and the relationship between the postulations of the theory and the principles of the proposed research. The study revealed that there is variation in terms of financial crisis and this was attributed by changes in corporate governance, capital requirement, credit risk management and liquidity Management. The study recommended that commercial banks should comply fully with the stipulated regulations and the Central Bank must ensure that all banks comply. This will have the effect of ensuring a stable banking sector which plays a big role in the economy.