Analysis Of Factors Affecting Investment Decisions Of Commercial Banks

The banking industry like any other in the other sectors has tremendously gone through a lot of changes in the recent time. In Kenya there has been a sporadic move of some banks closing branches in the last decade with numerous other banks opening up new branches. This pattern of investment of expansion while others are closing opens up a vast field of study on the factors that managers consider when making up investment decisions. The trick to investing in risky investment options and still making money from them is to have a diversified investment portfolio e.g. having the same product line but in varied markets. Instead of just concentrating on one financial market, you can invest in a number of financial markets at a time. Within one financial market there is a greater possibility that there are hundreds of investment options. Diversification of organisational funds helps in such a manner that if a particular fund performs poorly, one does not need to worry much as there will be some other funds that must have performed well. This would imply that a balance in your earning will be maintained and one does not feel the pinch of the poorly performing fund.