Research Papers (RP)

Permanent URI for this community

https://repository.ku.ac.ke/handle/123456789/1282

Browse

Now showing 1 - 13 of 13

Credit Risk and Financial Performance of Fully Fledged Islamic Banks in Kenya
(International Journal of Managerial Studies and Research, 2023) Ibrahim, Shukri Abshir; Gatauwa, James; Abdul, Farida
Islamic banks must carefully analyze the loans granted in order for them to get back the loans as per the agreements. The aim of this study was to assess how credit risk affects financial performance of Islamic Banks in Kenya. The agency theory and the modern portfolio theory guided the inquiry. Descriptive research design was embraced targeting 3 commercial banks offering Islamic products in Kenya and census was used. Secondary cross sectional quarterly data on particularly loan loss provisions and total loans was collected although other associated data on total liquid assets, total deposits, loan loss provisions, total loans, exchange rates fluctuation, total employee expenses, number of employees and net income was collected for the period 2017 all through to 2021 to help augment the results. Three regression models were used to estimate the link between Islamic banking risk, bank size and financial performance. It emerged that credit risk (r=0.463, β= -0.249, p<0.05), significantly affect financial performance of Islamic banks in Kenya. It was recommend that the credit managers of the Islamic banks in Kenya should review the existing credit risk management framework and mechanisms to manage the increasing trend in NPLs.
Determinants of Average Lending Rates among Selected Commercial Banks in Kenya
(International Academic Journals, 2018) Itimu, Samuel Mwaura; Abdul, Farida
Despite liberalization of Kenya’s financial sector in 1991, Kenya has become less competitive in terms of affordability of financial services and access to loans compared to countries such as South Africa and Malaysia whose private sector credit to GDP ratio are above 100 percent compared to Kenya’s private sector lending which stands at 40% of GDP. Financial sector liberalization has led to increased financial services access as evidenced by CBK data where 26.4% of the population in 2006 could access financial services compared to 66.9% in 2013(CBK) Newsletter No.1 December 2014.This remarkable growth is as a result of financial innovation including mobile banking, agency banking and credit information sharing which has translated to economic growth but has not led to matched increased access to credit. High cost of credit and operational inefficiency among commercial banks in Kenya limits the access of loans to the private sector and individuals which ultimately slows economic growth and development. The study is on the probable determinants of average lending rates among commercial banks in Kenya which include Bank Specific factors such as Non-performing loans, Operating costs, capital adequacy, and Bank size and liquidity risk. Also industry factors such as Kenya Banks Reference Rate and Central Bank Rate are included in the study. The effect of Credit information Sharing and Government Domestic borrowing on lending rates among commercial banks and intervening variable inflation be studied. The study employed a descriptive research design and the population consisted of eleven listed commercial Banks in Kenya. The Target population was staff of the eleven listed banks working in Credit and Risk and Compliance departments. A sample size of 33 was derived from three staff from credit and risk and compliance departments of each of the listed commercial banks in Kenya. Purposive sampling technique was used to collect data. Secondary data was collected from published journals and financial statements. The financial statements for the year 2012, 2013, 2014, 2015 and 3rdquarter of 2016 were used. Correlation and multiple regression analysis was used to analyze the nature and degree of relationship between the independent and dependent variables. Statistical package for social sciences was utilized to aid in data analysis. Summary of findings on the objectives was done, conclusion and recommendations to various stakeholders made.
Determinants of Average Lending Rates among Selected Commercial Banks in Kenya
(2018) Itimu, Samuel Mwaura; Abdul, Farida
Despite liberalization of Kenya’s financial sector in 1991, Kenya has become less competitive in terms of affordability of financial services and access to loans compared to countries such as South Africa and Malaysia whose private sector credit to GDP ratio are above 100 percent compared to Kenya’s private sector lending which stands at 40% of GDP. Financial sector liberalization has led to increased financial services access as evidenced by CBK data where 26.4% of the population in 2006 could access financial services compared to 66.9% in 2013(CBK) Newsletter No.1 December 2014.This remarkable growth is as a result of financial innovation including mobile banking, agency banking and credit information sharing which has translated to economic growth but has not led to matched increased access to credit. High cost of credit and operational inefficiency among commercial banks in Kenya limits the access of loans to the private sector and individuals which ultimately slows economic growth and development. The study is on the probable determinants of average lending rates among commercial banks in Kenya which include Bank Specific factors such as Non-performing loans, Operating costs, capital adequacy, and Bank size and liquidity risk. Also industry factors such as Kenya Banks Reference Rate and Central Bank Rate are included in the study. The effect of Credit information Sharing and Government Domestic borrowing on lending rates among commercial banks and intervening variable inflation be studied. The study employed a descriptive research design and the population consisted of eleven listed commercial Banks in Kenya. The Target population was staff of the eleven listed banks working in Credit and Risk and Compliance departments. A sample size of 33 was derived from three staff from credit and risk and compliance departments of each of the listed commercial banks in Kenya. Purposive sampling technique was used to collect data. Secondary data was collected from published journals and financial statements. The financial statements for the year 2012, 2013, 2014, 2015 and 3rdquarter of 2016 were used. Correlation and multiple regression analysis was used to analyze the nature and degree of relationship between the independent and dependent variables. Statistical package for social sciences was utilized to aid in data analysis. Summary of findings on the objectives was done, conclusion and recommendations to various stakeholders made.
Determinants of Average Lending Rates among Selected Commercial Banks in Kenya
(International Academic Journals, 2018) Itimu, Samuel Mwaura; Abdul, Farida
Despite liberalization of Kenya’s financial sector in 1991, Kenya has become less competitive in terms of affordability of financial services and access to loans compared to countries such as South Africa and Malaysia whose private sector credit to GDP ratio are above 100 percent compared to Kenya’s private sector lending which stands at 40% of GDP. Financial sector liberalization has led to increased financial services access as evidenced by CBK data where 26.4% of the population in 2006 could access financial services compared to 66.9% in 2013(CBK) Newsletter No.1 December 2014.This remarkable growth is as a result of financial innovation including mobile banking, agency banking and credit information sharing which has translated to economic growth but has not led to matched increased access to credit. High cost of credit and operational inefficiency among commercial banks in Kenya limits the access of loans to the private sector and individuals which ultimately slows economic growth and development. The study is on the probable determinants of average lending rates among commercial banks in Kenya which include Bank Specific factors such as Non-performing loans, Operating costs, capital adequacy, and Bank size and liquidity risk. Also industry factors such as Kenya Banks Reference Rate and Central Bank Rate are included in the study. The effect of Credit information Sharing and Government Domestic borrowing on lending rates among commercial banks and intervening variable inflation be studied. The study employed a descriptive research design and the population consisted of eleven listed commercial Banks in Kenya. The Target population was staff of the eleven listed banks working in Credit and Risk and Compliance departments. A sample size of 33 was derived from three staff from credit and risk and compliance departments of each of the listed commercial banks in Kenya. Purposive sampling technique was used to collect data. Secondary data was collected from published journals and financial statements. The financial statements for the year 2012, 2013, 2014, 2015 and 3rdquarter of 2016 were used. Correlation and multiple regression analysis was used to analyze the nature and degree of relationship between the independent and dependent variables. Statistical package for social sciences was utilized to aid in data analysis. Summary of findings on the objectives was done, conclusion and recommendations to various stakeholders made.
Firm Characteristics and Non-Performing Loans of Commercial Banks in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2020) Ngungu, Winfred Ndanu; Abdul, Farida
Banking in Kenya and the financial services in general have been identified as a pillar to achieving 2030 Vision. Banking facilitates macro-economic steadiness for long-term development which will transform Kenya to a middle economy country. The growing level of nonperforming loans among Kenyan banks has been a source of concern to all stakeholders. This research ascertained the impacts of firms-characteristics on nonperforming loans of Kenya’s banks. The specific objectives were to assess the effect on liquidity, capital adequacy and bank size on non-performing loans of Kenyan banks. In addition, the research examined the moderating impact of interest rate on the relationship between firms’ characteristics and non-performing loans of Kenyan banks. The research relied on market power, agency, liquidity preference and capital buffer theories. Causal design was utilized in this research. The targeted population was 40 banks that were operational from 2013 to 2017. The study used a census approach. Secondary data was gathered from the audited financials of these banks. Diagnostics tests were done for multicollinearity, stationarity and hausman. Data analysis was done based on descriptive analysis and panel regression analysis. The findings from the panel regression analysis indicated that liquidity had insignificant effect on non-performing loans of commercial banks in Kenya. Capital adequacy had a significant effect on non-performing loans of commercial banks in Kenya. Bank size had a significant effect on non-performing loans of commercial banks in Kenya. Additionally, the study findings revealed that interest rate had no significant effect on the relationship between firm characteristics and non-performing loans of commercial banks in Kenya. The study recommended that bank managers should be cautious when granting loans to customers by scrutinizing each application for credit regardless of the levels of liquidity held by banks. The study also recommended that banks with larger assets can consider other investment options to diversify against the effect of high loan defaults.
Intervening Effect of Corporate Performance on the Relationship between Investment Incentives and Effective Corporate Tax Rate for Manufacturing Firms in Kenya
(The Strategic Journal of Business & Change Management, 2024-01) Nganyi, Silas Muyela; Koori, Jeremiah; Abdul, Farida
Effective corporate tax rate remain a subject of interest to firms, policy makers and researchers. It measures real level of tax burden imposed by national tax system at firm level. The main problem is how to reduce it at firm level. To address this, government across the world implement various investment incentive framework aimed at lowering effecting corporate tax rate. The intention of low effective corporate tax rate is to influence investments, facilitate capital formation, increase productivity and grow firms. However, effective corporate tax rate in Kenya is still a problem averaging 31.3 percent for the last 10 years and has not been declining towards zero as recommended by the World Bank. Such high effective corporate tax rate militates against desired competitive corporate environment for the manufacturing sector. The manufacturing sector in Kenya has deteriorated to 7.4 percent contribution to gross domestic product which is less than 15 percent as envisaged in Kenya Vision 2030. This undesirable phenomenon therefore prompted the design of this study. The objective of the study was to determine the intervening effect of corporate performance on the relationship between investment incentives and effective corporate tax rate for manufacturing firms in Kenya. The theories underpinning this study were optimal corporate taxation, political power and neoclassical investment. The study adopted positivist philosophy and longitudinal research design. The target population was 1,092 firms registered with Kenya Association of Manufacturers. Stratified random sample of 278 firms provided secondary data for the period 2010 to 2020. Descriptive and inferential statistics were generated using panel data regression analysis. The intervening model was analysed at significance level of 5 percent. The findings established that corporate performance had intervening effect on the relationship between investment incentives and effective corporate tax rate. It was recommended that both the National Treasury and manufacturing firms should have a robust financial framework for monitoring and evaluation of how effective corporate tax rate responds to investment incentives and corporate performance. The study added to finance knowledge that fiscal policy affects corporate operations.
Intracompany Loan and Financial Performance of Manufacturing Firms in Rwanda
(Stratford Peer Reviewed Journal and Book Publishing, 2020) Omwoyo, Edinah Kwamboka; Abdul, Farida; Ngaba, Dominic
The manufacturing sector in Rwanda contributes to less than 5 percent of the GDP (UNECA, 2015). The financial performance of manufacturing companies in Rwanda has been declining over the years. This might bedue to low intracompany loans, thus formed the justification of the study. For instance, Cimerwa, the largest cement manufacturing company in the country, made a net loss of Rwf 7.4 million in 2016, Rwf 5.5 million in 2017 and further Rwf 7.1 million in 2018. The reviewed empirical literature had mixed results. Some studies revealed that intracompany loans positively affect financial performance, while other studies showed a negative effect. Based on this background, the study sought to examine the effect of intracompany loan on financial performance of the manufacturing firms in Rwanda. The study was anchored on pecking order theory. The target population was 32 manufacturing firms. . The data was collected from 2015 to 2019. The findings of the study revealed that a positive association existed between intracompany loans and financial performance. Based on the regression analysis, it was found that intracompany loans had a positive and significant effect on return on investment (β=0.956415, p=0.001). The study recommended that intracompany loans need to be increased between a subsidiary and parent company. The terms and conditions of payment of a given loan between a subsidiary and parent company need to be made more friendly and promising than a loan taken from other lenders.
Investment Incentives and Effective Corporate Tax Rate for Manufacturing Firms in Kenya
(Canadian Center of Science and Education, 2024-01) Nganyi, Silas Muyela; Koori, Jeremiah; Abdul, Farida
Effective corporate tax rate is a finance subject of interest to firms, policy makers and researchers. It measures level of tax burden at firm level. Thus, governments implement various investment incentives to influence effective corporate tax rate. The effective corporate tax rate in Kenya is still a problem averaging 31.3 percent for the last 10 years. Such high effective corporate tax rate militates against desired competitive corporate environment for the manufacturing sector. In the last ten years, the manufacturing sector has deteriorated to 7.4 percent contribution to gross domestic product which is less than 15 percent as envisaged in Kenya Vision 2030. This undesirable phenomenon prompted design of this study. The objective of the study was to determine the effect of investment incentives on effective corporate tax rate. The study adopted positivist philosophy and longitudinal research design. A sample of 278 firms provided secondary data for the period 2010 to 2020. Descriptive and inferential statistics were conducted using panel data regression. The study established that investment incentives are statistically significant predictors of effective corporate tax rate for manufacturing firms in Kenya. The study recommends that public policy makers should design appropriate profit based, capital investment and custom duty incentives as part of fiscal policy instruments to grow firms involved in manufacturing. The study has added to finance knowledge that fiscal policy affects corporate operations. However, there is need for further investigation on other possible investment incentives that were not covered in this study that influence effective corporate tax.
Investment Incentives and Effective Corporate Tax Rate for Manufacturing Firms in Kenya
(International Journal of Economics and Finance, 2024-01-10) Nganyi, Silas Muyela; Koori, Jeremiah; Abdul, Farida
Effective corporate tax rate is a finance subject of interest to firms, policy makers and researchers. It measures level of tax burden at firm level. Thus, governments implement various investment incentives to influence effective corporate tax rate. The effective corporate tax rate in Kenya is still a problem averaging 31.3 percent for the last 10 years. Such high effective corporate tax rate militates against desired competitive corporate environment for the manufacturing sector. In the last ten years, the manufacturing sector has deteriorated to 7.4 percent contribution to gross domestic product which is less than 15 percent as envisaged in Kenya Vision 2030. This undesirable phenomenon prompted design of this study. The objective of the study was to determine the effect of investment incentives on effective corporate tax rate. The study adopted positivist philosophy and longitudinal research design. A sample of 278 firms provided secondary data for the period 2010 to 2020. Descriptive and inferential statistics were conducted using panel data regression. The study established that investment incentives are statistically significant predictors of effective corporate tax rate for manufacturing firms in Kenya. The study recommends that public policy makers should design appropriate profit based, capital investment and custom duty incentives as part of fiscal policy instruments to grow firms involved in manufacturing. The study has added to finance knowledge that fiscal policy affects corporate operations. However, there is need for further investigation on other possible investment incentives that were not covered in this study that influence effective corporate tax.
Loan Restructuring and Financial Performance of Commercial Banks in Kenya
(Journal of Accounting and Finance, 2024) Makui, Risper Siroma; Abdul, Farida; Musau, Salome
The study sought to evaluate the influence of corporate restructuring on the performance of commercial banks in Kenya. The financial performance of Kenyan banking institutions has been improving over the last five years. However, there was a reported decline in profitability in 2020, dropping from 159.1 billion shillings to 112.1 billion shillings. The specific objectives were to determine the effects of loan restructuring, non-interest income restructuring, financial technology restructuring, and the moderating role of bank size in the relationship between corporate restructuring and financial performance. The study was based on four theories: the technology acceptance model, financial intermediation theory, agency theory, and profit maximization theory. It adopted a causal research design and included 40 commercial banks operating in Kenya as of December 31, 2020, as the population. Secondary data collected from the Central Bank of Kenya covered a two-year period from January 2020 to December 2021. The data analysis included the use of descriptive statistics and panel regression analysis. Diagnostic tests were also performed to confirm that the assumptions required for regression analysis were satisfied. The findings revealed that loan restructuring, non-interest income restructuring, and financial technology restructuring all had a positive and statistically significant impact on the financial performance of commercial banks in Kenya. However, bank size did not moderate the relationship between corporate restructuring and financial performance. In conclusion, corporate restructuring significantly influenced the financial performance of commercial banks in Kenya. Based on the findings, the study recommends that banking institutions should enhance their use of technology in banking services. Commercial banks can develop secure and tamper-proof banking applications with robust security measures. Additionally, they can leverage technology to assess customers' creditworthiness based on personal information. Finally, commercial banks should consider diversifying their operations to improve their overall performance.
Post-Merger Commercial Bank Performance Trends: A Case of Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2024) Oira, Sammy Machoka; Omagwa, Job; Abdul, Farida
Commercial banks face performance challenges since most of them react to these challenges in a fairly standardized manner. This is because most of the commercial banks offer similar products and services. In so doing, they face high competitions and as a result, they engage activities in pursuit of a competitive edge in order to keep their current customers and attract new ones. Some of the strategic activities these companies have engaged in the recent past have been Mergers and acquisitions (M&A). M&A have become an effective strategic tool to consolidate the Banks and Financial Institutions (BFIs) in Kenya to increase their capital base, expand their business, and bring financial stability. However, despite venturing into mergers and acquisitions, evidence from elsewhere indicates that financial performance stability and improvement still remains a challenge forming a good basis for further empirical investigation. This paper provides an assessment of the post-merger commercial bank performance in Kenya over the period 2008 to 2019 using return on equity as a proxy for bank performance. The target population for this study comprised all 13 commercial banks operating in Kenya between the year 2008 and the year 2019. The study used purposive sampling to select thirteen (13) commercial banks that had undergone mergers and acquisitions in Kenya over eleven years (from 2008 to the year 2019). The study finds that the post-merger effect of mergers and acquisitions on financial performance is mixed. Some commercial banks reported improved ROEs while a few reported declining ROEs during the study period. To enhance performance, the study recommended that commercial banks should prioritize M&A opportunities that align with their long-term strategic goals. This might include expanding into new geographic regions, entering new markets, diversifying product offerings, or gaining access to new technologies. Banks should assess the potential risks associated with the M&A transaction, including credit risk, operational risk, and reputational risk. Develop strategies for mitigating these risks and ensuring a smooth transition.
The Link between Financial Synergy and Financial Performance of Commercial Banks: A Case of Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2023-11) Oira, Sammy Machoka; Omagwa, Job; Abdul, Farida
Despite the significance of commercial banks in Kenya, their financial performance has been fluctuating over the last decade. The overall trend of financial performance (measured by Return on Equity in year 2018 to year 2022) has been inconsistent and largely erratic, with the lowest ratio recorded being 14.1% in 2018: this improved slightly in year 2019 then rose to 14.9% before dropping to 13.9% in 2020. The highest Return on Equity (at 25.6%) was recorded in the year 2022. Although the banking sector has documented growth in Assets, financial performance (in terms of Profitability) has been declining in the recent past. Empirical evidence linking financial synergy and financial performance of commercial banks documents mixed results on the nature and type of relationships. However, it remains an issue for further empirical investigation as to whether financial synergy has a significant effect on the financial performance of commercial banks in Kenya. Hence, the study sought to assess the relationship between financial synergy and financial performance of commercial banks in Kenya. The theories underpinning the study are: synergistic mergers theory and tax incentive hypothesis theory. The target population comprised 13 commercial banks which had undergone mergers and acquisitions in Kenya over the 11-year time scope (2008-2019). Positivism research philosophy and explanatory research design were adopted. The study was a census of the 13 Commercial banks. Panel data was used-the data was obtained from the audited financial statements, and Central Bank of Kenya supervisory reports. The study finds a positive and significant link between financial synergies and financial performance (P = 0.001). In view of the findings, the study recommends that institutions critically evaluate the overall business and operational compatibility of the merging institutions and focus on capturing long-term financial synergies, as this has a positive effect on financial performance.
The Relationship between Operational Synergy and Firm Performance: A Review of Literature
(Stratford Peer Reviewed Journals and Book Publishing, 2023-08) Oira, Sammy Machoka; Omagwa, Job; Abdul, Farida
Theoretical and empirical evidence has documented erratic and fluctuating firm performance amongst financial firms worldwide and across different economic sectors. The need to stabilize firm performance has instigated a variety of corporate reorganization strategies including Mergers and Acquisitions. However, theoretical and empirical literature has not been quite categorical on the link between operational synergies (arising from Mergers and Acquisitions) and firm performance. Firms have increasingly inclined towards operational synergy to enhance firm performance. Operational synergy has consistently improved firm performance outcomes in most firms. However, while numerous studies have examined the relationship between operational synergy and performance, there exists a need to synthesize and consolidate the findings across diverse contexts and economic sectors. Hence, the purpose of this review was to determine the relationship between operational synergy and firm performance via desktop review. The study was informed by three theories; The Theory of Misvaluation, The Hubris Theory and Stakeholder Theory. The review adopted a positivist research philosophy and desktop review design via evidence-based approach. The Study Documents that operational synergy has a significant effect on firm performance. Additionally, the review finds that firms which actively pursue operational synergy strategies exhibit improved financial performance, cost reduction, streamlined processes, and higher customer satisfaction. The study further finds that firms which successfully achieve operational synergy, particularly through mergers and acquisitions, have a tendency to outperform their competitors financially, with improved profitability, cost efficiency, and overall financial performance. Hence, the study recommends that firms should prioritize the development and implementation of strategies that foster operational synergy such as promoting a culture of collaboration, communication, and integration across different operational functions.

Browse

Browsing Research Papers (RP) by Author "Abdul, Farida"

Results Per Page

Sort Options