Browsing by Author "Kariuki, Grace"

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    Audit Committee and Financial Performance of Deposit Taking Saving and Credit Cooperative Organisations in Nairobi City County, Kenya
    (IAJEF, 2024-11) Muturi, Jane Wanjiru; Kariuki, Grace
    Savings and Credit cooperatives (SACCOs) are important players in financial intermediation and a critical indicator of how well society will fare in the future. Deposittaking SACCOs in Kenya have been facing challenges related to financial mismanagement, fraudulent activities, and inadequate internal controls, which have jeopardized the safety and stability of these institutions. The financial performance of the SACCO sector is very weak and spread weakness to other areas, the independence, composition and technical skills of the audit committees which has often been compromised by both internal and external forces of the institutions. This study therefore1 sought to establish the effect of audit committee on financial Performance of deposit taking Saccos in Nairobi City County, Kenya. The specific objectives were the effect of audit committee independence; audit committee expertise and audit committee diversity on the financial performance of deposit taking SACCOs in Nairobi City County, Kenya. The underpinning theories of th1 study included agency theory, institutional theory and stakeholder theory. In this study, descriptive research design was adopted. The target population of this study was all deposit taking SACCOs. The unit of observation was 43 licensed deposit taking SACCOs are operating in1 Nairobi City County. The1 unit of analysis was 258 respondents1 comprising of Chief Executive1 Officers (CEOs), and audit committee1 members. The sample size of 157 respondents was attained using stratified random sampling and simple random sampling techniques. Primary data was obtained using questionnaires, which were emailed to the1 respondents. Inference from test score to a large domain of items similar to those of test is drawn using content validity which was used in this study. In order to check for reliability, the research used Cronbach alpha. The research used diagnostic tests such as stationarity test/ unit root test, normality test, multicollinearity test, autocorrelation1 test, Hausman test and heteroscedasticity test. This study utilized the descriptive and inferential statistics. Quantitative data was descriptively analyzed by use of measures of central tendencies and measures of dispersion. The measure of central tendency was the arithmetic mean while standard deviation was the measure of dispersion for data obtained from interval scales and ratio scales. Multiple regression analysis was used to analyze inferential data. The study information was displayed in tables. Throughout the research exercise, ethical principles were observed in the constitutional rights1 of every person and as such informed consent was sought from the respondents and was assured of confidentiality of the data and information to be collected. The study found that the board ensures a balanced representation of independent directors on the audit committee. The study found that it was uncertain whether there are mechanisms to ensure the independence of each committee member, and tenure limits ensure a continuous infusion of fresh ideas and skills. The study found that there is open and effective communication between the audit committee and external auditors. The study also found that audit committee meetings are not held with regular frequency. Moreover, the research found that the role of the audit committee in managing risks associated with the size of the SACCO’s loan portfolio is crucial. The research concluded that audit committee expertise had the greatest effect on the financial performance of deposit taking Saccos in Nairobi City County, Kenya, followed by audit committee independence, then audit committee meetings, then audit committee diversity while audit committee diligence had the least effect to the financial performance of deposit taking Saccos in Nairobi City County, Kenya. Moreover, it was concluded that the significant relationship between audit committee and financial performance of Deposit Taking Saccos in Nairobi City County depends on size of the Sacco. The study recommended that there is need to strengthen audit committee independence by implementing fixed terms for committee members. To boost audit committee expertise, the study suggested that targeted training programs should be provided, focusing on the specific challenges and risks inherent in the SACCO sector.
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    Financial Risk Hedging and Financial Performance of Commercial Banks Listed in Nairobi Securities Exchange, Kenya
    (Journal of Finance and Accounting, 2025-01) Mohamud, Ahmed Mohamed; Kimutai, Carolyne; Kariuki, Grace
    In Kenya, financial institutions play a vital role in economic development by facilitating investments through receiving and lending funds, but they face market-driven financial risks that impact their performance, including a decline in Return on Assets over the past decade. This study aimed to determine the relationship between financial risk hedging techniques and the financial performance of Kenyan commercial banks listed on the Nairobi Securities Exchange (NSE). The study's specific objectives included forward contract, future contract, currency diversification of currencies, and swaps hence bank size is used as moderating variables. The agency theory, profit maximization theory, and enterprise risk management theory supported the study, providing a theoretical foundation for exploring the relationship between financial risk hedging and the financial performance of publicly traded commercial banks in Kenya. A descriptive correlational approach was adopted to target all publicly traded commercial banks in Kenya, with a census conducted to ensure comprehensive coverage. Secondary data was collected annually over a five-year period (2017–2021) from publications by the Nairobi Securities Exchange and the respective commercial banks, utilizing a structured data collection form. Diagnostic tests, including normality, multicollinearity, heteroscedasticity, and stationarity, were performed, confirming that the data met the required assumptions for analysis. The data was subsequently transformed to ensure that regression analysis could be conducted without producing spurious results. Descriptive statistics were summarized using means and standard deviations, while correlation and regression analyses were employed to test the hypotheses and draw meaningful conclusions. The correlation analysis revealed that using forward contracts as a hedging strategy has a strong positive and significant impact on financial performance. The futures, swaps, and currency diversifications also they had positive correlation against financial performance, and they had significant relationship. The regression study revealed a strong positive link between risk hedging and financial success, indicating a noteworthy correlation. Forward and future contracts were revealed to be risk-hedging approaches with significant effects on commercial bank financial performance, implying that currency diversification and swaps had a positive and significant effect on financial performance. Size had a strong favorable impact on the link between risk hedging and financial performance. The study recommends that bank executives and stakeholders should adopt robust risk management approaches and diversification strategies to enhance financial performance and stability in the banking sector. The Central Bank of Kenya (CBK) should regulate high-risk financial hedging products and require banks to disclose their use of financial derivatives, while the government should create supportive policies to promote these tools, ultimately strengthening financial institutions and fostering economic growth.
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    Financial Risk Hedging and Financial Performance of Commercial Banks Listed in Nairobi Securities Exchange, Kenya
    (Journal of Finance and Accounting, 2025-01) Mohamud, Ahmed Mohamed; Kimutai, Carolyne; Kariuki, Grace
    In Kenya, financial institutions play a vital role in economic development by facilitating investments through receiving and lending funds, but they face market-driven financial risks that impact their performance, including a decline in Return on Assets over the past decade. This study aimed to determine the relationship between financial risk hedging techniques and the financial performance of Kenyan commercial banks listed on the Nairobi Securities Exchange (NSE). The study's specific objectives included forward contract, future contract, currency diversification of currencies, and swaps hence bank size is used as moderating variables. The agency theory, profit maximization theory, and enterprise risk management theory supported the study, providing a theoretical foundation for exploring the relationship between financial risk hedging and the financial performance of publicly traded commercial banks in Kenya. A descriptive correlational approach was adopted to target all publicly traded commercial banks in Kenya, with a census conducted to ensure comprehensive coverage. Secondary data was collected annually over a five-year period (2017–2021) from publications by the Nairobi Securities Exchange and the respective commercial banks, utilizing a structured data collection form. Diagnostic tests, including normality, multicollinearity, heteroscedasticity, and stationarity, were performed, confirming that the data met the required assumptions for analysis. The data was subsequently transformed to ensure that regression analysis could be conducted without producing spurious results. Descriptive statistics were summarized using means and standard deviations, while correlation and regression analyses were employed to test the hypotheses and draw meaningful conclusions. The correlation analysis revealed that using forward contracts as a hedging strategy has a strong positive and significant impact on financial performance. The futures, swaps, and currency diversifications also they had positive correlation against financial performance, and they had significant relationship. The regression study revealed a strong positive link between risk hedging and financial success, indicating a noteworthy correlation. Forward and future contracts were revealed to be risk-hedging approaches with significant effects on commercial bank financial performance, implying that currency diversification and swaps had a positive and significant effect on financial performance. Size had a strong favorable impact on the link between risk hedging and financial performance. The study recommends that bank executives and stakeholders should adopt robust risk management approaches and diversification strategies to enhance financial performance and stability in the banking sector. The Central Bank of Kenya (CBK) should regulate high-risk financial hedging products and require banks to disclose their use of financial derivatives, while the government should create supportive policies to promote these tools, ultimately strengthening financial institutions and fostering economic growth.
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    The Nexus between Working Capital Management Practices and the Financial Performance of Service Sector Small and Medium sized Enterprises (SMEs) in Nairobi City County, Kenya
    (Journal of Finance and Accounting, 2023) Oyoo, Paul Odero; Kariuki, Grace
    Working capital management practices play key roles in the financial performance of organizations. Firms that endeavor to enhance their financial performance strategize on working capital management to improve on cash flow management and earnings quality through efficient use available resources. Scholarly interest on how SMEs can enhance their financial performance through effective working capital management practices has continued to increase due to the significant contribution of the service sector SMEs to the growth of economies around the world. Nevertheless, empirical research linking working capital management practices and the financial performance of service sector SMEs in Nairobi City County is inadequate. The current study sought to investigate the nexus between working capital management practices and the financial performance of service sector SMEs in Nairobi City County, Kenya. The study was anchored by two theories, including, capital budgeting theory and the pecking order theory. The study adopted a correlational research design and targeted a population of 4,857 SMEs owners, managers, or their equivalents from which a sample of 370 participants were selected to participate in the study. The Statistical Package for Social Sciences (SPSS) was used to analyze descriptive and inferential statistics. The study findings confirmed a positive and statistically significant relationship between working capital management practices and the financial performance of sector SMEs in Nairobi City County, Kenya. The study findings may be helpful in informing favorable policy formulation and economic environment conditions that the county and national government can provide to SME firms for enhanced performance.