Browsing by Author "Makori, Daniel"

Now showing 1 - 11 of 11
  • Thumbnail Image
    Item
    Audit Firm Characteristics and Audit Quality for Firms Listed at the Nairobi Securities Exchange in Kenya.
    (International Academic Journals, 2018) Mugo, Eliud Munene; Makori, Daniel
    There have been numerous financial scandals and audit reporting failures in both public and private organizations some of which are listed in the NSE which has led Companies in various sector of the economy to experience financial distress; that is circumstances in which a company cannot meet its current obligations using operating cash flows and it is therefore faced with the need to employ corrective measures. Such distresses have been occasioned by professional misconduct while handling financial accounts and consequently raising doubts on auditing profession. Consequently, a lot of questions have been raised about the auditing profession in Kenya. Much of the concerns are about reduced quality audit and independence of auditors and especially the Big 4. This study therefore sought to establish the effect of audit firm characteristics on audit quality of firms listed in the Nairobi Securities Exchange. This study aimed to investigate the joint effect of audit firm tenure, auditor reputation, auditor independence and auditor professional competence and due care on quality audit of firms listed in the Nairobi Securities Exchange in Kenya. The study was anchored on the agency theory, role theory and audit expectation gap and the signaling effect theory. A descriptive research design was used. The researcher used primary and secondary data for a period of five years between 2011 and 2015. Primary data was collected using structured questionnaires issued to selected respondents and secondary data was derived from audited and published financial statement for the listed companies in the Nairobi Securities Exchange and the NSE, CMA and other relevant websites and recorded in a data collection sheet. A population of 67 listed firms was the object of study out of which 33 firms were selected using purposive sampling technique. This sample was approximately 50%. Inferential statistics like correlation analysis and multiple regression analysis were used to measure and analyze the results of the study which was analyzed and presented in form of statements and tables. The researcher applied high ethical standards to ensure no information is misrepresented and citations made accordingly. SPSS package version 7.0 was used to analyze the data. The findings and conclusions focused on effects the independent variables have on quality audit for selected firms listed in the NSE in Kenya. The recommendations thus enables audit firms, clients, all users of financial information and investors to have in-depth knowledge of firm characteristics that allow objective financial reporting and sound investment decision making. The study found that firms allowed quality audit work to be carried out because of strong commitment and dedication to management role and profession in the organization, that management ensured that there was no personal relationship with the auditors that would lead to familiarity threats and compromise their independence, that duration in years and rotation of auditor or lead partner greatly affect quality audit for firms and that auditors have the required academic qualifications to be professional auditors. The study concluded that audit tenure activities had the greatest effect on the influence of stakeholder activities on audit quality, followed by auditor reputation, then auditor independence then auditor professional competence while disciplinary measures had the least effect on audit quality. The study recommends that there is need to increase the proportion of independent auditors since an increase in their number reduces the chances of financial misreporting and leads to positive perception by investors and that there should be high level of professionalism by the audit firms.
  • Thumbnail Image
    Item
    Camel Financial Indicators and Performance of Tier Three Commercial Banks in Kenya
    (Stratford Peer Reviewed Journals and Book Publishing Journal of Finance and Accounting, 2024-11) Ngatia, James; Makori, Daniel; Theuri, Joseph
    Tier three banks are vital to the Kenyan economy by promoting competition and ensuring efficiency in the banking sector. Despite their importance, recent statistics indicate poor performance among these banks, possibly due to their financial practices. However, limited research exists on how the CAMEL approach affects their financial performance. This study addressed this gap by analyzing the financial performance of Kenya’s tier three commercial banks through CAMEL factors, namely; capital adequacy, asset quality, management, earning ability, and liquidity. The study was guided by the Free Banking Theory, Agency Theory, Capital Buffer Theory, and Transactional Cost Theory. An explanatory research design was adopted, with a focus on 18 tier three commercial banks. Secondary panel data were collected from the banks' records over a period of ten years (2014-2021). The regression results revealed a coefficient of determination (R-squared) of 0.6918, indicating that 69.18% of the variance in financial performance (ROA) is explained by the CAMEL variables. The analysis identified that Capital Adequacy, Asset Quality, Management Quality, and Liquidity significantly affect the financial performance of tier-three commercial banks, while Earnings Ability did not show a statistically significant effect. The study further examined the moderating effect of Ownership Identity on the CAMEL-ROA relationship, but the findings indicated that it does not enhance the predictive power of the model. Consequently, Ownership Identity was ruled out as a significant moderator. The study concludes that the CAMEL framework is essential for assessing the financial health of tier-three commercial banks in Kenya, emphasizing the importance of strong capital adequacy, liquidity, and management quality for profitability. The study recommends that bank management prioritize these CAMEL components while policymakers should create supportive regulatory frameworks and further research should explore additional performance indicators and potential moderators affecting financial performance.
  • Thumbnail Image
    Item
    Credit Factors and Loan Accessibility in Deposit-Taking Savings and Credit Cooperative Organizations in Kenya
    (INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH (IJARKE Business & Management Journal), 2024) Njoroge, Elizabeth Wambui; Makori, Daniel
    Savings and Credit Cooperative Societies (SACCOs) are pivotal in enhancing financial inclusion in Kenya, particularly among low-income and rural communities, by providing credit and savings services. Despite the growth of Deposit-taking SACCOs (DT-SACCOs), recent surveys show a decline in loan accessibility. This study investigates how critical credit terms impact loan accessibility in licensed DT-SACCOs in Kenya, utilizing theories including agency theory and financial theory. The research objectives include evaluating the effects of product range, collateral requirements, product characteristics, and lending procedures on loan accessibility. Using a descriptive research design, data was collected from 122 credit managers of DT SACCOs. Analysis involved descriptive and inferential statistics, with MS Excel and SPSS. The study found that changes in product range, collateral requirements, product characteristics, and lending procedures significantly affect loan accessibility in DT-SACCOs. It recommends SACCO management invest in product innovation, conduct regular market research, and offer flexible repayment periods to better meet the needs of clients. This includes providing tailored products like business and agriculture loans, understanding customer preferences, and ensuring loan repayment terms are manageable for borrowers.
  • Thumbnail Image
    Item
    Credit Information Sharing and Financial Performance of Commercial Banks in Kenya
    (International Academic Journals, 2018) Omar, Abdirahman Kassim; Makori, Daniel
    Empirical studies done on the area of credit information sharing and its effect on financial performance of commercial banks in Kenya have not been conclusive. Information sharing in the credit market is a relatively new concept in most Kenya and other emerging economies. Credit information systems are still in their infancy, and information sharing among banks remains weak. Credit reference bureaus were introduced in the Kenyan banking sector to facilitate the concept of credit information sharing and to mitigate information asymmetry and credit risk. In the process of providing financial services, they assume various kinds of financial risks which affect their financial performance. Various studies have been done on determinants and measurement of bank financial performance. However, little research studies have been done on effect of credit information sharing on financial performance of commercial banks in Kenya. This study sought to determine the effect of credit information sharing on financial performance of Commercial Banks in Kenya. The specific objectives were; to find the effect of competitive information sharing, volume of lending, operating cost and level of interest rates on financial performance of Commercial banks in Kenya. This study employed a descriptive research design. The study was anchored on moral hazard theory, adverse selection theory and theory of asymmetric information. A descriptive research design was employed. The population of this study entailed all the 43 commercial banks licensed under the banking Act as at 31 December 2015 in Kenya. This study used primary data. Primary data was collected using closed ended questionnaires administered using a drop and pick method. Data was analysed using both descriptive and inferential statistics. The multiple regression model was used to determine the effect of credit information sharing on financial performance of commercial banks in Kenya. The study established that all the variables namely competitive information sharing, volume of lending, operating costs and the level of interest have positive and significant effect on financial performance of commercial banks in Kenya. T he study concludes that competitive information sharing, volume of lending, operating costs and the level of interest rate all had positive and significant influence on financial performance of commercial banks. The study recommends that competitive information sharing among commercial banks should be strengthened to enhance their financial performance. All commercial banks in Kenya need to put in place sound policies that increase the lending base and therefore financial performance. The top management of all commercial banks should emphasize on operational efficiencies to eliminate unnecessary operating costs and therefore improved financial performance. The Central Bank of Kenya and the National Treasury should work closely to ensure stability of levels of interest rates in the economy for better financial performance of commercial banks.
  • Thumbnail Image
    Item
    Effect of Camel Variables on Financial Stability: A Dynamic Panel Analysis of Commercial Banks in Kenya
    (International Knowledge Sharing Platform, 2020) Wamalwa, Nathan; Mungai, John; Makori, Daniel
    A stable banking sector is significant in ensuring economic growth as well as sound, efficient and stable financial system. However, the banking sector in Kenya has been considered fragile and this is evident from the increasing trend of non-performing loans, fluctuating deposit trend of some commercial banks and fluctuations of foreign liabilities in commercial banks in Kenya, which is associated with financial stability. Furthermore the collapsing of some commercial banks and some being put under receivership is of great concern to the financial stability of the commercial banks in Kenya. The general objective of the study was to establish the effect of CAMEL variables on financial stability of commercial banks in Kenya. The specific objectives of the study were to determine the effect of operational efficiency, capital adequacy, bank liquidity, profitability and asset quality on financial stability of commercial banks in Kenya. The study was carried out in 17 fragile commercial banks in Kenya between 2011 and 2018. Generalized Method of Moments (GMM) model guided by dynamic panel regression results revealed that operating efficiency had a statistically significant positive effect on financial stability (β= 0.3104109, p=0.037) of commercial banks in Kenya. The study also established that capital adequacy had a statistically significant negative effect on financial stability (β= -0.1560403, p=0.050) of commercial banks in Kenya. The study further revealed that bank liquidity had a statistically insignificant negative effect on financial stability (β= -0.0073553, p=0.881) of commercial bank in Kenya. In addition, profitability had a statistically significant negative effect on financial stability (β= -0.1064231, p= 0.036). Finally, the study revealed that asset quality had a statistically significant positive effect on financial stability (β= 0.0987029, p= 0.032). Based on these findings, the study recommends for mergers and acquisition among the fragile commercial banks as per the fragility index, adoption of internal economics of scale, limits on insider loans to be established and credit to borrowers should not exceed 15% of the capital. This would ensure a sound and vibrant economy towards achieving the Vision 2030 that advocates for well-functioning, efficient and stable financial system.
  • Thumbnail Image
    Item
    Firm Characteristics and Capital Structure of Small and Medium Enterprises in Kenya
    (IJCAB Publishing Group, 2019) Mugwe, Munga Michael; Makori, Daniel
    Small and Medium Enterprises play an important role towards economic growth and development in Kenya at large. However, there is limited evidence on their capital structure or how they take financing decisions in Kenya. It was therefore imperative to understand how key firm characteristics affect capital structure of these enterprises to help in improving policy decisions and offering practical guidance. This study investigated firm characteristics which influence capital structure of SMEs focusing on Kenya with the hope that findings and recommendations will be replicated in in other countries. Ordinary Least Square model was applied on Kenya’s latest enterprise survey data of 2018.Both descriptive and regression analyses were employed. Results indicate that firm size and firm age are negatively associated with the capital structure. On the other hand, the study found that firm performance and assets base, affected capital structure positively. The study concludes that SMEs should find alternative funding avenues rather than relying on borrowing. A further study was also recommended to analyse why firm performance was positively related to capital structure.
  • Thumbnail Image
    Item
    Firm Characteristics and Financial Performance of Microfinance Banks in Kenya
    (International Academic Journal of Economics and Finance, 2024-10-07) Ouma, Cavine Onyango; Makori, Daniel; Aluoch, Moses Odhiambo
    Kenya has one of Sub-Saharan Africa's most active microfinance marketplaces. Microfinance gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's financial performance in the country has declined over time. With this view, this investigation aims to explore how firm characteristics (capital adequacy, assets quality, managerial efficiency, earning ability and liquidity) performance of microfinance banks in Kenya. The study was grounded on stakeholders, liquidity preference, financial intermediation, buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research Design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was descriptively and inferentially analyzed. The investigation employed panel multiple regressions and Pearson’s Product Moment Correlation analysis. Diagnostics test such as multicollinearity, normality, autocorrelation, heteroscedasticity and stationary tests were carried out. All ethical considerations were appropriately observed. Findings uncovered that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research reveals that efficiency of management has an insignificant direct influence on performed banks financially. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacity-building initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on performance financially. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes. Therefore, the study recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations.
  • Thumbnail Image
    Item
    Firm Characteristics, Interest Rate and Financial Performance of Microfinance Banks in Kenya
    (International Academic Journal of Economics and Finance, 2024-10) Ouma, Cavine Onyango; Makori, Daniel; Aluoch, Moses Odhiambo
    Microfinance Banks gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's Banks financial performance in Kenya has declined over time. The objective of this study is to investigate firm characteristics, interest rate and financial performance of microfinance banks in Kenya. The study was grounded on buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was analysed using descriptive and inferential statistics. The study used multiple regressions and Pearson’s Product Moment Correlation analysis. All ethical considerations were appropriately observed. Findings indicated that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research revealed that efficiency of management has an insignificant direct influence on financial performance of Microfinance banks. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacitybuilding initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on financial performance. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes and financial outcomes for microfinance institutions in Kenya does not appear to be subject to a substantial moderating influence from interest rate movements. Therefore, the survey recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations
  • Thumbnail Image
    Item
    Interest Rate Capping and Financial Performance of Commercial Banks in Kenya
    (IJCAB Publishing Group, 2019) Mutemi, Kyalo; Makori, Daniel
    Interest is the main source of income for commercial banks and therefore capping of interest rate may affect the performance of commercial banks and resort into measures such as downsizing to minimize the operational costs in order to remain sustainable. Put differently, the imposition of interest rate capping may have a bearing on the performance of commercial banks through interest margins generated. Against this background, the general objective of this study is to determine the effect of interest rate capping on financial performance of commercial banks in Kenya. Specifically, the study seeks to establish the effect of credit supply on financial performance of commercial banks in Kenya as well as to analyze the effect of asset quality on financial performance of commercial banks in Kenya. Moreover, the study seeks to determine the effect of cost of credit on financial performance of commercial banks in Kenya. The study is anchored on three key theories: Financial intermediation theory, fractional reserve theory of banking, the credit creation theory of banking; and theory of rational expectation. The study used quarterly secondary data from 2013 to 2017 collected from forty commercial banks licensed in Kenya. The choice of period is justified on the ground of data availability and the period when this study was started. The data was obtained from the bank’s financial statements and other publications by the Central Bank of Kenya. To analyze the data, the study used descriptive analysis approach and Ordinary Least Square (OLS) regression method. The descriptive statistics and the regression results indicate that Interest rate capping has a positive effect on financial performance of commercial banks. It is evident from the results that capping interest rate has impacted commercial banks positively. In addition, the results reveal that the quality of assets measured by the share of Non-performing loans affects financial performance negatively. Further, it was evident that credit supply measured by gross loans and advances has negative effect on banks’ financial performance. Based on the findings, this study recommends commercial banks to look into ways of reducing the proportion of non-performing loans in their books in order to improve their returns on assets. This can be achieved by assessing credit worthiness of individuals and companies before advancing loans. The cost of credit measured by the interest rate shows it has positive effect on financial performance and therefore the study recommends the government through the Central Bank to continue monitoring the cost of credit so as to make loans accessible to low income earners. This can contribute to increases in the uptake of loans thereby raising bank’s profitability through interest payments. Commercial banks should also find alternative ways of increasing their interest income thereby improving returns on assets.
  • Thumbnail Image
    Item
    Moderating Effect of Exchange Rate on the Relationship Between Firm Characteristics and Financial Stability of Commercial Banks in Kenya
    (International Knowledge Sharing Platform, 2020) Wamalwa, Nathan; Mungai, John; Makori, Daniel
    The study sought to determine the moderating effect of exchange rate on the relationship between firm characteristics and financial stability of commercial banks in Kenya. The study sought to establish the effect of exchange rate on financial stability of commercial banks in Kenya. The study further sought to determine the effect of firm characteristics as a composite index on financial stability of commercial banks in Kenya. Positivism research philosophy was employed. Causal research design was utilized in this study. The study targeted 17 commercial banks from which secondary data was collected from the published financial reports for the study period between 2011 and 2018. Generalized method of moments (GMM) model guided by dynamic Panel regression analysis was utilized. Data analysis was run on the Stata 13 package and findings presented in tables while deriving conclusions and recommendations from the study findings. The study found out that exchange rate had a significant moderating effect on the relationship between firm characteristics and financial stability (β= 0.422519, p= 0.095) of commercial banks in Kenya. The study also found out that firm characteristics as a composite index had a significant negative effect on financial stability (β= -1.006024, p= 0.063) of commercial banks in Kenya. The coefficient of exchange rate at (β= 0.0177881, p=0.000) shows a statistically significant positive effect on financial stability of commercial banks. To deal with issues of exchange rate fluctuations, the study recommends that commercial banks in Kenya should adopt a unified exchange rate. The study further recommends that commercial banks should focus on streamlining their internal firm characteristics in order to ensure financial stability is achieved collectively since they are associated with variability in the exchange rate.
  • Thumbnail Image
    Item
    Taxpayer Education and Tax Compliance by Water Vending Businesses in Hargeisa City, Somaliland
    (Journal of African Interdisciplinary Studies (JAIS), 2024) Jirde, Hamse Ibrahim; Makori, Daniel
    An effective tax system is vital for driving economic growth, and tax compliance is a primary focus of the Somaliland Inland Revenue Authority, which aims to maximize revenue collection for essential public services and wage obligations. This research explores the impact of taxpayer education on tax compliance among water vending businesses in Hargeisa, Somaliland. It specifically examines three key areas: the effect of teaching basic tax principles, the impact of communicating tax-related information for awareness, and how assistance with tax filing influences compliance. The study is based on several theories, including the Economic Deterrence Tax Theory and the Theory of Planned Behavior. A descriptive research design guides the data collection process, targeting 326 registered water vending businesses in Hargeisa City. Using the Yamane formula, a sample size of 179 participants was selected through stratified and simple random sampling methods. Data were collected using structured questionnaires, followed by diagnostic tests and analysis through a multiple regression model, with findings presented in various statistical formats. The results indicate that educational, communicative, and practical assistance strategies significantly enhance tax compliance. Teaching tax essentials improves understanding and adherence to obligations, while effective communication raises awareness and fosters positive perceptions of the tax system. Practical assistance simplifies tax filing processes, reducing compliance barriers. Additionally, socio-demographic factors influence the relationship between education and compliance, highlighting the necessity for tailored programs addressing specific needs. To enhance compliance, the study recommends targeted tax education strategies, effective promotional communication, and the provision of practical assistance. It also emphasizes the importance of understanding socio-demographic factors to develop targeted outreach programs. Further research is suggested to evaluate the long-term effects of these strategies and explore the role of digital tools in improving compliance.