Browsing by Author "Mungai, John"

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    Branchless Banking Services and Financial Stability of Commercial Banksin Kenya
    (Journal of Finance and Accounting, 2025-02) Momanyi, Moraa Lucy; Mungai, John
    Purpose: Financial stability is a key goal for commercial banks, as it allows them to operate effectively in fulfilling their role as intermediaries in the financial system. Technological advancements, creative financial products, shifting consumer needs, and the utilization of different distribution channels are all having an impact on the banking sector. The purpose of this study was to investigate how Kenyan commercial banks' financial stability is impacted by branchless banking services. Methods: Using an explanatory research approach, the study concentrated on all 38 commercial banks as of December 31, 2023. From commercial banks, primary and secondary data spanning the years 2016 to 2022 was gathered. Data collecting sheets were used to gather secondary data. The gathered data were coded, cleaned, tabulated, and shown in tables before analysis. Statistics, both descriptive and inferential, were used to conclude. Descriptive statistics included the mean and standard deviation and inferential statistics included regression analysis. STATA 15 software was used for the analysis in this study. Results: The study found a positive and significant relationship between agency, mobile, and online banking services and financial stability. Conclusion: Agency, mobile, and online banking services have a positive and significant effect on financial stability of commercial banks. The study made recommendations that commercial banks should implement measures that will lead to increased use of branchless services such as ATM banking, agency banking, mobile banking, and online banking to improve their financial stability. The study also recommended that policymakers should make policies that aim at increasing the use of branchless banking services.
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    Capital Structure Decisions and Financial Performance of Sugar Manufacturing Firms in Kisumu County, Kenya
    (International Academic Journals, 2018) Ongombe, Kennedy Otieno; Mungai, John
    The sugar factories in Kisumu County are performing badly and this is as a result of the fact that most of these sugar manufacturing factories are riddled with a heavy debt burden and continuous poor performance (KSB 2013). This poor state has resulted to loss of employment opportunities and delay in payment to cane suppliers thus has garnered a lot of concern from the Government, the sugar cane growers and the companies’ employees. This predicament led to the placement of Muhoroni Sugar Company under receivership in the year 2001. Poor state of the sugar firms has persisted despite the fact that the sugar manufacturing companies in Kisumu County have well branded commodities, sufficient trained personnel and a huge domestic demand that they are unable to fully satisfy. The factors affecting the operations of sugar firms have been studied and analysed from diverse dimensions and hardly on the influence of capital structure decisions on financing decisions. Capital structure decisions are vital since the financial performance of an entity is directly affected by such decisions. Capital structure has attracted a strong debate and scholarly attention in the corporate finance literature for a long period of time. However, in the context of sugar industries, the topic has received inadequate research attention. This study therefore, investigated the influence of the choice of capital structure decision on financial performance of sugar milling firms in Kisumu County. The specific objectives of the study were to investigate the effect of financial debt-ratio, debt-equity ratio and weighted average cost of capital on the financial performance of sugar milling firms. The financial performance of the three sugar milling factories in Kisumu County were analysed from the perspective of the indicator of return on equity. The study was conducted based on the Trade-off theory, the Pecking order theory and the Agency cost theory. The units of analysis were individual firm to determine the effect of capital structure on financial performance. The population of the study consisted of all the three sugar manufacturing firms in Kisumu County. The study involved financial analysis and thus used descriptive survey design. The study used secondary data which was obtained from published financial statements from the period 2011-2015 and collected using the secondary data collection sheets. Data was analysed quantitatively using statistical package for social science (SPSS) version 21. Additionally, correlation analysis, simple and a multiple regression analysis was done to determine the extent of influence of each of the autonomous variable. To check whether there was colinearity, multicollinearity was carried out using tolerance and variance inflation factor and the normality was indicated by a PP plot of regression standardized residual. Data was presented using table and written discussions. The findings indicated that debt-ratio had a negative insignificant statistical relationship while debt-equity ratio had a significant negative effect on monetary performance of sugar manufacturing firms in Kisumu County as measured by ROE. It also revealed that WACC had positive significant effects with financial performance of the sugar firms. The study recommended that Sugar firms that are in position to finance their operations using equity should reduce debt financing so as to lessen the risks connected to borrowing hence improve on their financial performance. It also recommended that firms’ management should therefore strike a balance between their choice of capital structure and the effects on its performance as it affect the shareholders risks, returns and cost of capital.
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    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.
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    Financial Management Practices andGrowth ofPublic Hospitals in Nyeri County, Kenya
    (IJCAB Publishing Group, 2020) Muturi, Beatrice Wairimu; Mungai, John
    The provision of health care is among the social pillars in the vision 2030. The health sector has been characterized by many challenges ranging from recent strikes by health workers, poaching of workers by private hospitals and health workers looking for greener pastures outside the country because of poor management of the sector and poor infrastructure. Despite the support from the government, public hospitals in Nyeri County are straining to meet their financial obligations. Challenges ranging from inability to meet daily expenses, delayed payment of workers, delayed national government reimbursements and diminishing patient’s expectations. The objectives of the study were to investigate how budgeting, internal control systems, financial tracking, and waiver affect financial management practices and growth in government hospitals. The management and movement of funds as aligned to the budget is critical for a public hospital’s growth. But experience and exposure in finance management reveal that the financial management processes of public hospitals are generally weak and dominated by conditions of resource scarcity vis-a-vis the ever-increasing agenda of development activities on which such funds could be spent. The study used a descriptive survey design. The study targeted202respondents who were the employees of the four county public hospitals under study. Stratified simple random sampling was used, and a sample of 101respondents was selected. The study used both primary and secondary data sources for data collection. Data was analyzed by the aid of the Statistical Package for Social Studies (SPSS) computer software through frequencies, means, percentages, correlation coefficient as well as regression method. Tables and graphs were used for data presentation. The findings indicated that there has been an increase in the number of operational cost in majority of the hospitals. Majority of the public hospitals experience a lot of challenges and delays before budget is approved. The findings indicated that there are several steps that should be followed before authorization of any payment in hospital. The results presented poor control of revenue in the hospital and lack of proper coordination and monitoring. The study findings indicate that financial tracking procedures are hard to follow and that the procedures are not very clear to all the employees. Majority of the respondents argued that there is lack of management support when it comes to financial tracking in the public hospitals in Nyeri County. The relationship between audit practices and growth of public hospitals is strong and positive and the relationship between financial tracking and growth of public hospitals is weak negative and significant. The study concludes that the relationship between audit practices and growth of public hospital was positive and significant and that a positive change in audit practices would result to a positive change in the growth of public hospitals. The study recommended that sufficient funds to the public hospitals should be disbursed early enough to enable proper planning and budgeting. The study also recommended that employees working in the public hospitals in Nyeri County should consider financial tracking as a daily task and that there is need for the County officials to be trained on the audit requirements and audit procedures.
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    Formal Credit Financing and Financial Performance of Small and Medium Enterprises in Nanyuki Town, Kenya.
    (International Academic Journals, 2018) Ndemi, Emily Gakatha; Mungai, John
    The current study sought to investigate the effects of formal financing on financial performance of small and medium enterprises in Nanyuki Town, Kenya. The study was conducted in Nanyuki Town which has a fine mix of thriving SMEs that are the drivers of economic life in the town. The target population was made up of the SMEs and their owners in the town. The study targeted 765 SMEs in Nanyuki town. The sample was selected using stratified and simple random sampling technique. A sample of eighty-eight respondents was selected. Information was collected using questionnaires deployed utilizing drop-andpick-later technique. Data was analyzed utilizing both inferential and descriptive statistics aided by SPSS software version 21. Correlation analysis as well as multiple linear regression were employed to determine effectively the effect and nature of associations between the variables. The study established poor liquidity condition for the SMEs with both the current ratio and quick ratios standing 1.47:1 and 0.55: 1 respectively which are below the globally accepted standards of 2:1 for current ratio and 1:1 for quick ratio. The profitability of the SMEs was also relatively low with the return on assets standing at an average of 6.67%. The Pearson correlation analysis results indicated a positive association between formal financing option and financial profitability of SMEs. The study recommended that stakeholders and especially the government devise measures to assist SMEs boost their ability to access alternative funds from formal institutions and other alternatives such as government affirmative funds. The government should consider incentives to formal financial players who establish special facilities targeting SMEs and enhance efficiency of affirmative funds targeting SMEs
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    Internal Control Systems and Financial Performance of Microfinance Institutions in Laikipia County – Kenya
    (IJARKE Business & Management Journal, 2024-10-24) Ogaro, Peter Ondieki; Mungai, John
    Most microfinance institutions have pulled out of the industry altogether because of how much money has been lost in Kenya's microfinance sector. Return on equity has grown negatively due to low profitability and losses. From the 2015–2016 fiscal years to the 2022–2023 fiscal years, client deposits declined. After rising in December 2016, the capital base was hit hard by the growth of nonperforming loans. As a result, liquidity levels will fall in 2019, 2020, 2021, and 2022. This research set out to address that question by analyzing microfinance institutions in Laikipia County, Kenya, with an eye on their internal control mechanisms and their impact on their efficiency. The goals of the research were to analyze the financial performance of microfinance institutions in Laikipia County, Kenya, and how the control environment affected that performance. The research was based on systems theory. Questionnaires and a descriptive research approach were used to collect primary data. Five MFIs operating in Laikipia County were the focus of the research: KWFT, Faulu Ltd., Asa Ltd., SMEP, and PAWDEP Ltd. A total of 289 individuals were surveyed, with 168 chosen at random from the pool of potential respondents. Both descriptive and inferential statistics were used to examine the quantitative data. Data was shown quantitatively using graphs, tables, and frequency tables. Based on the findings, MFIs' control chains are ineffective because of their lack of progress in corporate structure. On the other hand, all of the company's core functions are regulated by established policies and procedures. The results showed that the staff performed well in carrying out the financial management tasks, with the periodic accounts reconciliation being the only stumbling block. To aid in the assessment, reduction, and tracking of risks, the MFIs have devised individualized approaches to risk management. The research found that MFIs' financial performance in Laikipia County, Kenya, was positively and significantly impacted by control environment. The study suggested that microfinance institutions (MFIs) broaden the scope of their control measures to include both the degree of compliance and the control activities involved in authorizing transactions
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    Mobile Banking Adoption and Financial Credit Accessibility in Wote Sub – County, Makueni County, Kenya
    (IJCAB Publishing Group, 2019) Kibicho, Nahashon Kairo; Mungai, John
    Although the financial system is a vital component of the socio-economic development of any nation, most Kenyans lack access to formal financial credit services. This arises due to the cause of putting up bank branches in the rural areas is deemed not economically viable. Most banks have partnered with Mobile Network Operators to help mitigate this problem by introducing the use of Mobile banking (M-banking) technology in accessing vital banking services such as financial credit. However, this effort may not attain success if the factors inhibiting the use of M-banking technology have not been assessed. The purpose of this study was to establish the effect of Mobile banking adoption on financial credit accessibility by residents in Wote sub-county. This study was necessitated by the current emerging trend of accessing financial credit through the Mobile banking system. This study adopted a technology acceptance model to establish the effects of adopting mobile banking and its application in use of banking services among residents of Wote sub-county. The study was guided by the following objectives: To establish the effect of perceived usefulness, perceived ease of use, and perceived risk of using mobile banking technology and financial credit accessibility in Wote sub-county, Makueni county, Kenya. Descriptive research design was employed in which the study population comprised the residents of Wote sub-county. The target population of the study consisted of 137,944 mobile money users across both banked and non-banked population in Wote sub-county and the sample size comprised of 138 participants who were selected through the use of simple random sampling technique. Data was collected using a questionnaire whose reliability was established by use of Cronbach’s Alpha. All items in the questionnaire had a score of above 0.7 which was deemed to be the acceptable threshold. The questionnaires were administered through drop and pick later method. The data collected was processed and analysed using SPSS. Descriptive statistics such as percentages, frequencies, standard deviation and mean scores were used. Afterwards, the research findings were presented using frequency tables, pie charts and bar graphs. Multiple regression analysis was used to analyse and draw inferences from the research data. The results indicated that perceived usefulness of mobile banking technology perceived ease of use of mobile banking technology, and perceived risk of using mobile banking technology were statistically significant in accessing of financial credit. The intervening variable- customers’ attitude- was found to be non-significant. This study recommended that both the banks and MNO’s to continuously invest in product improvement of mobile banking systems to ensure the uptake of mobile credit is enhanced. The study also recommended that the financial service providers should engage in education and extensive customer awareness on use of mobile applications to access mobile credit as well as draw up strategies to reduce the mobile phone operational costs such as the interest charged on mobile loans which are a major hindrance. Further, the banks and MNO’s should increase extra security features in their systems to increase trust in accessing mobile credit. Finally, the service providers should make mobile banking more user friendly for ease of financial credit access by incorporating graphics interface.
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    Mobile Banking Services and Financial Performance of Tier One Commercial Banks in Kenya
    (International Academic Journals, 2019) Maina, Duncan Warui; Mungai, John
    Kenya mobile banking arena is fast developing and shaping the landscape of cashless transactions exponentially. With introduction of mobile services in the banking industry, the commercial banks are faced with the challenge of embracing the new technological advances in the industry or lose business. The purpose of this study was to determine the effects of mobile banking services on financial performance of commercial banks in Kenya. The study was guided by the following specific objectives; to examine the effects of mobile banking withdrawal and deposits, loans, payment of bills and funds transfer on the financial performance of commercial banks in Kenya. The study was anchored by the following theories; diffusion of innovation theory, agency theory and stewardship Theory. This study employed descriptive research design. The study targeted 8 tier one commercial banks. The study used secondary data which was obtained from the published financial statements of the tier one commercial banks in Kenya. Descriptive statistics and inferential statistical techniques were used to analyze the data and presented in terms of tables and figures. Multivariate regression model based on cross sectional pooled data from the annual reports and other financial statements to assess the effect of mobile banking services on the financial performance was conducted. Regression analysis and correlation analysis was carried out to analyze the relationship between the variables. Based on the findings that mobile withdrawals have a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile withdrawals are efficient and are sound to facilitate participation of the customers in using the banking applications as well as contribute to greater returns. On the other hand, the findings that mobile loans have a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile loans are efficient and are sound to facilitate participation of the customers in using the banking applications loans services as well as contribute to greater performance. Similarly, the findings that mobile banking payment of bills have a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile banking payment of bills are efficient, effective and are sound to facilitate participation of the customers in using the banking applications services as well as contribute to greater performance. On the mobile banking funds transfer, the findings indicate that there is a significant positive influence on financial performance of tier one commercial banks in Kenya it can be concluded that banks should always ensure that the mobile banking funds transfer are efficient, effective and are sound to facilitate participation of the customers in using the banking applications services on money transfer as well as contribute to greater performance. The study recommends that tier one commercial banks in Kenya should always offer mobile banking loans services at lower interest rates to encourage more borrowers. It is recommended that tier one commercial banks in Kenya should always develop appropriate mobile banking payment of bills services which are informed by the changes in the environment and that accommodate the common customers in Kenya.
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    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.
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    Real Time Gross Settlement and Financial Performance of Commercial Banks in Kenya
    (International Academic Journals, 2018) Muhoro, Duncan Iregi; Mungai, John
    The banking industry has been undergoing a significant process of transformation. Novelty in information technology has been the force behind this transformation. Real Time Gross Settlement (RTGS) is an automated means of transferring funds from one bank to another on real time. The challenge is that even with innovation on real time gross settlement commonly known as pesalink, it’s still not clear whether it has significant effect on financial performance of commercial banks in Kenya. It’s from this contextual that the study sought to investigate the effects of RTGS on the financial performance of banks in Kenya. The research specifically sought to investigate if there is a correlation between the dependent variable of financial performance as measured by return on assets (ROA), with the independent variable real time gross settlement which was measured by percentage of adoption of service and percentage of transactions. The following hypothesis was developed, real time gross settlement lack significant result on monetary performance of commercial bank in Kenya. A census research was done on all Banks in Kenya as regulated by CBK. The study used secondary data from 43 profitable banks operational in Kenya. The research used both inferential and descriptive statistics. Diagnostic tests were carried out to test for Normality and Heteroscedasticity tests. Data was coded and sorted using SPSS to produce descriptive statistics which was presented in form of tables. The study found out that, RTGS affects ROA at 0.022 significance, 1% increase in RTGS volumes increase ROA by 0.7985%. The more the volume of transactions, the more the revenue or income from the RTGS platform. Based on the conclusion, the research recommends that Commercial banks use RTGS to achieve on profitability and at the same time revamp mobile and internet banking platforms for customer service and loyalty.
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    Risk Management and Level of Performance of Unsecured Loans in Commercial Banks in Nanyuki Town, Kenya
    (International Academic Journals, 2018) Kariu, Joseph King’ori; Mungai, John
    Banks have to manage more types of risks in order to maximize the shareholders’ wealth. Kenyan banks have witnessed increasing non-performing loans. The liberalization of interest rate controls, the privatization of publicly owned banks, and the expansion on the variety of financial instruments, provided new business opportunities for banks but they also increased the need for proper risk management systems to be put in place in order to control the risks and uncertainties deriving from these changes. The gross nonperforming loans (NPLs) increased by 6.6 percent in the first quarter of 2017. The study focused on the effect of risks management on performance of unsecured loans in banks. The objective of the study was to establish the effect of information technology on performance of unsecured loans. The study was anchored in the information asymmetry and technological determinism theories. The study used a descriptive cross sectional research design. Commercial banks in Nanyuki town were targeted. Branch managers and departmental heads were the respondents in the study. The study used purposive sampling where all 12 banks and 60 respondents were involved in the study. A self-administered questionnaire was used to collect data. Descriptive statistics such as frequencies, percentages, mean and standard deviation were used to organize findings. Regression analysis was conducted to determine the statistical significance of the attempted prediction between risk management and performance of loans among commercial banks. The tests were performed the help of SPSS software at 95% confidence level. Findings were presented in form of tables and figures. The study found that that information technology was used in risk management to a large extent. Regression analysis showed that there was a strong positive correlation (r=0.837) between risk management and performance whereby 68.4% of performance of unsecured loans in commercial banks in Nanyuki town, Kenya could be attributed to risk management. There was statistically significant relationship (F(4,7) = 4.394, P=0.004) between risk management and performance of unsecured loans in commercial banks in Nanyuki town, Kenya. Information technology (p=0.044), was statistically significant. The study concluded that risk management is vital to performance of unsecured loans in commercial banks. This relationship is driven by utilization of information technology which enable the bank assesses and predict risk and therefore employ corrective and mitigation strategies to avoid default. The researcher recommended that commercial banks should make greater investments in information technology in risk management especially in the area of data mining.