Browsing by Author "Musau, Salome"

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    Analyzing the Effect of Liquidity on Financial Stability: Evidence from Kenyan Deposit-Taking Savings and Credit Cooperative Societies
    (Stratford Peer Reviewed Journals and Book Publishing, 2024-05-15) Birisi, Hesborn Birisi; Omagwa, Job; Musau, Salome
    Non-performing loans have been on the rise among DT SACCOs in Kenya over the past five years as evidenced by the increase in percentage of NPLs to gross loans in SACCO regulatory authority report of 2020. Consequently, if this trend is allowed to continue then this sector’s contribution to financial intermediation through provision of financial services will be negatively affected. In view of the above this study sought to investigate the effect of firm characteristics and financial stability of deposit taking savings and credit cooperative societies in Kenya. In view of the above this study sought to assess the effect of liquidity on financial stability of deposit taking savings and credit and cooperative societies in Kenya. The study was anchored on agency theory. Positivist research philosophy was adopted in this study. The study adopted explanatory research design. The target population for the study comprised 160 DT SACCOs which were fully operational in the period. A census approach was used for the study. This study utilized quantitative secondary data which was obtained from the society’s financial statements and supervision reports from the savings and credit cooperatives regulatory authority. The study utilized annual panel data for the period of 2017 to 2021. Multicollinearity test, normality tests, autocorrelation test, homoscedasticity, stationarity test and model specification test were carried out prior to panel data analysis. Data was analyzed using descriptive statistics, Pearson’s correlation analysis and panel regression analysis. STATA software was used for the analysis. The findings showed that liquidity had a strong, positive effect on NPLs ratio (β = 0.410056, p=0.003 <0.05). In view of the findings, the study recommends that DT SACCOs with high liquidity levels should consider implementing rigorous lending practices to ensure that loans are extended to creditworthy borrowers. Additionally, effective credit risk assessment and continuous monitoring of borrower repayment behavior are essential to minimize NPLs. DT SACCOs should focus on improving management efficiency by implementing cost-effective operational processes.
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    Assessing the Effect of Financial Literacy on Investment Decisions Among Matatu Savings and Credit Cooperative Societies in Kenya
    (International Journal of Financial Research, 2025-04) Wakanyi, Moses Gathecha; Musau, Salome
    Financial literacy has garnered significant attention in the realm of investment on a global scale over the years. This phenomenon is ascribed to its pivotal role in the process of making investment decisions. The global economy has undergone increased complexity; thus, it is imperative for each individual to engage actively and astutely in investment decision-making to effectively navigate the escalating cost of living. Numerous individuals exhibit interest in various forms of investments, finding them captivating due to the ability to make decisions and subsequently observe the consequences of those decisions. Nevertheless, not all investment endeavors yield profits, given that investors may not invariably be accurate in their decision-making. Therefore, this research sought to analyze the influence of financial literacy on the investment decisions of designated Matatu SACCO employees in Nanyuki town, Kenya. Specifically, the research involved evaluating the influence of savings techniques, debt management, financial planning, and project appraisal methods on investment decisions. Underpinning theories were information asymmetry, behavioral economics and financial education. A causal research design was employed, focusing on 8 Matatu SACCOs in Nanyuki Town, Kenya, as the units of analysis. Data was gathered from 195 employees of the SACCOs, representing various departments, utilizing a stratified sampling method and simple random sampling techniques for participant selection. The study encompassed a sample of 131 participants. Primary data was acquired through questionnaire. Descriptive analysis, correlation and multiple regression was utilized for data synthesis. The study revealed that saving techniques, debt management techniques, financial planning and project appraisal techniques had a positive significant effect on investment decisions. The study concludes that savings strategies often encourage financial literacy and education. As Matatu SACCO employees engage in saving, they may also seek information on various investment options available to them. Debt management strategies often involve education on financial planning, budgeting, and investment options enabling employees to gain a better understanding of their financial situation, which enhances their ability to make informed investment choices.. The study recommends that the Matatu SACCO should organize regular workshops focusing on financial literacy, covering topics such as budgeting, saving, and investment options. The Matatu SACCO should create a clear debt management policy that outlines acceptable debt levels, repayment schedules, and consequences of default. The Matatu SACCO should invite financial experts and successful investors to share their experiences and insights, providing real-world context to theoretical knowledge. The Matatu SACCO employees in Nanyuki town, Kenya should organize regular workshops and seminars focused on project evaluation methodologies, financial analysis, and investment decision-making
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    Audit Committee Attributes and Corporate Governance in State Corporations under the National Treasury in Kenya
    (International Academic Journal of Economics and Finance (IAJEF), 2025-06) Chepngetich, Rhodah; Musau, Salome
    The role of state corporations in national economies is pivotal, given their mandate to implement government policy, provide essential services, and drive socioeconomic development. In Kenya, state corporations under the National Treasury have historically faced scrutiny over governance failures, marked by rising complaints of administrative malpractice and corruption. Despite the establishment of corporate governance frameworks such as the Mwongozo Code and the formation of audit committees intended to enhance oversight, concerns over political interference, weak supervision, and inadequate financial management structures persist. This study sought to analyze the effects of audit committee attributes on corporate governance among state corporations overseen by the National Treasury. The target population comprised 136 respondents from 34 public institutions under the National Treasury. Due to the relatively small population, the study employed a census approach, ensuring that all 136 respondents within these corporations participated. Data were primarily collected using a structured questionnaire. Quantitative data analysis involved statistical methods, including the calculation of means and standard deviations, while qualitative data was analyzed thematically and descriptively. Additionally, an empirical analysis was conducted to assess the effects of audit committee attributes on the governance of state-owned enterprises. The data were subjected to heteroscedasticity, multicollinearity, and normality tests to validate the reliability of the multiple regression model. The analysis showed that all four audit committee attributes had significant positive effects on corporate governance. Audit committee independence enhanced objectivity and accountability; committee size contributed to workload distribution and governance coverage; diversity promoted inclusive and balanced decision-making; and expertise had the greatest impact, enabling informed oversight and risk management. The study concluded that audit committee attributes are critical determinants of good governance in state corporations. It recommends strengthening appointment policies to preserve independence, ensuring optimal committee size, promoting diversity, and enhancing technical capacity through professional development. These findings contribute to the discourse on public sector governance reform and offer practical insights for policy implementation. Further research is encouraged to explore contextual moderators influencing effectiveness of the committee such as institutional culture and regulatory environments.
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    Cost of Production and Financial Performance of Selected Poultry Rearing Farmers in Kiambu County, Kenya
    (International journal of Current Aspects in Finance, banking and Accounting, 2024) Kibunja, Elvin Taabu; Musau, Salome
    The study sought to investigate the effect of cost of production on financial performance of selected poultry rearing farmers in Kiambu County, Kenya. The study was guided by specific objectives including; the effect of feed costs, the effect of poultry equipment, the effect of brooding costs and the effect of medication costs on financial performance of selected poultry rearing farmers in Kiambu County, Kenya. The study was anchored on cash conversion cycle theory, transaction cost of economics theory, resource-based theory and operating cycle theory. The study adopted descriptive research design and a sample size of 350 respondents. Snow ball sampling method was used to reach the respondents since their location was not well defined. Primary data was collected using questionnaires that was pilot tested to ensure its valid and reliable. Descriptive statistics of mean, percentages and standard deviation and inferential statistics including multiple regression analysis were conducted. The study findings revealed that production cost including feeding cost, poultry equipment, brooding cost and medication cost all individually had a statistically significant effect on financial performance and therefore all the null hypotheses were rejected. Feeding cost and medication cost had negative statistically significant effect, hence concluding that when the cost for feeds and medication increases, they lead to a decrease in financial performance. Also increase in poultry equipment and brooding cost were found to positively affect performance concluding that when the farmers increase investment in relevant equipment and brooding, financial performance improves. On feeding cost and medication cost, the study recommends that the farmers through the regulators to lobby for subsidies from the government so as to lower the cost of production. The study further recommends the farmers to invest in heavy technology in terms of equipment and brooding costs since greatly increase their financial performance.
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    Cost of Production and Financial Performance of Selected Poultry Rearing Farmers in Kiambu County, Kenya
    (2024-05) Kibunja, Elvin Taabu; Musau, Salome
    The study sought to investigate the effect of cost of production on financial performance of selected poultry rearing farmers in Kiambu County, Kenya. The study was guided by specific objectives including; the effect of feed costs, the effect of poultry equipment, the effect of brooding costs and the effect of medication costs on financial performance of selected poultry rearing farmers in Kiambu County, Kenya. The study was anchored on cash conversion cycle theory, transaction cost of economics theory, resource-based theory and operating cycle theory. The study adopted descriptive research design and a sample size of 350 respondents. Snow ball sampling method was used to reach the respondents since their location was not well defined. Primary data was collected using questionnaires that was pilot tested to ensure its valid and reliable. Descriptive statistics of mean, percentages and standard deviation and inferential statistics including multiple regression analysis were conducted. The study findings revealed that production cost including feeding cost, poultry equipment, brooding cost and medication cost all individually had a statistically significant effect on financial performance and therefore all the null hypotheses were rejected. Feeding cost and medication cost had negative statistically significant effect, hence concluding that when the cost for feeds and medication increases, they lead to a decrease in financial performance. Also increase in poultry equipment and brooding cost were found to positively affect performance concluding that when the farmers increase investment in relevant equipment and brooding, financial performance improves. On feeding cost and medication cost, the study recommends that the farmers through the regulators to lobby for subsidies from the government so as to lower the cost of production. The study further recommends the farmers to invest in heavy technology in terms of equipment and brooding costs since greatly increase their financial performance.
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    Digital Banking and Financial Inclusion of Women Enterprises in Narok County, Kenya
    (International Journal of Current Aspects in Finance, Banking and Accounting, 2020) Kisotu, David Melubo; Musau, Salome
    Financial inclusion is an important step in development, as access to finances can help the women to build money and lift themselves out of poverty. Lack of financial inclusion among women in Narok County is one of the many factors leading to financial exclusion and an introduction of digital banking is the remedy to its problems. Financial inclusion of women contributes immensely in empowering them. Digital banking in Kenya has been characterized by rapid technological change in the finance sector that has led to the development of mobile banking, online banking, ATMs and agency banking. The banking sector has undergone substantive transformation particularly from the year 2007. This study sought to establish the effects of digital banking and financial inclusion of Women Enterprises in Narok County, Kenya. Financial inclusion includes the provision of affordable financial services, which includes; access to payments and remittance facilities, savings, loans and insurance services by the formal financial system to those who tend to be excluded The study was anchored on finance growth theory and financial asymmetric theory. This study used descriptive research design and data was collected from the target population of all the 184 women owned enterprise in Narok County, Kenya. For this study census sampling was adopted to where all the population will be included in study since the number of target population is 184. Primary data was collected using a semi structured questionnaire to be administered to the women business owner through face to face interviews. The collected data was analysed using descriptive statistics methods; mean, mode, median, standard deviation, percentages and frequencies. Inferential statistical methods included multiple regression analysis was used to establish the relationship among variables. It was established that digital banking services significantly and positively influenced financial inclusion of women enterprises in Narok County. The study concluded that agency banking, mobile banking, online banking and ATM services significantly influenced the access and use of banking services by the locally based women enterprises in Narok County. It was further concluded that the women enterprises did not adequately use online banking due to limited literacy level, computer proficiency and internet availability. The study recommends that the available financial sector players in Narok County needs to sensitize SMEs especially women-owned to ensure that they are aware of the digital services available to be in the loop to enhance financial inclusion. The study recommends that the available digital banking providers need to improve formation of groups among the users of the services to enable improve usability. The study recommends further that the women enterprises managers and proprietors need to be in groups to develop each other and assist access, use and improve digital banking and financial inclusion.
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    Digital Financial Services and Profitability of Microfinance Banks in Kenya
    (International Journal of Social Science and Economic Research, 2024-11) Kimalit, Betty Jepkorir; Musau, Salome
    This study's primary intent was to ascertain how digital financial services influenced Kenyan microfinance banks performance in terms of profitability. More precisely, mobile banking, internet banking, electronic funds transfer and credit card usage effect on profitability of microfinance banks in Kenya were the specific objectives. Transaction Cost Economics, Innovations Theory of Profits, and Technology Acceptance Model theories are the theories that guided formulation of the current study concepts used herein. The research design utilized here is causal research design. The research populace consists of 14 microfinance banks in Kenya which were surveyed in order to collect data from this small group. Drop and pick method was employed to collect data, from the senior managers (finance officers) of the Microfinance Banks. The gathered data was subjected to diagnostic testing, including tests for linearity, and multicollinearity, homoscedasticity, and normalcy. Following this, the data was evaluated using additional descriptive and inferential techniques to test the general evolution of the study variables and each hypothesis respectively. Findings portrayed that digital financial services significantly and positively affected profitability of microfinance banks in Kenya. The management of microfinance banks need to adopt less costly mobile banking approaches when meeting their digital clients’ needs for this will boost the profitability thereof. With reduced cost, it will assure a direct and effective boosting of the financial performance for there is a negative link between cost and earnings of an entity. Regulators including Central Bank of Kenya should develop digital financial services policies which guide on the protection of both the producers and consumers of digital financial services.
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    Electronic Banking Channels and Financial Inclusion among Small and Medium-Sized Enterprises in Mogadishu, Somalia
    (journaleconomics, 2025-05) Warsame, Abdiaziz Omar; Wamugo, Lucy; Musau, Salome
    This study evaluated electronic banking channels effect on financial inclusion among Mogadishu’s small and medium enterprises. It assessed how mobile, Internet banking, Automated Teller Machine banking, and agency banking affect these enterprises financial inclusion, while allowing for financial literacy role. The following theoretical frameworks; technology acceptance model, financial intermediation theory, and financial repression theory were utilized. An explanatory approach was employed and primary data was used. According to Mogadishu Municipal Authority, there are 5,431 Small and Medium-sized Enterprises from various sectors, including retail, services, and manufacturing which served as the target population of this investigation. 461 respondnets were chosen through sampling of random stratification. Data was gathered using a semi-structured questionnaire. Employing descriptive statistics, correlation, and multiple regression analysis were utilize to interpret the quantitative data. The analysis findings were illustrated on tables and figures. Findings revealed that mobile banking significantly and positively (β=0.2452; ρ=0.000) affect financial inclusion; internet banks also noted a significant positive (β=0.3633; ρ=0.000) effect on financial inclusion; automated teller machine unveiled also significant positive effect (β=0.2167; ρ=0.000) on financial inclusion while agency banking uncovered inverse (β= -0.0997) and insignificant (ρ=0.082) effect on financial inclusion. The survey advocates that the government and financial institutions should collaborate to develop and promote tailored mobile banking solutions specifically designed for SMEs. By addressing the unique needs and difficulties confronted by these enterprises, such as limited access to credit and financial literacy, such initiatives can empower business owners to leverage digital financial services effectively.
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    Financial Inclusion, Bank Competitiveness and Credit Risk of Commercial Banks in Kenya
    (Sciedu Press, 2018-01) Musau, Salome; Muathe, Stephen M. A.; Mwangi, Lucy
    This paper provides an empirical analysis of the synergies and trade-offs between financial inclusion and credit risk of commercial banks in Kenya. The paper analyzed the effect of financial inclusion on credit risk and the mediation effect of bank competitiveness of commercial banks in Kenya. Financial inclusion was measured using three dimensions of bank availability, bank accessibility and bank usage, bank competitiveness used (HHI) while credit risk was represented by the non performing loans ratio. The study was anchored on financial intermediation theory supported by finance growth theory and asymmetry information theory. The target population was all the 43 commercial banks in Kenya. The study used secondary data collected from Central Bank of Kenya annual reports; commercial banks of Kenya published audited financial statements and annual data from Central Bureau of statistics of Kenya for the period of 2007-2015. Data was analyzed using descriptive statistics and panel multiple regression analysis. The results obtained found that bank availability, bank accessibility and bank usage had significant effect on credit risk of commercial banks in Kenya. Bank competitiveness was found to partially mediate the relationship between financial inclusion and credit risk. From the findings the study concluded that financial inclusion has a significant effect on stability of commercial banks in Kenya. The study recommends that commercial banks to formulate policies to ensure they remain stable and competitive while accommodating their activities to ensure financial inclusion, hence forming an all inclusive and stable financial sector over time. Keywords: financial inclusion, stability, competitiveness, credit risk, Kenya
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    Financial Inclusion, GDP and Credit Risk of Commercial Banks in Kenya
    (Canadian Center of Science and Education, 2018) Musau, Salome; Muathe, Stephen M. A.; Mwangi, Lucy
    This paper provides an empirical analysis of the synergies and trade offs between financial inclusion and credit risk of commercial banks in Kenya. The paper analyzed the effect of financial inclusion on credit risk and the mo deration effect of GDP on commercial banks in Kenya. Financial inclusion was measured using three dimensions of bank availability, bank accessibility and bank usage, while credit risk was represented by the non performing loans ratio. The study was anchore d on financial intermediation theory supported by finance growth theory and asymmetry information theory. The target population was all the 43 commercial banks in Kenya. The study used secondary data collected from Central Bank of Kenya annual reports; com mercial banks of Kenya published audited financial statements and annual data from Central Bureau of statistics of Kenya fo r the period between 2007 2015. Data was analyzed using descriptive statistics and panel multiple regression analysis. The results obtained found that bank availability, bank accessibility and bank usage had significant effect on credit risk of commercial banks in Kenya. GDP growth rate was found to partially moderate the relationship between financial inclusion and credit risk. From the findings the study concluded that financial inclusion has a significant effect on credit risk of commercial banks in Kenya. The study also recommended that commercial banks in Kenya to negotiate with Central Bank and the Ministry of Finance to put policies which support favorable macroeconomic variables especially GDP which influences the level of financial inclusion and bank credit risk.
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    Financial Literacy and Financial Inclusion of Youths in Nairobi City County, Kenya
    (European Journal of Business and Management, 0202) Charles, Kennedy Mumo; Musau, Salome
    In an effort to promote greater financial inclusion, Kenya has implemented a number of financial sector changes in recent years, propelled by technological innovations like ATMs and mobile banking. This expansion is seen as key to achieving Kenya’s target growth rate of ten percent as outlined in Vision twenty thirty, by expanding access to financial solutions, encouraging investments, savings, and supporting the country’s development objectives. However, despite these advancements, access to formal financial services remains limited. This study aimed to investigate the relationship between financial literacy and financial inclusion among the youth in Nairobi City County Kenya, focusing on the roles of investment methods, debt management, financial planning, and saving behaviours. The study was grounded in theories of information asymmetry, behavioural economics, financial education, and financial growth. A causal research design was used, targeting a population of One million nine hundred ninety, three thousand three hundred and ninety youths in Nairobi City County, with a sample size of four hundred respondents. Data were collected using structured questionnaires, validated through a pilot study with forty participants. Reliability was ensured with a Cronbach's alpha score, and the data were analysed using descriptive and inferential statistics, including regression analysis. The study’s findings showed that the four factors, saving behaviours, debt management, financial planning, and investing practices accounted for ninety-two point eight of the variance in financial inclusion. Savings had a significant positive impact on financial inclusion, with youths who regularly save better able to access formal financial services. Debt management practices also positively influenced financial inclusion, albeit to a moderate degree, suggesting that improved debt management skills could reduce financial exclusion. Financial planning techniques were strongly associated with financial inclusion, indicating that youth who engage in organized financial planning are more likely to access sanctioned financial assistance and make sound financial decisions. Investment practices had a very strong positive impact on financial inclusion, emphasizing the importance of promoting investment literacy among young people. The study concluded that fostering saving habits, debt management skills, financial planning, and investment literacy is crucial to enhancing financial inclusion. It recommended that educational institutions, financial organizations, and government agencies work together to incorporate financial literacy into school curricula from an early age, to equip young people with the financial skills needed for greater financial empowerment.
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    Financial Technology and Financial Inclusion among Youth Operating Businesses in Central Business District Nairobi City County, Kenya
    (IJRISS, 2023-12) Nyokwoyo, Douglas Ouso; Musau, Salome; Kosgei, Margret
    Financial inclusion is the cornerstone of savings and investment initiatives among. Youth who are financially included have greater access to credit from financial institutions and can create and expand investment opportunities. In addition, the inclusion of youth in financial systems improves access to financial education and planning, which increases employment opportunities and ensures that previously marginalized and alienated youth are reintegrated into the economy. The purpose of this study was to evaluate the effect of financial technology on the financial inclusion of youth owned businesses in Nairobi’s central business district. The researcher targeted a large population of approximately 32100 youth owned business enterprises in the central business district of Nairobi. Convenient sampling was used to select 500 respondents aged between 20 and 35 years, per the definition of youth by the Department of youth affairs. The researcher employed a descriptive research methodology. Using open-ended questionnaire, primary data was collected. The research discovered that the utilization of mobile phones, access to the internet, and the provision of agency services have a noteworthy impact on enhancing the financial inclusion of young individuals. The research findings suggest that the achievement of financial inclusivity for enhancing the participation of young individuals in economic frameworks is facilitated by the utilization of cellular devices, the utilization of online technology, the utilization of services through intermediaries, and the acquisition of financial literacy. Therefore, the formulation of strategies aimed at enhancing financial inclusivity among the youth in the central business district of Nairobi should prioritize the enlargement of entry and amplification of financial technology solutions.
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    Firm Characteristics and Financial Performance of Licensed Microfinance Banks in Kenya
    (International Research Journal Publishers, 2025-03) Munyithya, Veronica Muli; Musau, Salome
    Microfinance institutions significantly contribute to the financial sector by providing credit facilities to low-income earners and the unbanked population. However, the rising economic crisis in Kenya has adversely affected the financial performance of Microfinance institutions, raising concerns about their sustainability. This study aims to investigate how firm characteristics such as capital adequacy, bank size, and management efficiency impact the financial health of microfinance banks in Kenya. The research spans a six-year period from 2018 to 2023, a time marked by rapid expansion in the microfinance sector and significant economic challenges, including the devaluation of the Kenyan shilling, corporate consolidation, and the takeover of financial institutions. The theoretical framework of the study is underpinned by Capital Buffer Theory, Economic Theory and Efficiency Structure Theory. A descriptive research design was employed, collected secondary data from the published financial reports of the 13 licensed microfinance banks in Kenya, using a census sampling method. Ethical and logistical standards were rigorously followed, ensuring voluntary participation and maintaining data confidentiality. Results revealed a strong positive correlation between capital adequacy and financial performance. Management efficiency also showed a significant positive correlation with financial performance, while bank size showed a weaker relationship. Panel regression further confirmed that capital adequacy and management efficiency had a positive impact on financial performance, whereas bank size had a minimal effect. Conclusions from the study indicate that firm characteristics significantly influence financial performance. Larger banks due to economies of scale and diversified portfolios, tend to perform better, implying that growth and expansion strategies can enhance financial stability. Capital adequacy emerged as a crucial determinant of financial health, with well-capitalized banks being more resilient to financial shocks and better positioned for growth. Management efficiency also played a key role, with better-managed institutions showing higher profitability through cost control and optimal resource allocation. These insights can guide policymakers and bank managers in crafting strategies to bolster the financial resilience of Microfinance institutions s, with an emphasis on maintaining robust capital adequacy ratios and enhancing managerial capabilities to drive longterm sustainability and competitiveness.
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    Fiscal Deficit on Cost of Credit: Does It Matter? Insights from Selected Listed Commercial Banks in Kenya
    (International Academic Journal of Economics and Finance, 2025-09) Ndung’u, Evanson Waweru; Musau, Salome
    The banking sector is an integral player in any economy due to their role in financial intermediation. They collect surplus cash from savers and redistribute to borrowers. However, commercial banks have consistently suffered poor performance arising from high cost of credit. The exorbitant cost of lending has led to an enormous rise in non-performing loans during 2002 to 2023, which adversely impacted banks’ profitability. The study primarily aimed at examining the effect of fiscal deficit on lending costs for a subset of Kenyan Nairobi Stocks Exchange (NSE) listed commercial banks. The study was anchored on the Keynesian liquidity preference theory. A census of Kenya's NSE listed twelve commercial banks was the descriptive survey research design’s main focus. Using a secondary data collection sheet, the review amassed secondary data from 2007 to 2023 spanning 17 years. Pearson's correlation coefficient, panel multiple regression analysis, and descriptive statistics (mean score, frequencies, standard deviation, minimum, and maximum) analyzed data. Tables were used to display the results. The corrected Rsquare value demonstrated that fiscal deficit explains a substantial share of fluctuations in borrowing costs. Regression analysis evidenced that fiscal deficit positively and significantly influenced costs of credit. The review therefore concluded that fiscal deficit when properly managed can reduce the cost of credit thus leading to additional borrowing and economic growth. These results yield critical implications for commercial bank managers, policymakers and researchers. The results indicate that prudent fiscal deficit management is necessary to prevent excessive pressure on credit markets.
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    Internal Audit Function and Financial Accountability of Laikipia County Government, Kenya: Application of Internal Audit Independence
    (IOSR-JBM, 2024) Maina, Susan Mumbi; Musau, Salome
    The public sector has experienced a growing demand for accountability and the need to optimize value within the constraints of limited resources. This research sought to assess the effect of internal audit function on financial accountability in the county government of Laikipia, Kenya. The specific objective of the study was to evaluate the effect of independence of the Internal Audit function on financial accountability of Laikipia County Government. The study targeted 105 employees working in the finance and economic planning department. Out of these, a sample of 51 employees were chosen and 48 questionnaires were duly filled and qualified for analysis. Data was gathered, sorted, coded, and entered on SPSS for analysis. Descriptive statistical analysis was applied to provide a summary of the data using mean as well as standard deviation metrics. Correlation and multiple regression analysis were employed to explore relationships and provide insights into the variables. The outcomes were presented using tables and charts. The questionnaire was found to be reliable, and the data was normally distributed and homogeneous, with no intercorrelation between the variables under study. The model adopted in the study was confirmed significant using ANOVA. Independence of the audit function was found to be a positive and significant predictor of financial accountability. The study recommended that policymakers should: enhance the independence of the audit function in Laikipia County Government by structurally separating the internal audit section from the Finance and Economic Planning department to strengthen its oversight capacity; implement measures to manage conflicts of interest, minimize management interference, and ensure adherence to auditing standards. To enhance effective financial accountability in the public sector, future research should examine factors influencing internal audit effectiveness.
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    International Financial Reporting Standard 9 and Performance of Commercial Banks in Kenya
    (African Development Finance Journal, 2025-03) Thogo, Mburu Daniel; Warui, Frederick; Musau, Salome
    Commercial banks play a critical role in resource allocation and financial intermediation, channeling funds from depositors to investors. In response to the 2007–2008 global financial crisis, regulators introduced measures to enhance financial stability, including the International Financial Reporting Standard 9 (IFRS 9), issued by the International Accounting Standards Board in 2014. IFRS 9 replaced IAS 39, aiming to strengthen bank financial performance through a forward-looking credit risk management framework and expected credit loss (ECL) provisioning. However, studies have suggested that the early recognition of credit losses and stricter risk management practices under IFRS 9 may negatively impact bank profitability. This study examines the impact of IFRS 9 on the financial performance of commercial banks in Kenya, focusing on loan loss provisioning, credit risk, and capital adequacy. Additionally, bank competition was analyzed as a moderating factor. The research is grounded in Credit Risk Theory, Asymmetric Information Theory, Agency Cost Theory, the Basel Capital Adequacy Framework, and the Structure-Conduct-Paradigm Theory. A positivist research philosophy and a longitudinal design were employed, utilizing secondary data from 39 banks over the period 2018–2022, sourced from audited financial statements and Central Bank of Kenya supervision reports. Descriptive statistics and panel regression analysis were conducted, alongside diagnostic tests to ensure data reliability. The findings indicate that loan loss provisioning, credit risk management, and capital adequacy have a significant positive impact on bank performance. Additionally, market share was found to moderate this relationship. The study recommends that bank managers enhance loan loss provisioning, maintain adequate capital buffers to meet regulatory requirements, and strategically expand market share to improve financial performance.
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    Inventory Management Systems and Profitability of Small and Medium Manufacturing Firms in Nairobi City County, Kenya
    (International Academic Journal of Economics and Finance, 2025-05) Njagi, Rosaline Karimi; Musau, Salome
    Inventory management is a critical component of operational efficiency particularly in manufacturing sector’ small and medium-sized enterprises (SMEs). In Kenya’s Nairobi City County, many SMEs face challenges related to inadequate inventory management systems, which can significantly impact their profitability. Therefore, the present study sought to ascertain inventory management systems effects on profitability of Kenya’s Nairobi City County small and medium manufacturing firms with specific objectives on establishing effects of lean inventory system, Economic Order Quantity system and Just in Time inventory system. Dynamic theory of profit, theory of constraints, Economic Order Quantity model, Innovation Diffusion and Just-InTime model theory anchored the examination. Employing descriptive research, Nairobi’s SMMEs as target population was categorized as follows; food and beverage production, textiles and apparel, metal fabrication, plastics, woodwork and electronics. The respondents were the 1333 owners of the firms. The study employed a stratified sampling design and purposive sampling method for respondents’ selection where 308 forms the sample size. The research employed a questionnaire as its primary tool. The research systematically collected quantitative data which were analyzed using descriptive statistics, summarizing key features specifically mean and standard deviation which describe central tendency, variability, and distribution. Inferential statistics of correlation and regression analysis was adopted. The diagnostic tests comprised normality, multi-collinearity and autocorrelation tests. Tables and figures presented findings clearly. The study found that there was a positive significant relationship between establish lean inventory system, economic order quantity system and just in time inventory system and Kenya’s Nairobi City County SMME’s profitability. The study concludes that lean inventory solutions significantly lower the expenses associated with obsolescence, insurance, and storage by reducing excess inventory. The economic order quantity system allows businesses to release capital that would typically be engaged in surplus inventory, facilitating reinvestment in growth opportunities or enhancements to profit margins. The just-in-time inventory system removes waste from production, allowing businesses to enhance product quality. The study recommends that companies should ensure proper process standardization by implementing clear and consistent procedures for inventory management, which helps enhance efficiency and minimize errors. The businesses ought to focus on reducing ordering expenses by making fewer, larger orders to lower the administrative costs linked to ordering and receiving inventory. The companies ought to perform precise forecasting to accurately anticipate demand, which assists in ensuring that supplies arrive on time, reducing delays and surplus inventory.
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    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.
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    Mobile Banking and Financial Inclusion of Traders in Homa-Bay Municipal Market, Kenya
    (Journal of Finance and Accounting, 2025-07) Awiti, Brian Onyango; Musau, Salome; Abdul, Farida
    Governments and financial institutions are striving to enhance access to formal financial services for traders, particularly those in remote regions. However, in Kenya, small-scale traders still encounter significant challenges such as lack of collateral, limited credit history, and high costs associated with formal financial services, hindering their access to necessary capital for business growth. This study aimed to examine the effect of mobile banking services on financial inclusion among traders at Homa-Bay municipal market, Kenya. The study was anchored on the Technology Acceptance Model (TAM) and adopted a descriptive research design, targeting traders from the Homa Bay Municipal Market, which had a total of 2,000 traders according to the Homa Bay County Council. The study employed the Yamane (1967) formula to select a sample size of 333 respondents, who were chosen using stratified random sampling. Questionnaires were used as the primary data collection method. SPSS computer software was used to facilitate the analytical process. The findings revealed a significant positive correlation between mobile banking services and financial inclusion (r = 0.218, p = 0.000). Regression analysis showed that mobile banking services significantly affected financial inclusion with an unstandardized coefficient of 0.164 and a standardized beta of 0.156 (β=0.164, t=2.515, p=0.000). The results indicated that a one-unit increase in mobile banking services resulted in a 0.164 unit increase in financial inclusion among traders. The study concludes that mobile banking services play a pivotal role in enhancing financial inclusion among traders in Homa-Bay municipal market by offering tailored banking solutions such as account management, fund transfers, and bill payments. Thestudy recommends that financial institutions and mobile service providers should develop targeted education and awareness campaigns, enhance security and reliability of platforms, while policymakers should prioritize expansion of mobile network infrastructure and enforce policies promoting competition among service providers to improve accessibility and affordability of mobile banking services.
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    Nexus between Financial Technology and Investment Decisions among Youths Involved in Sports Betting in Nairobi City County, Kenya
    (EdinBurg, 2024-12) Kipkirui, Nahashion; Musau, Salome
    AbstractPurpose:Increased access to technology and the widespread use of technology devices in Africa have created new opportunities for sports betting that were not previously available.Sport betting has taken off among Kenya’s youth population, who are mostly sports lovers. Poor investment decisions among the youths have led to these youths suffering huge losses.This study aimed to ascertain how financial technology influences the investment choices made by young people in Nairobi City County, Kenya who bet on sports. This study aimed to specifically investigate how data-based services, mobile services,anddigital platforms affect the decisions of young people who bet on sports. Methods:Prospect theory, technological acceptance theory, and heuristic theory applications were used to support this study. The study employed a descriptive research designand target population was 302,540 young people who wager on sports. In this study, 384 young people were sampled using a basic random sampling technique. Primary data was collected using a questionnaire and analyzed using correlation and regression analysis. Results:The study foundthat among young people who bet on sports, data-based services, mobile services, and digital platforms had a positiveand significant impact on investment decisions. Conclusion:The study concluded that financial technology has a significantly positive effect on investment decisions among youths involved in sports betting in Nairobi City County, Kenya. It is imperative for policymakers overseeing sports betting organizations to establish laws that facilitate the establishment of social media accounts by betting companies that effectively and efficiently disseminate information about sports bets.The government needsto lower the data subscription charges to allow the youths to place their bets.The management of sports betting organizations should keep funding mobile money technologies.