Browsing by Author "Oira, Sammy Machoka"

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    Credit Information Sharing and Performance of Selected Commercial Banks in Kenya
    (International Academic Journals, 2018) Oira, Sammy Machoka; Wamugo, Lucy
    Many banks in Kenya have been experiencing poor financial performance. Most of these financial problems arise from lack of credit information on the loan applicants which then affect their ability to recover both the principle and the interest. There have been efforts by the Central Bank of Kenya to advance credit information sharing on loan applicants among commercial banks so as to reduce the default rates among loan beneficiaries. This study aimed to establish the effect of credit information sharing on the performance of selected commercial banks in Kenya. The specific objectives were; To establish the effect of competitive information sharing on performance of commercial banks in Kenya; to assess the effect of credit scoring on the performance of commercial banks in Kenya; to establish the effect of efficiency in the information gathering process on the performance of commercial banks in Kenya and to assess the effect of information accuracy on the performance of commercial banks in Kenya. This study employed a descriptive research design. The study was anchored on information asymmetry theory, moral hazard theory and financial intermediation theory. The population of this study entailed all the 43 commercial banks licensed under the banking Act as at 31 December 2015 in Kenya. The study used primary and secondary data. Primary data was collected using closed ended questionnaires administered on drop and pick method while secondary data was collected from CBK annual supervision reports and the banks specific audited accounts. Data was analyzed using both descriptive and inferential statistics. The qualitative data collected was analyzed using mean, standard deviation, frequencies and percentages while inferential statistics including multiple regression analysis was performed to estimate the changes in performance following changes in credit information sharing variables. The study used tables and charts to present the analyzed data. From the findings, there exist a strong correlation between variables. The study established that the credit information sharing explained for a large proportion of changes in the performance of commercial banks in Kenya. The overall regression model was significant in determining credit scoring on credit information sharing and performance of commercial banks in Kenya as shown by the value of R2. The study established that credit scoring system has a significant effect on capability to repay loans. The study recommended that credit scoring system should give information on borrowers’ capability to repay loans, credit scorecards tools should be used to assess the behavior of prospective borrowers while good credit track record should reduce credit risks.
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    Post-Merger Commercial Bank Performance Trends: A Case of Kenya
    (Stratford Peer Reviewed Journals and Book Publishing, 2024) Oira, Sammy Machoka; Omagwa, Job; Abdul, Farida
    Commercial banks face performance challenges since most of them react to these challenges in a fairly standardized manner. This is because most of the commercial banks offer similar products and services. In so doing, they face high competitions and as a result, they engage activities in pursuit of a competitive edge in order to keep their current customers and attract new ones. Some of the strategic activities these companies have engaged in the recent past have been Mergers and acquisitions (M&A). M&A have become an effective strategic tool to consolidate the Banks and Financial Institutions (BFIs) in Kenya to increase their capital base, expand their business, and bring financial stability. However, despite venturing into mergers and acquisitions, evidence from elsewhere indicates that financial performance stability and improvement still remains a challenge forming a good basis for further empirical investigation. This paper provides an assessment of the post-merger commercial bank performance in Kenya over the period 2008 to 2019 using return on equity as a proxy for bank performance. The target population for this study comprised all 13 commercial banks operating in Kenya between the year 2008 and the year 2019. The study used purposive sampling to select thirteen (13) commercial banks that had undergone mergers and acquisitions in Kenya over eleven years (from 2008 to the year 2019). The study finds that the post-merger effect of mergers and acquisitions on financial performance is mixed. Some commercial banks reported improved ROEs while a few reported declining ROEs during the study period. To enhance performance, the study recommended that commercial banks should prioritize M&A opportunities that align with their long-term strategic goals. This might include expanding into new geographic regions, entering new markets, diversifying product offerings, or gaining access to new technologies. Banks should assess the potential risks associated with the M&A transaction, including credit risk, operational risk, and reputational risk. Develop strategies for mitigating these risks and ensuring a smooth transition.
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    The Link between Financial Synergy and Financial Performance of Commercial Banks: A Case of Kenya
    (Stratford Peer Reviewed Journals and Book Publishing, 2023-11) Oira, Sammy Machoka; Omagwa, Job; Abdul, Farida
    Despite the significance of commercial banks in Kenya, their financial performance has been fluctuating over the last decade. The overall trend of financial performance (measured by Return on Equity in year 2018 to year 2022) has been inconsistent and largely erratic, with the lowest ratio recorded being 14.1% in 2018: this improved slightly in year 2019 then rose to 14.9% before dropping to 13.9% in 2020. The highest Return on Equity (at 25.6%) was recorded in the year 2022. Although the banking sector has documented growth in Assets, financial performance (in terms of Profitability) has been declining in the recent past. Empirical evidence linking financial synergy and financial performance of commercial banks documents mixed results on the nature and type of relationships. However, it remains an issue for further empirical investigation as to whether financial synergy has a significant effect on the financial performance of commercial banks in Kenya. Hence, the study sought to assess the relationship between financial synergy and financial performance of commercial banks in Kenya. The theories underpinning the study are: synergistic mergers theory and tax incentive hypothesis theory. The target population comprised 13 commercial banks which had undergone mergers and acquisitions in Kenya over the 11-year time scope (2008-2019). Positivism research philosophy and explanatory research design were adopted. The study was a census of the 13 Commercial banks. Panel data was used-the data was obtained from the audited financial statements, and Central Bank of Kenya supervisory reports. The study finds a positive and significant link between financial synergies and financial performance (P = 0.001). In view of the findings, the study recommends that institutions critically evaluate the overall business and operational compatibility of the merging institutions and focus on capturing long-term financial synergies, as this has a positive effect on financial performance.
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    The Relationship between Operational Synergy and Firm Performance: A Review of Literature
    (Stratford Peer Reviewed Journals and Book Publishing, 2023-08) Oira, Sammy Machoka; Omagwa, Job; Abdul, Farida
    Theoretical and empirical evidence has documented erratic and fluctuating firm performance amongst financial firms worldwide and across different economic sectors. The need to stabilize firm performance has instigated a variety of corporate reorganization strategies including Mergers and Acquisitions. However, theoretical and empirical literature has not been quite categorical on the link between operational synergies (arising from Mergers and Acquisitions) and firm performance. Firms have increasingly inclined towards operational synergy to enhance firm performance. Operational synergy has consistently improved firm performance outcomes in most firms. However, while numerous studies have examined the relationship between operational synergy and performance, there exists a need to synthesize and consolidate the findings across diverse contexts and economic sectors. Hence, the purpose of this review was to determine the relationship between operational synergy and firm performance via desktop review. The study was informed by three theories; The Theory of Misvaluation, The Hubris Theory and Stakeholder Theory. The review adopted a positivist research philosophy and desktop review design via evidence-based approach. The Study Documents that operational synergy has a significant effect on firm performance. Additionally, the review finds that firms which actively pursue operational synergy strategies exhibit improved financial performance, cost reduction, streamlined processes, and higher customer satisfaction. The study further finds that firms which successfully achieve operational synergy, particularly through mergers and acquisitions, have a tendency to outperform their competitors financially, with improved profitability, cost efficiency, and overall financial performance. Hence, the study recommends that firms should prioritize the development and implementation of strategies that foster operational synergy such as promoting a culture of collaboration, communication, and integration across different operational functions.