Browsing by Author "Theuri, Joseph"

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    Bank Regulation and Level of Non-Performing Loans in Commercial Banks in Nakuru County Kenya
    (IJCAB, 2020) Muhanji, Indeje Geoffrey; Theuri, Joseph
    The study sought to determine the effect of bank regulation and level of nonperformingloans in commercial banks in Nakuru County Kenya. The specific objectives of the study were to explore the effect of capital adequacy on the level of nonperformingloans in commercial banks in Nakuru County Kenya, to find out the effect of asset quality on the level of nonperforming loansin commercial banks in Nakuru County Kenya, to evaluate the effect of liquidity management on the level of nonperforming loans in commercial banks in Nakuru County Kenya, to examine the effect of management efficiency on the level of nonperforming loansin commercial banks in Nakuru County Kenyaand todetermine the moderating effect of macroeconomic factors on the relationship between bank regulation and level of nonperforming loans. The literature review focused on portfolio theory of investment, capital asset pricing theory andthe capital buffer theory of capital adequacy.The primary data was collected using structured questionnaires and secondary data was collected from the banking survey 2017 and central bank of Kenya annual supervisory reports. The study employed multiple linear regression analysisandthe findingrevealed that there exist a negative and statistically insignificant relationship between capital adequacy and non-performing loans. It was also observed thatthere exist a negative andstatistically insignificant relationship between liquidity management and non-performing loans. On the other hand, there exist a positive and statistically significant relationship between asset quality and non-performing loans. Similarly, there exist a positive and statistically insignificant relationship between management efficiency and non-performing loans.Finally, the findings indicated that macroeconomic factors have moderating effect on the relationship between bank regulations and non-performing loans in commercial banks in Nakuru County.It was concluded that asset quality positively influencesnon-performing loans while management efficiency influence positively the non-performing loans. Similarly, liquidity management exerts a negative influenceon non-performing loans. Finally, capital adequacy influence negatively on non-performing loans. The study recommends that Central Bank of Kenya should regularly access lending behavior to ensure compliance with banking regulations to avoid increasing incidences of non-performing loans. In addition, Central Bank of Kenya should closely monitor banks with deteriorating asset quality. Further, Central Bank of Kenya should strictly monitor the economic sector and ensure that banks provide adequate provisionsfor loans to mitigate risks of default. Furthermore, banks should maintain a good balance on deposits and lending out loans and adhere to regulators decisions about monetary policies. Finally, banks should increase the operational efficiency of operation weakness and improve corporate governance on the sanction of loans and Central Bank of Kenya should focus on managerial performance in order to detect banks with potential increases in non-performing loans.
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    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.
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    Credit Information and Asset Quality of Commercial Banks in Nakuru Town, Kenya
    (IJCAB Publishing Group, 2019) Kaigu, Kinyati John; Theuri, Joseph
    The study sought to establish the effect of credit information on the asset quality of commercial banks in Nakuru Town, Kenya. The specific objectives of the study are to determine the effect of collateral information on asset quality of commercial banks in Nakuru Town, Kenya, to determine the effect of business ratings information on the asset quality of commercial banks in Nakuru Town, Kenya, to determine the effect of consumer identity verification information on the asset quality of commercial banks in Nakuru Town, Kenya, to determine the effect of customers credit status information on asset quality of commercial banks in Nakuru Town, Kenya and to establish the effect of consumer default information details on asset quality of commercial banks. The literature review focused on bank risk management theory, loanable funds theory, Merton’s default risk model and asymmetric information theory. Primary data was collected using questionnaires in order to get accurate results. The study used regression analysis and the findings revealed that Business Ratings and Collateral Information significantly influences up to 59.4% and 17.6% positive variation on Asset quality respectively. This implies that for every one unit increase in business ratings information asset quality increases by 59.4 % while collateral information increases asset quality increase by 17.6 %. It was also observed that consumer default information significantly influences 36.3% positive variation on asset quality. However, it was noted that Customer’s Credit Status Information significantly influences 32.5% negative variation on Asset quality. This implies that for every one unit increase in Customer’s Credit Status Information, Asset quality decreases by 32.5%. Similarly, Consumer Identity Verification Information influences negatively Asset quality by 9.3%. In this study, Business ratings information is the best predictor of asset quality. It was concluded that Collateral information, business ratings information and consumer default information influences positively asset quality. However, consumer identity verification information and customer’s credit status information influences negatively on asset quality. The study recommends that Collateral information should be controlled in order to promote positive loan performance by commercial banks as well as that business ratings information should be adequately provided in order to enhance quality assets of commercial banks.
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    Firm Characteristics and Quality Audit of Firms Listed at the Nairobi Securities Exchange in Kenya
    (International Academic Journals, 2018) Otieno, Mildred Aluoch; Theuri, Joseph
    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.