MST-Department of Accounting and Finance

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Access to Capital Finance and Performance of Small Scale Farms in Nyandarua County, Kenya
(Kenyatta University, 2023-11) Njui, William Ndung’u; Jeremiah Koori
As per the World Bank, the common farmer in Sub-Saharan Africa delivers only one ton of grain for every hectare, which is less than 50% of what an Indian farmer creates, a fourth of what a Chinese rancher produces, and a fifth of what an American rancher produces. The situation is equally worrying in the food basket region of Nyandarua County-Central Kenya, where the productivity of major crops produced like potatoes, peas and cabbages has been constant or declining significantly in recent years, even as the population continues to increase. Latest Food and Agricultural Organisation statistics show a country wide drop from an average of twenty tonnes per hectare for potatoes in the year 2010 to nine tonnes per hectare in 2020. This points out to dwindling financial fortunes for the Kenyan farmer. Access to capital finance is considered an important factor in growing the yields of populations in rural areas, primarily by marshalling resources to more fruitful activities. The general objective of this study is to establish the effect of access to capital finance on the performance of small scale farms in Nyandarua County. The specific objectives include identifying the effect of money market, cost of credit, terms of credit and, financial knowledge on the performance of small scale farmers in Nyandarua County. Finance and growth theory, finance and inequality theory are the two main theories that guided the research. The study used descriptive research design whereby questionnaires were used to collect primary data. Proportionate sampling technique was applied to select the required sample size. The sampling frame was proportionately calculated as per the sub-counties population in the 2019 Census using a sample of 100 farms. The study applied panel random effect regression model. Statistical Package for Social Sciences STATA, was used to analyse the data. Multiple regressions was applied for analysis of data. The study establishes that costs of credit, terms of credit and financial knowledge significantly influence the performance of small scale farmers in the county while money market has insignificant influence. Other factors that influence the performance of small scale farmers are education level and account ownership. The study recommends that financial institutions should lower lending rates to small scale farmers to enable financial flow in order to enhance crop yield and spur economic growth for the farmers and Kenya at large. Further, the financial institutions should provide credit at affordable terms by extending repayment period to allow the farmers to harvest their produce, sell and then make repayment. Further research should be carried out in other counties to determine which factors influence crop production to promote food security and accelerate economic growth. Further studies should also be done to determine what contributes to low agricultural yield, even though Kenya is considered to have a well-developed financial sector to support agricultural production. Lastly, research should be done to determine the insignificant influence of money market on the performance of small scale famers in Kenya and how it can be harnessed to increase agricultural productivity.
Accessibility to financing by micro and small enterprises in Kenya : a case of Gikomba Market Nairobi
(2011-11-11) Lipio, Mugambi
Small and Medium Enterprises (SME's) are important for raising the economic efficiency of a country. They are breeding grounds for entrepreneurship, innovations and inventions hence a reservoir for employment. Sustainable jobs, creates income which in turn reduces the level of poverty. In Kenya, the SME's have not grown to any notable impact often citing lack of finance. The Kenyan financial system is marked by a dualistic structure. It is characterized by the existence side by side of formal and informal financial markets. The informal suppliers of credit make up in part for the provision of the financial services. This then raises the issue on what determines whether the financial institutions will advance to the SME's credit.The objective of the study was to investigate the accessibility to financing availability by SME's in Kenya, with a special reference to Gikomba Market in Nairobi. The constraints faced in accessing formal credit and the awareness of the financing from the formal sources to the SME's was addressed. The study was intended to be of help to individual entrepreneurs, investors, banks, micro finance organization, and the government as well as other researchers and in creating and facilitating enabling credit policies to SME's in Kenya.The study used stratified random sampling and then applied the simple random sampling to select respondents from the selected stratas. There were 10 categories of respondents or stratas where 10 respondents were picked randomly from each category and therefore, 100 respondents were studied. Data was gathered using questionnaires. and observations.The data was analyzed by using statistical package for social sciences (SPSS). It was then presented in tables, graphs, and pie chart and cross tabulations. Based on the. findings, data and descriptive statistics were provided as well as the conclusions of the findings and recommendations.The research results revealed that institutional credit to SME's has been substantially used despite the current strong interest of the credit. Interest rates, collateral requirement, cumbersome documentation and time involved were investigated and were found out to be some of the factors constraining access to formal credit.
Accounting Information Systems and Financial Performance of Small and Medium Enterprises in Kirinyaga County, Kenya.
(Kenyatta University, 2023) Mwangi, Stephen; John Mungai
Maintaining solid accounting1records is a significant component that contributes1to appropriate decision-making because it is the source of essential informational1requirements. Indeed, in the SME sector, the quality of accounting information used has a favorable link with an entity's success. In small and medium businesses, information and technology adoption is slow and has also harmed SMEs in Kirinyaga County and Kenya. The issue of poor accounting system acceptance can be linked to the initial goal of adopting information technology, which was primarily aimed to substitute the manual accounting processes, which has since hampered future use and investigation of the systems' benefits. This study sought to determine how accounting11information systems, influence the financial1performance of SMEs. Precisely the research sought to evaluate the influence of accounting information1systems records, accounting information1systems service quality, accounting information1systems data quality and accounting systems quality on the SMEs financial performance in Kirinyaga1County Kenya. The findings of this study helped SMEs improve their financial reporting and record-keeping which will benefit management in monitoring, planning on decision making ensuring their survival1in the business sector. The population of interest comprised of 1420 owners and managers which were registered with Ministry of Trade in Kirinyaga County. The descriptive research technique was used for this study. The population of interest comprised of 1,420 owners and managers which were registered with Ministry of Trade in Kirinyaga. Stratified sampling through the use of Yamane’s formula was applied. Primary1data was used for this study and was obtained using a questionnaire which was quantitative in nature and thus close-ended questions was used. Quantitative data analysis using descriptive statistics was adopted. Additionally a multiple regression and Pearson correlation analysis was used.The accounting information systems1records had a significant positive effect on financial performance of SMEs in Kirinyaga County, Kenya. This indicates that improving the way SMEs store and prepare their buy and sales ledgers helps enhance their financial performance. This indicates that financial success has a very strong positive relationship with competent bookkeeping. The results on accounting information systems service quality indicates that the variable had a positive and significant effect on financial performance. The results on accounting information systems data quality indicated that the variable had a positive and significant effect on financial performance. The accounting information systems quality had a positive significant effect on financial performance. The SMEs have made significant investments in accounting information system quality in order to improve their day-to-day operations. But to majority of the SMEs such an investment does not produce the intended results due to system failure, system error, and the generation of incorrect data, all of which impact decision-making processes. Relevance, correctness, understandability, and dependability of the accounting information systems quality were evaluated with performance, based on the premise that there is a link between accounting information quality and small and medium company performance.
Accounting Information Systems and Financial Performance of Small and Medium Enterprises in Mombasa County, Kenya
(Kenyatta University, 2023) Kirigha, Francisca Wanjala; Peter Ng'ang'a
Manually entering and documenting everyday business transactions has become impractical; organisations have realised the usefulness of adopting accounting information systems to improve their performance. An accounting information system is a data management and processing system that provides managers with the information they need to plan, manage and run a business. The study aimed to examine the effect of accounting information systems on the financial performance of small and medium enterprises in Mombasa County, Kenya. The study's objectives were to see how record-keeping systems, financial reporting systems, budget control systems, and cash management systems affected the financial performance of small and medium enterprises in Mombasa County, Kenya. The Technology Acceptance Model, Agency Theory and Decomposed Theory of Planned Behaviour were used to drive the study. This study adopted a descriptive research design and targeted 1640 small and medium enterprises located in Mombasa central business district that have been in operation for more than five years. 268 small and medium enterprises managers/owners were chosen using stratified random sampling. Data was gathered via questionnaires. A pilot test was conducted to ensure the tool’s validity and reliability. Statistical Packages for the Social Sciences version 24 was used to analyse data using descriptive analysis and inferential statistics. Ethics were followed before, during and after the study was completed. The study concluded that there is a strong significant relationship between record-keeping systems and financial performance of small and medium enterprises in Mombasa County, Kenya. The study also concluded that a strong significant relationship exists between financial reporting systems and financial performance of small and medium enterprises in Mombasa County, Kenya. The study went further to conclude that a strong significant relationship exists between budgetary control systems and financial performance and finally a strong significant relationship exists between cash management systems and financial performance of small and medium enterprises in Mombasa County, Kenya. As a result of the clear relationships established between variables the study was able to conclude that a clear relationship exists between accounting information systems and financial performance of small and medium enterprises in Mombasa County, Kenya. The study recommends the Government to develop policies and guidelines that will encourage small and medium enterprises to adopt accounting information systems, as well as Institute of Certified Public Accountants of Kenya to offer free consultation services to small and medium enterprises on choosing appropriate accounting systems, financial management and reporting.
Accounts Receivable Management and Financial Performance of Kericho Water and Sanitation Company Limited, Kericho, Kenya
(Kenyatta University, 2018-10) Siele, Charles Kipkirui
Account receivables have been a major problem for most utility service providers especially those still dealing with the post payment method where services are rendered before payment is made. This study sought to find out if financial performance of Kericho Water & Sanitation Company (KEWASCO) was attributed to management of accounts receivable. The study collected secondary data spanning from 2010 to 2014 from Kenya national audit office and KEWASCO published financial statements to find out average collection period and accounts receivable turnover. The target population included employees of KEWASCO in two regions, Kericho and Bureti working in finance. Data was collected using questionnaires where a census was employed and data analyzed using regression and correlation analysis to find if there is any relationship between financial performance and accounts receivable at 5% significance level. From the findings inventory turnover period and average payment period is averagely 30.14 days and 105.45 days respectively, accounts receivable turnover had a mean of 24.54, average collection period (29.8) size of the region (1.547). The results showed that KEWASCO, financial performance variable Return on Equity (ROE) was significantly affected on Size of the region with positive correlation of 0.688 and Inventory Turnover with negative correlation of 0.245. According to the regression equation established, taking all factors into account; size of the region, Average Payment Period (in Days), Accounts receivable turnover, and Average collection period) financial performance of KEWASCO, measured by ROE was 0.752 (75.2%).This study recommended that the organization should increase average collection period, inventory period, accounts receivable turnover and debt levels in order to improve their financial performance.
Activity Based Costing and Financial Performance of Manufacturing and Allied Companies Listed on Nairobi Securities Exchange, Kenya
(Kenyatta University, 2023) Arithi, Vandrose; Joseph Theuri
Activity-based costing is vital in cost information analysis for financial decision making hence has a link to the net returns of a firm. However, Kenya’s manufacturing companies are experiencing undesirable financial performance as demonstrated by inadequate profits and slow growth in overall net returns. It is against this challenge that the researcher examined the effect of activity-based costing on financial performance of manufacturing companies listed on the Nairobi Securities Exchange. The specific objectives of the study included; to determine the effect of resource management, cost activities determination, cost driver selection and cost objects on financial performance of listed manufacturing companies. The study was anchored on theories comprising positive accounting theory, theory of constraints, and profit maximization theory. Survey research design was employed. The study’s target population comprised all the eight manufacturing companies listed on the Nairobi Securities Exchange while the unit of analysis was the managers. Census technique was employed and structured questionnaire was used in collection of data. Data analysis was done through descriptive and inferential statistical methods via aid of Statistical Packages for Social Sciences (SPSS) version 24. Descriptive findings established that activity based costing parameters; resource management, cost activities determination, cost driver selection and cost objects determination affected the financial performance of listed on the Nairobi Securities Exchange. Correlation analysis results revealed that all the variables had a significant relationship with financial performance. Therefore, activity-based costing affected financial performance. Regression analysis results indicated that the coefficient of determination was 0.723 thus activity-based costing accounted for 72.3% variation in financial performance. The study concluded that appropriate management of resources enables manufacturing firms to plan, schedule, forecast and optimize costs and returns. Use of activity-based costing is a great way of managing the resources of manufacturing companies and promoting financial performance. It is also concluded that cost driver selection has a great relevance on the management of costs and enhancement of the Returns on Assets (ROA) for listed manufacturing companies. The study recommends that a comprehensive implementation guidelines and principles for adopting activity-based costing should be developed. Manufacturing companies should intensify the utilization of activity-based costing in the management of resources. It is also recommended that cost driver selection as part of activity-based costing should be integrated into the financial plans of listed manufacturing companies. This integration will lead to cost minimization and optimization of returns.
Adequacy of retirement income in defined contribution pension plans : case of teachers service commission and Jomo Kenyatta foundation
(2011-08-19) Ogot, Calleb Odhiambo
The study is a comparative analysis of adequacy of income in Defined benefits Pension plans and defined contribution pension plans. The main objective of the study is to establish whether retirees will have adequate income at retirement under defined contribution pension plan and its differential effects on income distribution among different categories of retirees. Problem with Defined Contribution Pension plan is that the benefits to retirees are not certain because the benefits depend on the contribution rates and investment returns. Because of undeveloped capital markets in most developing countries, it is unclear whether retirees can achieve adequate replacement ratio in defined contribution pension design. The two-thirds retirement model of Macdonald and Cairn (2006) was used to test adequacy of retirement income. If the DC yields a replacement ratio of forty percent, the retirement income will be considered adequate for this study. According to the World Bank and International Labor Organization, 40% replacement ration is considered adequate for developing economies. To determine the inequality of income among retirees in the two pensions plans a gini coefficient was used. Using a sample of 118 employees of the Teachers Service Commission and 40 staff of the Jomo Kenyatta Foundation, the study established that employees with DB plans are likely to be more secure in terms of retirement income than retirees under the defined contribution pension plan. The results also show that there is greater disparity of retirement income under the Defined Contribution Pension design than under the Defined Benefit plan. The key findings are that DC plans tend to have lower retirement income and higher income disparity among workers compared to DB designs. Whereas basic earnings contribute about 80% of retirement benefits under the defined benefits plans, contribution rates and investment returns contribute about 60% of retirement benefits in Defined Contribution pension plan.
Adoption of Agency Banking and Operational Cost of the Commercial Banks in Kenya
(Kenyatta University, 2021) Otigo, Bob; James Muturi
The adoption of financial innovation by commercial banks has been a strategic move aimed at expanding the market share of most commercial banks. The adoption of agency banking service by most commercial banks has assisted banks to render effective services to its consumers and businesses. Despite most of the studies on agency banking adoption indicating that the aim is to reduce the cost of operations, there remains a gap on studies seeking to establish whether agency banking has had a statistically significant effect on operating costs of the bank such as cost of labor, rental charges, cost of depreciation charge on plant and equipment, cost of utilities and marketing costs hence the motivation for this research. This study sought to evaluate the relationship between adoption of agency banking and operational costs by commercial banks in Kenya. Specifically, the study sought to address the following objectives; to assess the relationship between availability of financial services and operational costs by commercial banks in Kenya, to analyze the relationship between financial inclusion and operational costs by commercial banks in Kenya, to determine the relationship between accessibility to financial services and operational costs by commercial banks in Kenya. The study was anchored on three theories that is; Agency theory, Bank -lead theory and diffusion of innovation theory. The study adopted the cross sectional design in analyzing data from various commercial banks over a period of time. The target population of the study constituted all the 11 commercial banks that have adopted agency banking by 2014 since its authorization in the year 2010. All the 11 banks were considered for the study indicating that a census was appropriate. A research window of four years before and after the adoption and 4 years after the adoption was considered. The data collection was done using a secondary data capture tool where various costs were extracted from the financial statements of the 11 banks between 2006 and 2014. The results were analyzed using descriptive statistics of mean and standard deviations and inferential statics of correlation, simple and multiple regression and t- test to test the significance of the change. The research considered all ethical considerations and norms regarding researches in Kenya and Kenyatta University. The results have indicated that operating costs reduced for those banks that had adopted agency banking since the mean difference before adoption was much more than the difference after the adoption. This was attributed to the fact that financial services were more available to the customers there was increased financial inclusion and also increase in access to financial services by the customers. The results showed that the mean difference measured by the t statistic in the three independent variables (availability, financial inclusion and accessibility) significantly contributed to the reduction in the operational costs among commercial banks that had adopted agency banking in Kenya. The results further indicated that the mean difference of availability, financial inclusion, accessibility and operating costs of commercial banks that had adopted agency banking by 2014 was statistically significance. The study concluded that agency banking adoption has had a very significant effect on the reduction of operational costs. The study recommends that commercial banks need to expand their services offered by agencies in order to reduce the cost incurred at the branch and make their financial services available and accessible to more unbanked customers. The results are expected to benefit the management of the commercial banks, and other stakeholders in the sector as it provided an insight to the agency banking in relation to operational costs.
Adoption of Digital Banking Technology and Financial Performance of Commercial Banks in Kenya
(Kenyatta University, 2020-10) Ouma, Stephen Otieno
Commercial banks play a leading role in the economic development of a country and this role of can be achieved only if the banks are stable. Digital banking technology is one way that commercial banks have used to improve their financial performance which is largely based on retail and corporate banking activities. Retail banking customers are widely spread geographically and this makes it a challenge to the banks to network in such a way that enables them to capture a wide area of customers as possible. Digital banking technology innovations has been established as one way of addressing the challenge of network. From the inception of digital banking, banks have improved their networks in areas of deposits, withdrawals and other banking activitiess. Despite the innovative ideas in digital banking, still there are gaps as some banks still fail and face imminent collapse. The objective of this study was to establish how digital banking technology innovations affects the financial performance of commercial banks. The study took a descriptive survey design and was driven by three objectives namely; determining the effect of access to digital banking technology on financial performance, assessing the influence of the turnaround time of digital banking technology on financial performance, and determining the effects of digital banking technology costs on financial performance. This study was anchored on financial intermediation theory, innovation diffusion theory and modern economics theory. A questionnaire was used to collect primary data over a target population of 42 commercial banks in Kenya. The study involved a census of the commercial banks in Kenya as at September 2018 and it encompasses collection of data basically through self-administered questionnaires targeting the finance and IT managers of the banks in their headquarters in Nairobi. The data collected was analysed using a descriptive method. The responses were tabulated, coded and processed by use of a computer statistical package for social scientists (SPSS) and findings of the study, were analysed and presented using statistical methods such as pie charts and bar graphs and frequency tables. From the findings and summary, the study concluded that the ease of access to digital banking through digital-banking technology innovations had a positive influence on the financial performance of commercial banks in Kenya. The study also concludes that the turnaround time of digital banking technology innovations had a positive impact on the financial performance of commercial banks in Kenya with many of the banking institutions recording high amount of deposits and improved loan values thus creating an opportunity of increasing their customer base.
Adoption of E-Procurement and Financial Performance of Ministry of Education, Science and Technology, Kenya
(Kenyatta University, 2018-11) Samoei, Abraham Kiprop
The core and critical challenge mostly experienced by MOEST include application of effective supply chain management procedures and practices as well as poor information and communication technology integration among others. MOEST is operating in emerging markets that have multi-businesses linked through supply chain management practices cross-subsidization and are therefore generally viewed as having a complex supply chain management system. The concept of finance considerably contributes to the performance of public institutions. In the current dynamic business environment, organizations require reliable and fast information so as to improve their decision making regarding adapting in an effort to improve organizational performance. The general objective of this study was to determine how e-procurement adoption affects the financial performance of Ministry of Education, Science and Technology, Kenya. The specific objectives were to find out the effect of e-tendering, e-sourcing, e-ordering and e-informing on financial performance of Ministry of Education, Science and Technology, Kenya. Descriptive research design was used. The population of the study was employees in the Ministry of Education, Science and Technology. The study used census method, implying that all the individuals in the target population were used. The study’s sample size was 40 staff working in information technology, accounts, procurement and finance departments. Primary data was collected from respondents via questionnaires. Descriptive statistics included percentages, frequencies, mean and standard deviation. Inferential statistics made use of multiple regression analysis. Statistical analysis of the data gathered revealed that e-tendering, e-sourcing, e-ordering and e-informing have a statistically significant effect on financial performance. The study found that e-tendering has a significant effect on the financial performance in the Ministry of Education, Science and Technology (r=0.788, p-value=0.006). In addition, E-sourcing had a significant effect on the financial performance in the Ministry of Education, Science and Technology (r=0.611, p-value=0.016). Further, e-ordering had a significant effect on financial performance in the Ministry of Education, Science and Technology (r=0.578, p-value-0.021). Also, e-informing had a significant effect with financial performance in the Ministry of Education, Science and Technology (r=0.852, pvalue= 0.000). The study recommends that MOEST should ensure that procurement policies and regulations are adhered to so as to be ethical in the tendering process. MOEST should enhance their e-sourcing activities so as to gain control over their tender processes and an audit path for compliance purpose and to support collaboration and allow various stakeholders to easily work together. MOEST should practice e-ordering in order to improve employee productivity, receive accurate orders, create a better experience for customers. Since e-informing has a positive influence on financial performance, the study recommends that it is important for MOEST to obtain the information of the suppliers on their previous clients as well as their experiences. It is also important to consult references for product/service quality, electronically, so as to improve the financial performance of MOEST.
Adoption of International Public Sector Accounting Standards and Quality of Financial Reporting in National Government Agricultural Sector Entities, Kenya
(Kenyatta University, 2024-04) Kabachia, Wanyoike Samuel
Ini Kenya,i thei agriculturali sectori playsi ai cruciali rolei ini thei country'si economy,i contributingi significantlyi toi GDP,i employment,i andi foodi security.i However,i despitei itsi importance,i challengesi persisti ini ensuringi transparenti andi accountablei financiali managementi practicesi withini Nationali Governmenti Agriculturali Entities.i Addressingi thesei challengesi requiresi robusti financiali managementi systemsi andi transparenti reportingi mechanismsi withini Nationali Governmenti Agriculturali Sectori Entities.i Therefore,i therei isi ani urgenti needi toi investigatei thei adoptioni ofi IPSASi andi itsi impacti oni thei qualityi ofi financiali reportingi withini Nationali Governmenti Agriculturali Sectori Entitiesi ini Kenya.i Thei generali objectivei ofi thisi studyi wasi toi determinei thei effecti ofi thei adoptioni ofi Internationali Publici Sectori Accountingi Standardsi oni thei qualityi ofi financiali reportingi ini nationali governmenti agriculturali sectori entitiesi ini Kenya.i Thei studyi wasi guidedi byi thei followingi specifici objectives:i toi assessi thei effecti ofi adoptingi ai standardizedi charti ofi accountsi oni thei qualityi ofi financiali reportingi ini nationali governmenti agriculturali sectori entitiesi ini Kenya;i toi assessi thei effecti ofi disclosurei andi valuationi ofi assetsi andi liabilitiesi oni thei qualityi ofi financiali reportingi ini nationali governmenti agriculturali sectori entitiesi ini Kenya;i toi evaluatei thei effecti ofi accountingi policies,i estimates,i andi errorsi oni thei qualityi ofi financiali reportingi ini nationali governmenti agriculturali sectori entitiesi ini Kenya;i andi toi determinei thei effecti ofi corporatei governancei reportingi oni thei qualityi ofi financiali reportingi ini nationali governmenti agriculturali sectori entitiesi ini Kenya.i Thei studyi adoptedi ai cross-sectionali surveyi researchi design.i Thei targeti populationi consistedi ofi 11i nationali governmenti agriculturali sectori entities,i whichi servedi asi thei uniti ofi analysis.i Withini thesei entities,i thei uniti ofi observationi includedi financei managers,i accountants,i financiali analysts,i andi internali auditors.i Purposivei samplingi wasi employedi toi deliberatelyi selecti 44i respondents.i Four,i representingi 10%i ofi thei studyi sample,i participatedi ini ai piloti test.i Primaryi datai wasi obtainedi utilizingi ai semi-structuredi questionnaire.i Thei Statisticali Packagei fori Sociali Sciencesi (SPSS)i versioni 25i softwarei wasi usedi toi analyzei thei data.i Qualitativei datai wasi analyzedi usingi contenti analysisi andi presentedi ini prosei form.i Descriptivei andi inferentiali analysisi techniquesi werei employedi fori qualitativei datai analysis.i Descriptivei statisticsi suchi asi frequency,i percentages,i andi meansi werei used.i Pearsoni correlationi coefficienti wasi usedi fori testingi thei strengthi andi directioni betweeni thei independenti andi thei dependenti variables.i Ai multiplei regressioni modeli wasi usedi toi testi thei significancei ofi thei influencei ofi thei independenti variablesi oni thei dependenti variable.The findings were presented in Tables and figures. The regression analysis revealed significant positive relationships between adopting a standardized chart of accounts, disclosure and valuation of assets and liabilities, accounting policies, estimates, and errors, as well as corporate governance reporting, and the quality of financial reporting, with beta coefficients of 0.324, 0.235, 0.347, and 0.481, respectively. To enhance financial reporting quality in national government agricultural sector entities, recommendations entail implementing robust standardized chart of accounts, improving transparency in disclosing asset and liability information, establishing clear accounting policies and error management practices, and strengthening corporate governance reporting mechanisms.
Affordable Housing and Real Estate Investment in Residential Housing Sector in Kenya
(kenyatta university, 2023) Ongaki, Sophia Moraa; Job Omagwa; Geoffrey Mbuva
Affordable housing and determinants of real estate investments have received significant scholarly attention; however, there remains limited scholarship and consensus on the relationship between affordable housing and real estate investment growth in Kenya. Provision of affordable housing has remained a challenge in many developing nations including Kenya. Kenyan real estate investment especially the residential housing sector is facing poor growth rate due to its unbalanced focus. Residential real estate investment mostly focuses on the elite, high income earners while giving little focus to the majority who belong to the low and middle class households. The study aimed at determining the effect of affordable housing on real estate investment capitalization in the Kenya. It focused on identifying key indices of affordable housing in Kenya and recommended ways of increasing residential housing affordability to promote the growth of real estate investment through increased capitalization. Evidence indicates that majority of the houses constructed targets the elite and wealthy individuals hence majority of the housing units constructed remain unaffordable to the low-income earners, which affects residential real estate investment. The real estate market in Kenya has been on the decline owing to many factors, such as oversupply of high-end residential property and constrained access to credit facilities. The specific objectives were to: determine the effect of housing prices, household income, cost of mortgage, and moderating effect of inflation on real estate investment in the housing sector in Kenya. The study was anchored on permanent income theory, liquidity preference theory, anticipated income theory, rational choice theory, and decision theory. Positivism research philosophy and explanatory research design were adopted for the study. The study population comprised of real estate firms registered in Kenya. Using Census technique, a document review guide was applied to collect data from Real Estate firms registered by Estate Agents and Valuers Registration Board under Ministry of Land, Housing and Urban Development (N=80). The study adopted a 10-year period ranging from years 2010 to 2019. Data sources were: annual reports and financial statements from real estate companies. Data was analyzed using: Descriptive statistics, correlation analysis, and time series analysis. Data were presented in form of figures and tables. Diagnostic tests such as normality, multicollinearity, heteroscedasticity, stationarity and autocorrelation tests were conducted. Ethical considerations were observed to maintain integrity in the research process. The study found that housing prices, household income, and cost of mortgage all had a statistically significant effect on real estate investment in residential housing sector in Kenya. The study further determined that inflation had a significant effect on the relationship between affordable housing and real estate investment in residential housing sector in Kenya. The study recommends government’s cushioning prospective home owners from economic shocks and inflation, reduction of excessive taxes on construction materials, encouraging alternative income sources for households, the need for innovative financing in addition to provision of government tax incentives and exceptions/grants for private developers to build affordable residential units. The research effort further recommends that investors should find alternative sources of building materials.
Agency Banking and Deposit Mobilization on Commercial Banks in Kenya, Nairobi City County Branches
(Kenyatta University, 2020-10) Rono, Romanus Kipngetich
Banking industry has been competitive in the past years. Kenyan Banks are exploring all strategies to remain competitive in lending and in ensuring that their clients are satisfied. They have diversified their products from lending to offering custodial and insurance services. Lending continuity mainly depends on the reserves or rather bank’s available deposits. As an initiative therefore, Kenyan commercial banks have employed various strategies to mobilize cheap and stable deposits, as is the game changer. In line with this, most banks have invested in technology and alternative banking channels. There has been an impressive uptake of agent banking model after Central Bank Implemented it in the year 2010. Some banks have leveraged on it and casted it wider to net more customers across the country particularly in the rural areas to fish out for the idle deposits and in the process promoting financial inclusion in the country. Tier 1 banks have benefited much on this alternative channels while Tier 2 banks are still struggling with their agency business. These banks are aggressively implementing various strategies to mobilize their deposits and one of the strategies is agency banking. Several studies have expounded on commercial banks’ deposit mobilization and lending. However, no study available has documented the role of agency banking in the banks’ deposit mobilization initiatives. This study therefore sought to determine the role of agent banking in deposit mobilization for the Commercial Banks in Kenya. The commercial banks under the study are Equity, KCB, Co-operative and Family Bank. All of these banks have branches and agents spread within Nairobi. The specific objectives of the study was to find out the effect of deposit transactions, account opening, institution payments and bill/utility payment and size of the agents on the banks’ deposit mobilization. The study was anchored on agency theory, financial intermediation banking theory and fractional reserve banking theory. Descriptive research was employed with the study targeting the branches within Nairobi County for the banks under the study. The target population of the study was 152 respondents including 4 branch managers, 8 agency banking officers and 140 bank agents. A sample size of 60 respondents was drawn from the population for study where primary data was mainly used. Primary data was collected through semi-structured questionnaire. The data collected was analysed by use of descriptive and inferential statistics thereafter presented by charts and frequency tables. The study findings revealed that there is a significant relationship between agent deposit transactions and deposit mobilization (p=0.000); there was a significant relationship between agent account opening and deposit mobilization (p=0.000); there was a significant relationship between bill/utility payments and deposit mobilization (p=0.000) and that there was a significant relationship between number of agents and deposit mobilization (p=0.000). The study concluded that an increase in the number of agents increases the deposit mobilization of commercial banks in Kenya and that a decrease in volume of deposits negatively affects the deposit mobilization of commercial banks. The study concluded that deposit mobilization by bank agents in Kenya need to be looked into more so as to mobilize more transactions made on agent banking thus Agency banking should be used as a tool by commercial banks to mobilize deposits in places where customers are far away from the bank. From the foregoing conclusion, there is need for Commercial banks in Kenya to leverage on expansion of agent network in order to improve their deposit mobilization drive.
Agency Banking and Financial Performance of Kenya’s Listed Commercial Banks
(Kenyatta University, 2024-06) Gakii, Kitty Ann
Gone are the days when each banking exchange required a visit to the banking office. Money transactions have changed in form, and banks have contracted their activities to third-parties to avoid the cost associated with opening up new. Kenyan keeping money division has been quick to grasp the progressions, and in the course of the most recent seven years, a bunch of operators have so far taken up the choice. Organization banking includes various advances together for the moneyrelated establishments to monitor the exchanges done by the retail outlet. This investigation is based on past trends whose objective is to assess agents investing in the country’s business banks. This research embraced a descriptive research plan where the primary target was 18 banks in Kenya that offer banking services through Agency Banking. The research was conducted in order to close significant gaps in knowledge on this topic, especially with regard to the Kenyan agency banking sector, where no comprehensive attempts have been made to understand this aspect of the office betting on the execution of bank experts' business. Particular goals were to explore the impact of agency banking organization, agency banking networking, maintenance cost required, and impact of monetary openness related to office saving money on the budgetary performance of business banks in Kenya. The research accordingly focused on every single business bank offering agency banking in Kenya, which was eighteen as of December 2016. The research was a census survey meaning that data was collected from all the 18 Commercial banks offering agency banking in Kenya though individuals being interrogated. Essentially, both primary and secondary information was used in the research. Essential information was gathered through blended modes of data collection where face-to-face interviewing and self-completion techniques were used. CBK's annual report and supervisory reports were also used to obtain further information to determine the total number of operators registered and the value-based esteem led by the specialists. To test the legitimacy and unwavering quality of the instrument, a pilot research was likewise directed. Quantitative information gathered was investigated by the utilization of descriptive statistics using SPSS and presented through rates, standard deviations and frequencies. The findings were presented using relevant bar charts, pie graphs, diagrams, and in prose-form. Content Analysis was used to test information that is subjective or part of the information gathered from the open-ended inquiries. The research shows that the highest correlation was between agency banking network and agency banking maintenance cost, and agency banking maintenance cost and financial performance, as well as the financial performance and agency banking network. At the 0.01 level, all of these associations were significant and positive. R-squared of 0.626 and a standard error of 0.719 were reported. The study concludes that Kenya’s listed commercial banks' financial performance was significantly improved through agency banking. According to the report, commercial banks should completely embrace agency banking by using better security information technologies to increase client reliability. The report also suggests that the Central Bank should think about developing a clear agency banking regulatory strategy that establishes a common platform for all financial institutions. By doing this, fair market completion can be improved. Financial institutions would be prevented from abusing their customers
Agency Banking Transactions and Performance of Commercial Banks in Kenya
(Kenyatta University, 2020-09) Thuo, Esther Wairimu
performance of commercial banks in Kenya has been declining in the recent years evidenced by decline in return on assets and return on equity from 3.99 percent and 24.7 percent in 2016 to 3.5 percent and 22.5 percent in 2018. This trend indicates a challenge in the entire banking industry regarding profitability. Agency banking was introduced to increase the reach of banks to enable banks to reach the unbanked. Agency banking can therefore enhance market share and performance of banks. The purpose of this study was to examine the influence of agency banking transactions on financial performance of commercial banks in Kenya. The specific objectives of the study were to assess the influence of cost of transactions in agency banking, number of transactions in agency banking and value of transactions in agency banking on financial performance of commercial banks in Kenya. The study was guided by agency theory, financial intermediation theory and bank led theory. Comparative research design was applied in the study where the 16 commercial banks that have adopted agency banking in Kenya were the study population. Secondary data was used and it was obtained from the CBK bank supervision annual reports (2013-2017). Quantitative data collected was analyzed using descriptive statistics such as means, standard deviations, percentages and frequencies. Inferential statistics were also derived through panel data regression method. The results from the analysis were presented in figures and tables. The study findings showed that value of transactions had a significant positive effect financial performance of commercial banks when measured using ROA and ROE. The study findings showed that number of transactions had no significant effect on ROA or ROE. Further findings indicated that cost of transactions had no significant effect on ROA or ROE. From the study findings, the following recommendations were made. First, commercial banks should motivate their clients to transact high value transactions through their agents and not only the small value transactions. Further, banks should focus on value of transactions, not just on volume when they are marketing and designing policy for agency banking. Lastly, banks should focus on gaining economies of scale through increasing volumes of agency banking transactions to reduce unit cost. They should hence ensure that agents have enhanced customer security and transaction security to attract more customers to feel confident to transact through the agents.
Alternative Financing And Financial Performance Of Manufacturing Firms Listed At The Nairobi Securities Exchange Kenya
(Kenyatta University, 2021) Theuri, Catherine; Eddie Simiyu
Financial performance of listed companies has, in the recent past been declining as characterised by dwindling profitability. Total ROA for the 13 firms under study decreased from 1.33 in 2013 to 0.68 in 2014 and then increased to 1.05 in 2015 before falling again to 1.02 then 0.30 in 2016 and 2017 respectively. Six out of the 13 manufacturing firms listed in the NSE issued profit warnings in the period 2018 to 2019. As such, investors were no longer attracted to shares and corporate bonds listed in the bourse because of the low returns. Additionally, there was a lot of defaults in the corporate bonds in the recent past. This played a major role in the increased adoption of alternative sources of financing by firms. The main study objective was establishing the influence of alternative finance on the financial returns among manufacturing firms listed at the NSE. Specifically, the study sought to determine the impact of operating lease, lines of credit and finance lease on financial returns among listed firms in the manufacturing segment. The research also sought to establish the firm size moderating effect on the relationship between alternative financing and the financial returns of the firms. Key theories used in the study were Modigliani and Miller theorem, Trade Off theory, Pecking Order theory, Liquidity Preference theory and Economies of Scale theory. A descriptive research design was adopted. Secondary data extracted from annual reports and financial statements, was used. The study population was picked through a census of the 13 firms listed under the NSE manufacturing and allied and construction and allied segments. The study utilized the descriptive research design. Descriptive data analysis was used i.e., mean, mode, medium and standard deviation. Inferential statistics were analysed through Pearson’s correlations as well as Panel Regression Model for 13 listed manufacturing firms for the period between the year 2015 and 2019 using Eviews 11. The research results showed there was an insignificant correlation between finance lease, operating lease, credit lines, firm size and the financial returns among the firms. The study applied random panel regression and results showed that 17.29% of the changes in financial outcomes could be explained by alternative financing. The moderation tests indicated a positive significant and moderating effect of firm size on the financial performance of the manufacturing firms. The study concluded that alternative financing improved returns among listed manufacturing firms in Kenya. The research concluded that finance leasing reduced income significantly, while operating leasing and credit line had insignificant effect. Firm size and alternative financing were positively and significantly related with firm income generation capacity. The study revealed that firm size did not have a significant influence on the financial performance. It was recommended that improving financing structures, regulatory policies and guidelines to support the performance of manufacturing firms is vital. The firms also should regularly review their financing options to ensure selected options improve financial performance. Finally manufacturing firms should review their internal debt policies to improve their profit-generation capacity.
An analysis of credit risk assessment through credit scoring Models among commercial banks in Kenya
(2014-07-07) Kioko, Peter Mwanzia; Ngaba, D. K.
Risk management is a cornerstone of prudent banking practice. All banks in the present day volatile environment are facing a large number of risks such as credit risk, liquidity risk, foreign exchange risk, market risk, interest rate risk among others. These risks may threaten a bank's survival and success. From literature reviewed, effective credit risk management is lacking in most of the banking institutions. Credit risk assessment has been identified as one of the key skills required for successful banking operation. From literature reviewed, banks have been urged to engage in effective credit risk management techniques able to determine risk of default in their loan advances. One of these ways is through the use of credit scoring models in credit risk assessment. The study sought to analyze credit risk assessment through credit scoring models within commercial banks in Kenya. It further sought to identify if there is any relationship between NPLs and credit scoring practices. Credit policy is also vital for effective risk management and was therefore analyzed. The study will be of great help to commercial banks, the public and academicians by providing further insights on credit scoring and credit risk assessment in banks. The study is a census therefore the population of the study consisted of all commercial banks operating within Nairobi. Data was collected using questionnaires which were administered to Personal banking officers of the various commercial banks through the headquarter offices. Descriptive data analysis techniques have been used in form of percentages and tables to show the various findings. Correlation analysis is used to determine the relationship between NPLs and credit scoring. These methods were chosen because the data collected is in frequencies as the variables are measured in categorical scale. The study established that, 60.6% of the banks surveyed use credit scoring models during credit risk assessment of the various loan applicants while 39.4% do not use any credit scoring models on credit risk assessment. The study established that other methods used to assess credit risk are credit committee and analysis of financial statements like balance sheet and the profit and loss accounts incase of business loans. For personal loans, field observations on personal property and employment details are sometimes used. On the types of credit scoring models used, the study established that, risk adjusted return on capital model was the one mostly
Analysis of Determinants of Dividend Payout by Agricultural Firms Listed on the Nairobi Security Exchange.
(2014-02-22) Waswa, Calistus Wekesa; Muturi, J.; Ndede, F.W.S.
Agriculture has been a major source of the country’s food security and a stimulant to offfarm employment but agricultural production is on decline. Most firms in the agricultural sector have not lived to their expectations and have led to shareholder apathy therebycontributing to the decline of the rural economy due essentially to unstable and low dividend payout. The dividend policy is one of the most debated topics in finance literature. One of the different lines of research on this issue based on the information content of dividends, which has motivated a significant amount of theoretical and empirical research. An interesting issue, not yet explored, is the empirical evidence of determinants of dividend payout. Profitability has always been considered as a primary indicator of dividend payout ratio. There are numerous other factors other than profitability that also affect dividend decisions of an organization namely growth opportunity, Liquidity, Leverage and Firm Size. Available literature suggests that dividend payout is positively related to profits, liquidity and it has inverse relationship with Firm size, growth and Leverage. This research is an attempt to analyze the determinants of dividend payout of Kenya Agricultural sector. This thesis also focused on identifying whether various factors available as per literature influence dividend payout ratio in Agricultural sector in Kenya in existing scenario or not. Statistical techniques of correlation and regression were used to explore the relationship between key variables. Thus, the main theme of the study was to identify the various factors that influence the dividend payout policy decisions of Agricultural firms in Kenya listed on Nairobi Securities exchange. Most of the existing literature is mostly from the studies carried out in developed nations, hence the need for a study on the Kenyan domestic market. The study covered the period from 2005-2010. The research design was non-experiment and quantitative. The objective of the study was achieved by adopting panel data estimation technique using multiple regressions because it is the best method to use when dealing with micro-units in the economy. The test between Ordinary Least Square (OLS), fixed effects and random effect model was carried out. Panel data, cross-sectional time series data from financial reports in NSE libraries and CMA libraries was collected and stored in Microsoft Excel 2007, data analysis was carried out using the Statistical Package for Social Scientists (SPSS) version 17.0. The results show positive relationships between dividend payout and liquidity and profitability. The results also show negative associations between dividend payout and firm’s growth, Firm size and leverage. These results are consistent with the prediction by many authors.
An Analysis of Factors Influencing Accessibility of Credit Finances from the Youth Enterprise Development Fund in Githunguri Constituency, Kiambu County, Kenya.
(2013-08-27) Ngureh, John Mwangi
According to the youth status report 2007-2012, a youth is one fall ing between the ages of 18-35 years. The youth are faced with many problems such as unemployment and underemployment leaving them in the ranks of swelling poor. Further, the youth are unable to raise start-up capital to start a business since they do not have source of funds or property such as building or land which can serve as collateral for debt capital. Besides, once a loan is acquired, a high interest rate has to be paid, which is about 25% compounded and most of the youth are poor and cannot afford to pay. The government has in the recent past established various initiatives aimed at absorbing the extra labor force over and above what the formal sector can be able to accommodate. One of the government initiative aimed at addressing lack of start-up capital among the youth in the country is Youth Enterprise Development Fund (YEDF). However, despite the fact that YEDF could be a preferred source of funding among the youths, accessing it has remained a great challenge. It is from such a background that the study sought to identify factors influencing accessibility of credit finances from the YEDF. The study identified, individual, group and system factors influencing accessibility of credit finances from YEDF in Githunguri Constituency, Kiambu County. Descriptive research design was adopted. Purposive random sampling was used to sample respondents from the study area. Questionnaires were the key instrument used to obtain primary data supported by comprehensive review of secondary information. Data analysis constituted both qualitative and quantitative analysis, which was carried out using the Statistical Package for Social Sciences (SPSS). The analysis provided quantitative information in form of descriptive statistics such as percentages and means. Data was presented using tables, bar graphs and pie-charts. The study was useful as it formulated policy recommendations aimed at ensuring increased access to credit finances from YEDF by young people. The study established that majority of the members in the youth groups are men and are between the ages of 19 - 35 years. -The study also established that majority of the respondents were business people and had secondary education and above. The study also revealed that the groups had more than 10 members. Friends and relatives were a good source of information about YEDF, the study revealed. Additionally.the study established that there was a lot of bureaucracy in accessing YEDF.
An analysis of foreign exchange risk management performance techniques used by airline companies in Kenya
(2013-01-16) Kidong'oi, Joel Meitekini; Theuri, J. M.
The purpose of the study was to analyze the foreign exchange risk management performance Techniques used by airline companies in Kenya. The study involved analyzing of specific performance techniques used to manage foreign exchange risk by airline companies in Kenya, this included leading and lagging, use of derivatives, payment netting, payment Matching and invoicing. The study was significant to field of finance in the area of foreign exchange risk management and the scanty empirical literature is a limiting factor. The scope of the study was based on finance, since it's the one that is directly involved on foreign exchange management. The literature review contained empirical and theoretical literature on management of foreign exchange risk performance techniques. It also contained a critical review of the document with information related to the research problem and summary of the gaps to be filled. The conceptual framework of the study comprises of five independent variables, intervening variable (central bank of Kenya) and dependent variable. The study employed a descriptive survey research design. The study was carried out on a census on the total target population of 14 registered airline companies in Kenya. Data was collected by the use of questionnaires and was analyzed by the use of descriptive statistics and SPSS. The findings were presented in frequency tables and percentages, graphs and charts. Both airline companies in Kenya and International business organization benefited with the findings of this research. From the study, the researcher concludes that the variables; Invoicing and Currency clause, Leading and Lagging and Payment Matching were the main foreign Exchange risk performance techniques used by most airline companies as indicated by most respondents.

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