RP-Accounting and Finance Department

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Internal Controls and Operational Efficiency of Human Rights Organizations in Nairobi City County, Kenya
(AJEFM, 2025-04) Njange,Carolyn Wanjiru; Thuo, CPA Anthony
The study aimed to determine the connection between internal controls and operational efficiency of Human Rights Organizations in Nairobi, Kenya. Specifically, the study sought to: evaluate the impact of reporting controls on the accuracy and timeliness of financial information, assess the level of compliance with local, international and internal regulations and policies, assess the effectiveness of communication and information controls, examine the effectiveness of monitoring and evaluation controls in ensuring optimum implementation and ascertain the moderating effect of Board resolutions on the relationship between internal controls and operational efficiency of Human Rights Organizations in Nairobi, Kenya. The following theories guided the study: Agency theory; Stewardship theory as well as Contingency theory. The researcher utilized a descriptive research...
Itax System Role in Tax Compliance for Residential Landlords inKiambu County, Kenya
(AJEFM, 2025-04) Njuguna,Thuku Joseph; Warui,Fredrick
The Kenyan government relies on taxes as a major source of revenue, yet compliance remains a challenge, particularly in the real estate sector. Despite the significant growth of Kenya’s real estate market, tax revenue has not increased proportionally due to widespread non-compliance among landlords. This study examined the role of the iTax system in improving tax compliance among residential landlords in Kiambu Town, focusing on tax rates, cost acceptance, tax literacy, and tax awareness. The research was grounded in fiscal exchange, ability to pay, institutional anomie, and economic deterrence theories. A descriptive research design was used to survey 1,004 rental property owners, with a sample of 286 selected using Yamane’s formula. Data was collected via structured questionnaires with a five-point rating scale, achieving a Cronbach’s alpha of 0.7 for reliability. The study employed SPSS for data analysis, using both descriptive statistics...
Liquidity and Financial Performance in SACCOs: Evidence from Kiambu County, Kenya
(AJEFM, 2025) Chahira Anne Wanjiru; Waweru,Fredrick Warui
The study examined the relationship between liquidity and financial performance in Savings and Credit Cooperative Organizations (SACCOs) in Kiambu County, Kenya, a crucial sector for financial inclusion and community welfare. With the rising need for effective financial practices, the research assessed how liquidity ratios—current, quick, and cash—impact SACCO performance, particularly their financial stability and operational efficiency. The study analyzed secondary financial data obtained from financial statements of 13 SACCOs registered under the SACCO Societies Regulatory Authority (SASRA) from 2019 to 2023, employing a census sampling technique to eliminate sampling errors. Using a descriptive and causal research design, data analysis was conducted through Stata 14.0, applying descriptive statistics to summarize liquidity ratios and inferential statistics to examine their effect on SACCO performance. Findings revealed a strong correlation between liquidity ratios and SACCO financial stability, where high liquidity improved trust and operational resilience. The study emphasized the necessity for SACCOs to implement sound liquidity management policies to meet short-term obligations while ensuring long-term growth. Key recommendations included adopting policies to maintain optimal cash and quick ratios, strengthening liquidity governance, and conducting regular liquidity assessments to manage financial fluctuations. The research also suggested expanding future studies to other counties such as Nairobi, Murang’a, Nakuru, and Kisumu while incorporating additional financial solvency determinants like capital adequacy. These insights provide valuable guidance for SACCO managers, policymakers, and stakeholders in enhancing financial resilience within Kenya’s cooperative sector.
Debt Financing and Profitability of Listed Manufacturing Firms at the Nairobi Securities Exchange, Kenya: An Empirical Analysis
(AESS Publications, 2025-05) Amugada, Ballerine Shunza; Mwangi, Lucy Wamugo
Declining profitability in NSE-listed manufacturing firms like Mumias Sugar and Eveready East Africa has discouraged investment and hampered Kenya's economic growth. Despite extensive research on capital structure, a gap remains in understanding how debt financing specifically influences profitability, particularly return on assets (ROA), among NSE-listed manufacturing firms. This study examined the impact of debt financing on ROA, focusing on long-term debt, short-term debt, and the debt tax shield. The research was anchored on trade-off theory, agency theory, and Modigliani and Miller’s capital structure irrelevance theory. An explanatory research approach was employed, analyzing financial data from nine listed manufacturing firms from 2010 to 2022. A census sampling technique included all nine firms, and data was analyzed using Stata version 17 with panel regression analysis. Diagnostic tests conducted included multicollinearity, Hausman, heteroskedasticity, and normality tests. Findings revealed that both short-term and long-term debt had a statistically significant negative impact on ROA, indicating that higher debt levels reduced profitability. Conversely, the debt tax shield had an inverse but statistically insignificant effect, suggesting that tax benefits from debt financing did not significantly enhance profitability. The study recommends that financial managers explore alternative financing strategies such as equity financing or internal capital generation rather than broadly reducing debt. Additionally, firms should strategically balance their short-term and long-term debt to optimize financial performance while mitigating financial risks.
Impact of Inflation on Stock Market Returns: An Evidence from Banking Stocks of Nairobi Securities Exchange, Kenya
(AESS Publications, 2025-04) Mwiwa, Judith Kanini; Jagongo, Ambrose
Inflation significantly influences economic stability and investor confidence, potentially impacting stock market returns. Understanding this relationship is crucial for investors and policymakers, particularly in emerging markets like Kenya, where economic fluctuations are common. This study aimed to investigate the complex interplay between various inflation types and stock market performance within the Kenyan banking sector. Specifically, the study sought to determine the effects of imported inflation, demand-pull, cost-push, and inflation targeting on the stock market returns of commercial banks listed on the Nairobi Securities Exchange (NSE) from 2017 to 2022. The research was guided by the Fisher Hypothesis, Inflation Illusion Hypothesis, Proxy Hypothesis, and Interest Rate Parity Theory. A descriptive study design was employed, utilizing a census survey to collect data from all 11 banking sector firms listed on the NSE. Secondary data on stock market returns were sourced from the NSE and CBK, while inflation data was obtained from the KNBS. Quarterly data over five years were analyzed using SPSS version 21. Findings revealed that hyper-inflation, imported, cost-push, and demand-pull inflations had significant positive effects on stock market returns, while inflation targeting had a moderating effect. The study concluded that demand-pull inflation could lead to higher corporate earnings, while cost-push inflation could increase interest rates as the CBK attempts to control inflation. Imported inflation raised costs for firms relying on imported inputs, reducing profitability. Hyperinflation led to rising stock prices as investors sought to protect their wealth. Successful inflation targeting by central banks resulted in lower interest rates, boosting stock returns. The study recommended that the CBK could use interest rate adjustments to control inflationary pressures. Companies listed on the NSE could implement cost-control measures to mitigate cost-push inflation, while the government could impose tariffs to limit imported inflation. Additionally, diversification was suggested as a strategy for managing hyperinflation's impact on stock returns. The CBK was advised to use monetary policy tools such as interest rates and reserve requirements to regulate inflation and enhance financial stability.
Prudential Regulations and Profitability of Microfinance Banks in Kenya
(AESS Publications, 2025-04) Odhiambo, Willis Omondi; Ndede, Fredrick (; Wamugo, Lucy
Microfinance banks significantly add to the reduction of Kenya’s youth unemployment and poverty, which boosts the nation's economic development. Despite the implementation of prudential regulations aimed at enhancing financial stability and performance, many microfinance banks continue to struggle, as evidenced by a record decline in profitability over recent years. Therefore, this investigation examined prudential regulations effect on the Kenyan microfinance banks’ profitability. The effect of capital regulation on Kenyan microfinance banks’ profitability, liquidity regulation effect on Kenyan microfinance banks’ profitability and credit regulation effect on Kenyan microfinance banks’ profitability were examined. The study utilized fourteen microfinance finance banks which served as the target population. Census sampling was employed owing to the few microfinance banks in Kenya; hence, all the fourteen microfinance banks were utilized. Descriptive, correlation and panel regression technique was used as methods of data analysis. Findings uncovered that liquidity regulation insignificantly and positively affect the banks’ profitability; credit regulation possess inverse and insignificant effect on the banks profitability; capital regulation disclose a positive and significant effect on the banks profitability. The survey recommends that central bank should assess the current liquidity requirements and consider streamlining them to reduce unnecessary burdens on microfinance banks. This can involve revisiting reserve requirements, liquidity ratios, or other liquidity-related regulations to strike a balance between prudential safeguards and fostering profitability.
Credit Management Practices and Bad Debt Levels of Microfinance Institutions in Nairobi City County, Kenya
(Stratford, 2025-02) Choda,Linus James Odongo; Koori,Jeremiah; Makori,Daniel
Between the years 2018 to 2021, the bad debt levels of MFIs in Nairobi City County, Kenya have been increasing by 18% annually. The increasing bad debt levels have negatively affected MFIs’ operations and their profits to the extent of some being declared bankrupt. The general objective of the study is to establish the effect of credit management practices on bad debt levels of microfinance institutions in Nairobi City County, Kenya. The specific objectives of the study include to evaluate the effect of credit risk identification on bad debt levels of microfinance institutions in Nairobi City County, Kenya, to assess the effect of credit risk monitoring on bad debt levels of microfinance institutions in Nairobi City County, Kenya, to assess the effect of collection policies on the bad debt levels of microfinance institutions in Kenya, to establish the effects of credit appraisal policies on the bad debt levels of microfinance institutions in Nairobi City County, Kenya, and to determine the effect of CBK regulations on bad debt levels of microfinance institutions in Nairobi City County, Kenya. The theories underpinning this study include; modern portfolio theory (MPT), capital asset pricing model (CAPM), credit risk theory and PRISM model of credit risk management. The study employed a descriptive research design, targeting 54 active microfinance institutions in Nairobi City County, Kenya, with a sample size of 15 selected through stratified random sampling. Primary data (credit management practices) and secondary data (bad debt levels) were collected using data collection sheets and questionnaires. These were administered to credit managers, finance analysts, accountants, and debt portfolio assistants via the drop and pick technique. Data was analyzed using SPSS version 29, incorporating descriptive statistics, diagnostic tests (normality, multicollinearity, heteroscedasticity, Hausman test), correlation analysis, regression analysis, and hypothesis testing. The study found that despite implementing credit management practices, microfinance institutions struggled to curb rising bad debt levels due to lenient loan issuance and collection policies. It concluded that instant loans, straightforward application processes, and weak credit monitoring have contributed to high default rates. The study recommends that microfinance institutions adopt AI and big data analytics for improved credit management and establish a shared credit identification system to reduce multiple borrowing and defaults.
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.
Risk Management Practices and Financial Performance of Commercial Banks in Kenya
(International Journal of Scientific and Research Publications, 2024-12) Kithandi, Charles Katua; Kithandi, Dennis Katisya
In the contemporary world risk management and financial performance in financial institutions especially commercial banks has gained momentum. Using KCB, this study investigated the effects of risk management techniques on the financial performance of commercial banks. The study was informed by network theory, expectation theory, and enterprise risk management theory. The study employed descriptive research design. The study's population consisted of 460 management personnel from KCB Headquarters and its Nairobi County branches. The target group consisted of 46 middle and upper-level managers from KCB in Nairobi County. Since the study's target population was so small, a census technique was employed. The study employed a semi structured questionnaire to collect data. The data collection tool's validity and reliability were assessed. Both descriptive and inferential statistics were computed using SPSS Version 27.0. The moral implications were considered. The results showed a strong positive relationship between organizational effectiveness and risk transfer. Furthermore, it was shown that risk avoidance contributed very little to the success of the company. Nevertheless, it was found that risk control had very little negative effect on the functioning of the company. Furthermore, it was discovered that risk retention considerably increased organizational performance. Lastly, government regulations had no impact because the association between the predictors and response variable remained same. The report recommended that KCB should put in place robust risk transfer and retention policies in order to enhance organizational financial performance. In order to safeguard banks from risks related to the banking sector, the report also recommended that the Central Bank of Kenya offer policy interventions in the form of strategic risk management technique.
Capital Structure and Profitability of Commercial State Corporations in Kenya
(AJSSE Journals, 2024-12) Nyongesa, Edrine Mwajuma; Jagongo, Ambroseo
Commercial state corporations play a crucial role in national growth and in building the state’s technical capabilities and capacities. In Kenya, many commercial state corporations have raised capital through debt financing and equity capital. However, despite obtaining funds from these sources, their performance has been suboptimal, as evidenced by decreasing profitability over the past five years. The general objective of this study was to investigate the effect of capital structure on the profitability of commercial state corporations in Kenya. The study was anchored in trade-off theory, agency theory, and the pecking order theory. Secondary data covering 10 years (2011-2021) was gathered from the Office of the Auditor General’s website and individual companies' annual reports, and past studies in the area were also reviewed. The study established that equity capital has a positive and significant effect on profitability (β = 0.904, p < 0.05) of commercial state corporations in Kenya. Additionally, short-term debt was found to have a significant negative influence on profitability (β = -0.737, p < 0.05), while long-term debt showed a significant positive effect on profitability (β = 0.402, p < 0.05). The study concludes that equity capital and long-term debt positively impact the profitability of commercial state corporations, while short-term debt negatively affects profitability. Based on these findings, the study recommends that management utilize equity capital to fund operations, as equity owners can consistently monitor and influence managerial decisions, ensuring the proper allocation and utilization of resources. Furthermore, commercial state corporations should avoid short-term debt due to its high-interest rates and should instead use long-term debt to fund investments with longer repayment periods.
Type of Venture Capital Investment, Venture Capital Control and Financial Growth of Funded Small and Medium Enterprises in Nairobi City County, Kenya
(IAJEF, 2024-11) Maragia, Dancan S.; Gatauwa, James M.
Global venture capital industry expansion has boosted entrepreneurship and innovation, leading to the generation of wealth and jobs in a number of countries. SMEs play a crucial role in socioeconomic development by promoting wealth generation, economic growth, and job creation in their individual economies. These SMEs nevertheless have uneven and restricted access to sustainable finance, which is essential to their survival and expansion, despite their prominence and importance in developing countries such as Kenya. This study aimed to examine how type of venture capital investment and venture capital control affect the financial growth of selected SMEs in Nairobi County, Kenya. Both a descriptive research design and quantitative research methods were applied. The target population for the analysis consisted of 139 SMEs that have received venture capital funding. Data was analyzed using descriptive and inferential statistics. Results indicated that type of venture capital investment had a positive and significant effect on SMEs’ financial growth. SMEs' financial growth was positively, but not significantly, impacted by venture capital control. The study concluded that venture capital control had a positive but insignificant effect on SMEs’ financial growth. The study recommended that entrepreneurs should consider a diverse syndicate of venture capitalists. This is key for improved risk management, survival rate, access to more strategic collaboration and attraction to resources and expertise. In addition, the study recommended that entrepreneurs should review the venture capitalists’ level of control in the business. This would help to mitigate negative impact resulting from venture capital-imposed restrictions on managerial autonomy.
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.
Firm Characteristics, Interest Rate and Financial Performance of Microfinance Banks in Kenya
(International Academic Journal of Economics and Finance, 2024-10) Ouma, Cavine Onyango; Makori, Daniel; Aluoch, Moses Odhiambo
Microfinance Banks gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's Banks financial performance in Kenya has declined over time. The objective of this study is to investigate firm characteristics, interest rate and financial performance of microfinance banks in Kenya. The study was grounded on buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was analysed using descriptive and inferential statistics. The study used multiple regressions and Pearson’s Product Moment Correlation analysis. All ethical considerations were appropriately observed. Findings indicated that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research revealed that efficiency of management has an insignificant direct influence on financial performance of Microfinance banks. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacitybuilding initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on financial performance. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes and financial outcomes for microfinance institutions in Kenya does not appear to be subject to a substantial moderating influence from interest rate movements. Therefore, the survey recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations
Mobile Payment Services and Financial Performance of Local Businesses in Kiambu County – Kenya
(International Journals of Academics & Research (IJARKE Business & Management Journal), 2024) Mbugua, Eric Kimani; Suva, Mark
Mobile payments are a critical emerging mode of financial transactions in the business environment. Local business owners in Kiambu County have faced marginalization from traditional banking, with businesses in these regions lacking access to formal financial services due to factors such as low cash flow levels, lack of collateral and low incomes. Customers have lacked the convenience of transacting with their money in the traditional banks or incurring more costs in accessing their money. Local business owners, customers, and other stakeholder have encountered rigidity in making payments in their daily business operations. Money is transferred to their bank accounts or registered institutions, which is wired to the seller accordingly. Therefore, the current study investigated the effect of mobile payment services on the financial performance of local businesses in Kiambu County, Kenya. The specific objectives of the study investigated the effect of mobile money transfers, online transactions, and mobile payments on the financial performance of local businesses in Kiambu County, Kenya. The study was anchored on agency theory, contingency, the technological acceptance model, and innovation diffusion theory. The study employed a descriptive research study design to explore the sub-variables. A sample size of 157 respondents from the local businesses in Kiambu was targeted. Validity and reliability of the research instruments was considered during the pilot study for 20 respondents that were not involved in the parent study. The reliability analysis showed that all the study variables met the threshold Cronbach value of 0.70. Quantitative data were examined using descriptive and inferential statistical methods and presented in tables and figures, while qualitative data were examined through content analysis. The analysis of demographic information demonstrated a fair representation of both genders, designations to various positions in the local businesses, and various levels of experience dealing with local businesses in Kiambu County, Kenya. The findings indicate a meaningful positive and significant relationship between financial performance and mobile money transfers, online transactions, and mobile payments. Regression analysis suggests that mobile money transfers, online transactions, and mobile payments together account for 52.8 percent of all the variations in the financial performance of local businesses in Kiambu County, Kenya. The study concluded that mobile payment services significantly impacted the financial performance of local businesses in Kiambu County, Kenya.
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.
Macroeconomic Dynamics and Profitability of Insurance Firms Listed at Nairobi Securities Exchange, Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2024-11-04) Muteru, Milka W.; Omagwa, Job
Kenya’s insurance industry has been growing steadily since 2013, with premium revenue and capital investment increasing. However, Return on Assets has declined over the past four years and reached an all-time low in 2022 compared to the previous five years which was partly attributed to the reforms introduced to cater the impact of Corona virus pandemic on and the need to close infrastructure gaps. As a result, as gross domestic product grows, firm deposits and loans rise along with interest income and loan losses. This study focused on understanding how macroeconomic dynamics affect the profitability of insurance companies listed on NSE in Kenya. It particularly looked into how changes in exchange rates, interest rates, and the overall price rise in the economy (inflation) influence these companies' profits. The study was guided by the theoretical frameworks of purchasing power parity, deflation, the balance of payment, the classical theory of interest, and the balance scorecard model. The study adopted an explanatory research design and targeted the six insurance firms listed on the NSE. The secondary data collection for this study involved the utilization of secondary data sheets. Data was obtained from the official audited financial statements of the insurance firms for the fiscal years 2016 through 2022. Data analysis involved both descriptive and inferential analysis. Inferential analysis incorporated both correlation analysis and panel regression analysis. The study found that key macroeconomic dynamics had significant impact on the profits of insurance companies listed on the NSE, explaining 57.71% of the changes in profits (R-squared = 0.5771). It discovered that while changes in the exchange rate do not significantly affect profits (β = 0.0761, p = 0.5358), higher interest rates lead to higher profits (β = 2.1647, p = 0.0233), and inflation negatively impacts profits (β = -0.3447, p = 0.0011). The study's validity is supported by strong statistical evidence (F-statistic = 21.0100, p-value = 0.0000). It suggests that insurance companies in Kenya should focus on managing risks related to economic changes to improve their financial performance. This research adds to the understanding of how macroeconomic dynamics affect the profitability of insurance firms in the context of the NSE.
Firm Characteristics and Financial Performance of Microfinance Banks in Kenya
(International Academic Journal of Economics and Finance, 2024-10-07) Ouma, Cavine Onyango; Makori, Daniel; Aluoch, Moses Odhiambo
Kenya has one of Sub-Saharan Africa's most active microfinance marketplaces. Microfinance gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's financial performance in the country has declined over time. With this view, this investigation aims to explore how firm characteristics (capital adequacy, assets quality, managerial efficiency, earning ability and liquidity) performance of microfinance banks in Kenya. The study was grounded on stakeholders, liquidity preference, financial intermediation, buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research Design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was descriptively and inferentially analyzed. The investigation employed panel multiple regressions and Pearson’s Product Moment Correlation analysis. Diagnostics test such as multicollinearity, normality, autocorrelation, heteroscedasticity and stationary tests were carried out. All ethical considerations were appropriately observed. Findings uncovered that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research reveals that efficiency of management has an insignificant direct influence on performed banks financially. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacity-building initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on performance financially. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes. Therefore, the study recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations.
Financing Options and Growth of Real Estate in Savings and Credit Cooperative Societies in Nairobi City County, Kenya
(International Academic Journal of Economics and Finance, 2024-08-16) Sangori, Roselyne Auma; Aluoch, Moses Odhiambo
The challenges confronting real estate enterprises in Kenya, especially within Nairobi City County, are substantial, particularly regarding financing decisions given the capital-intensive nature of their projects. The evident gap between annual housing demand and actual supply underscores the critical need for effective financing mechanisms to bolster the expansion and development of the real estate industry. The research concentrated on investigating the impact of various financing options available through Savings and Credit Cooperative Societies in Nairobi City County is particularly relevant, given Savings and Credit Cooperativess' role in offering financial services to their members. Evaluating the effects of mortgage financing, lease financing, savings financing, and equity financing on real estate growth can offer valuable insights into the feasibility of different funding avenues for these enterprises. Considering the moderating influence of real estate firm size on the relationship between financing options and growth rates enriched the analysis, acknowledging that a firm's size and scale can significantly shape its financing strategies and growth trajectory. Drawing on theoretical frameworks such as the lien theory of mortgage financing, resource dependency theory, transaction costs theory, and housing cycle theory provided a robust foundation for understanding the dynamics of financing and growth in the real estate sector. Adopting a descriptive research design, along with panel data analysis spanning a five-year period, facilitated a comprehensive examination of trends and patterns among real estate firms operating within Savings and Credit Cooperative Societies in Nairobi City County. By employing a census approach to collect data from the entire population of 72 real estate companies, the study ensured a representative sample, enhancing the reliability and validity of the findings. The study found a significant and positive effect between mortgage financing, lease financing, savings financing, and equity financing and growth of real estate in SACCOs. The result indicated a moderating effect on the relationship between financing options and growth of real estate firms in SACCOs. The study concluded that the real estate sector in Nairobi City County requires effective financing and strategic decision-making, relying on mortgage, lease, savings, and equity financing to optimize resource allocation and drive growth, with SACCO size significantly moderating the impact of these financing options on firm performance. Based on the study findings, policy recommendations include reducing mortgage costs through subsidies and regulatory reforms, increasing lease financing options via innovative structures and Public-Private Partnerships, boosting savings financing through mobilization programs, facilitating equity financing with improved market mechanisms, and optimizing SACCO performance through targeted training. The study enriches understanding by demonstrating the significant impact of various financing options on real estate firm growth, advancing theoretical frameworks, addressing methodological gaps, and providing practical policy recommendations to support sector expansion.
Investment Incentives and Effective Corporate Tax Rate for Manufacturing Firms in Kenya
(International Journal of Economics and Finance, 2024-01-10) Nganyi, Silas Muyela; Koori, Jeremiah; Abdul, Farida
Effective corporate tax rate is a finance subject of interest to firms, policy makers and researchers. It measures level of tax burden at firm level. Thus, governments implement various investment incentives to influence effective corporate tax rate. The effective corporate tax rate in Kenya is still a problem averaging 31.3 percent for the last 10 years. Such high effective corporate tax rate militates against desired competitive corporate environment for the manufacturing sector. In the last ten years, the manufacturing sector has deteriorated to 7.4 percent contribution to gross domestic product which is less than 15 percent as envisaged in Kenya Vision 2030. This undesirable phenomenon prompted design of this study. The objective of the study was to determine the effect of investment incentives on effective corporate tax rate. The study adopted positivist philosophy and longitudinal research design. A sample of 278 firms provided secondary data for the period 2010 to 2020. Descriptive and inferential statistics were conducted using panel data regression. The study established that investment incentives are statistically significant predictors of effective corporate tax rate for manufacturing firms in Kenya. The study recommends that public policy makers should design appropriate profit based, capital investment and custom duty incentives as part of fiscal policy instruments to grow firms involved in manufacturing. The study has added to finance knowledge that fiscal policy affects corporate operations. However, there is need for further investigation on other possible investment incentives that were not covered in this study that influence effective corporate tax.
The Effect of Online Tax Payments on Tax Compliance among Large Taxpayers in the North-Rift Region, Kenya
(Stratford Peer Reviewed Journals and Book Publishing (Journal of Finance and Accounting), 2024-09-30) Tarus, Mark Kiplimo; Koori, Jeremiah
Tax compliance is a key emphasis area of the Kenya Revue Authority in a bid to maximise revenue collection to finance government services. However, complex processes and ineffective methods of revenue generation continue to mar tax compliance especially among the large taxpayers in the North Rift. This study sought to investigate the effect of online tax payments on tax compliance among large taxpayers in the North-Rift region, Kenya. The study was underpinned by the general systems theory. A descriptive research design was adopted by the study to guide data collection and analysis procedures. The study’s target population was 200 large taxpayers operating in North rift region, Kenya from which a random sample of 133 participants was selected with the use of Yamane’s (1967) formula. The study utilized structured questionnaires as a tool for data collection from 133 financial managers purposively selected from the 133 randomly selected large taxpayer companies in North rift region, Kenya. Data collected was entered into the Statistical Package for Social Sciences (SPSS) and quantitatively analysed using descriptive statistical techniques namely mean, percentages, and standard deviations, and inferential statistical analyses techniques namely correlation analysis and multinomial logistic regression analysis. The findings were presented in figures and tables. The study established significant and positive influence of online tax payments (Coeff=0.108, Sig=0.032). The study’s findings are capable of being used to inform research, revenue collection practice, and academic/research.

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