RP-Accounting and Finance Department

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Audit Committees and Public Financial Management in Coastal Counties of Kenya
(Kenyatta University, 2025-11) Esiokhunjila, Duncan Nganyi
Audit committees are important for effective corporate governance, internal control functions, reviewing integrity of financial reports, efficacy of risk management and overall oversight on public financial practices. This study investigated the relationship between audit committees and public financial management in coastal counties of Kenya. The study sought to ascertain the impact of audit committee independence, audit committee composition and implementation of audit reports on public finance management in coastal counties of Kenya. This research was grounded in institutional, resource dependency and agency theories. The study employed a descriptive research design with a targeted group of 144 individuals and 40 respondents using stratified sampling. Standardized and self-administered questionnaires were employed to gather data. Statistical Package for Social Sciences version 28 was employed for analysis of data. Statistical tests used in the study were correlation, regression analysis and Analysis of Variance tests. The findings of the study showed that there was statistically significant effect of audit committees on public financial management in costal counties of Kenya.The results revealed that audit committee independence significantly improved financial accountability and compliance within the coastal counties. Audit committee composition was also found to affect public financial management positively, with diverse professional expertise enhancing decision-making. Furthermore, the effective implementation of audit reports contributed to improved internal controls, reduced irregularities, and increased financial discipline in coastal counties of Kenya. The study recommended that coastal counties put in place measures to strengthen audit committees’ independence, by providing security of tenure, holding regular meetings and ensuring the chairman of the committee is independent and free from any undue influence or interreference in performance of his or her duties. On composition of the audit committee the study recommended the coastal counties to establish policies that promote diversity by including members with expertise in finance, accounting and risk management. Additionally, the study recommended counties put in place mechanisms for implementing audit recommendations and robust audit follow up tracking that facilitate closure of all audit queries. and recommendations. Future studies were suggested to explore audit committee effectiveness in other regions and the role of digital tools in supporting financial oversight.
Bank Characteristics, Central Bank Rate and Profitability of Tier Three Commercial Banks in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-09) Kariuki, Fredrick Njuguna; Aluoch, Moses Odhiambo
Kenya's tier three commercial banks have experienced declining profitability, with the Central Bank of Kenya reporting slowed profit growth in 2023 due to rising operational costs and increasing non-performing loans that constrain profit margins. Thus, this study examined the effects of market share, asset quality, and capital adequacy on the profitability of Kenyan tier three commercial banks, with central bank rates as a moderating variable. The research employed a descriptive design using secondary data from audited financial reports spanning 2015-2024, applying panel data methodology with multiple regression and diagnostic tests to analyze relationships between variables and profitability. Findings showed that profitability in Kenya's tier three banks was positively shaped by market share, asset quality, and capital adequacy. Stronger market positions boosted earnings, sound assets reduced default rates, and robust capital improved financial stability. While market share and asset quality also reinforced one another, capital adequacy appeared less connected to loan quality, suggesting different underlying drivers. The central bank rate had a weaker and less consistent influence, though modest increases could enhance profitability through interest margins; however, its overall direct effect in the panel model was negative, indicating that higher rates generally dampen returns. When monetary policy context was considered, the explanatory power of the model improved, with larger banks and well-capitalized institutions showing greater ability to withstand tighter policy conditions. Asset quality's interaction with monetary policy was not significant, but it still trended positively, hinting at potential benefits under certain conditions. The study concludes that profitability in Kenya's tier three banks is shaped by the combination of internal elements—capital strength, asset quality, and market share—and external forces like central bank rates. The study recommends that banks should prioritize market share expansion through strategic diversification and digital transformation while strengthening asset quality management through robust credit appraisal systems and comprehensive risk frameworks. The study recommends that tier three banks should develop comprehensive capital management strategies beyond regulatory compliance and establish sophisticated monitoring systems for macroeconomic indicators, particularly Central Bank Rate movements. The study recommends that banks should strengthen governance structures through independent board composition, empowered risk committees, and transparent leadership practices to ensure regulatory compliance and build stakeholder confidence.
Digital Credit and Financial Performance of Small and Medium Enterprises in Nairobi City County, Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-09) Thomas, Jane Nzembi; Mwenda, Nathan
This study ascertained the effect of digital credit on financial performance of selected SMEs in the CBD of Nairobi City County, Kenya. The research employed a cross-sectional research design. The population comprised 5,400 SMEs located in the Nairobi CBD. The study utilized a stratified random sampling technique to determine the necessary sample size. The sample involved responders selected by stratified proportionate sampling to identify 358 significant SMEs across several categories by the Licensing Office in Nairobi City County Offices. The research utilized source data gathered via a research tool. A pre-testing questionnaire was administered to 18 owners/managers of SMEs not included in the study sample. All the others in SMEs in Nairobi, not included in the study population, made up this population. Cronbach’s alpha tested the reliability of the scale and a score of 0.7 was considered. SPSS Package for Social Sciences was used. All the data gathered was of the quantitative type and it was analyzed through inferential analysis and descriptive analysis. It was shown as figures and tables. It was found that digital credit, its easy access, the rules surrounding it and its terms are key to how SMEs in Nairobi City County, Kenya, manage their finances. The research showed that SMEs in Kenya benefit financially from being able to access digital credit. Digital credit does not have a major impact on SME finances. It is concluded that the rules for digital credit play, a vital role in the financial health of SMEs. SMEs depend on privacy regulation, identity theft regulation and interest rate regulation that deal with the issues and appropriate responses. From this study, it is advised that SMEs take advantage of digital credit to help them reach their main aims and carefully plan how to achieve their objectives. Those who provide digital credit should make products available to SMEs to assist in shaping their offerings, sell them and urge use of the products by other players in the market. It is necessary to make sure the quality of the credit service is perfect, as this can keep customers from comparing prices with others. The report advises that digital credit providers for SMEs in Nairobi should come up with strategies to increase their online visibility
Cash Management Practices and Financial Sustainability of Public Secondary Schools in Nakuru County, Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-10) Njoroge, Mercy Wairimu; Makori, Daniel
Over Ksh 400 billion were given to the education sector in the 2017–2018 fiscal year, but an audit report released in 2018 found that almost a quarter of this money cannot be adequately accounted for. Another study by the Auditor General found that the government had spent 210.34 billion by the 2018/2019 fiscal year. Falsified enrollment numbers may be costing the government millions of shillings in capitation fees for public schools, according to financial data from the Ministry of Education. Thus, the study aimed to explore how various cash management techniques influence the ability of public secondary schools in Nakuru Town Sub-County to maintain a positive cash flow. The study was grounded in the Pecking Order Theory, Transaction Cost Theory, and a Monetary Theoretic Approach to cash management. An explanatory research design was employed for the investigation. The study focused on 33 public secondary schools in Nakuru Town Sub-County, with the analysis units being the principals, school bursars, and Board of Management (BOM) chairs. Given the relatively small target population, a census technique was used to include all the targeted respondents, resulting in a sample size of 99 individuals from the 33 schools. A questionnaire was used as the primary data collection method, and the Cronbach’s Alpha coefficient was applied to assess internal consistency. The data were analyzed using SPSS version 24, producing both descriptive and inferential statistics, with results presented in tables. The study adhered to ethical guidelines, ensuring voluntary participation and respecting participants' privacy. The findings indicated that cash budgeting, cash policies, cash disbursement, and cash flow forecasting all significantly impacted the long-term financial viability of the public schools in Nakuru East Sub-County, Nakuru County, Kenya. The study concludes that cash management practices play a crucial role in ensuring the financial sustainability of public secondary schools in the region. Based on these conclusions, the study recommends that school management teams, including principals and their deputies, should adopt a participatory approach to budgeting by involving all relevant stakeholders throughout the process. Additionally, schools should implement more aggressive credit policies to improve their working capital and achieve financial sustainability. School management should also embrace prudence in managing surplus funds, ensuring their maximum utilization through investments in viable projects. Finally, the Ministry of Education should organize regular training sessions for secondary school principals on cash flow forecasting, especially concerning operating, financing, and investing activities, to enhance their financial decision-making capabilities
Risk Attitude, Socio-Demographic Factors, and Betting and Gambling Behavior among Employed Youths in the Banking Sector in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-10) Momanyi, Enosh; Njoka,Charity
Betting and Gambling have increasingly become prevalent among employed youths in Kenya, particularly within the banking sector, raising concerns about financial stability and responsible behavior among professionals. Despite gambling often perceived as a leisure activity, emerging patterns show that some individuals resort to taking personal loans, liquidating assets, or selling property to sustain gambling habits, resulting in financial distress. Youth aged between 18–35 years make up approximately 35% of the population and form a significant proportion of the workforce, particularly in urban sectors such as banking and finance. This study investigated the influence of risk attitude and socio-demographic factors specifically gender, educational level, and economic status on gambling behavior among employed youths in Kenya’s banking sector. Grounded in Prospect Theory and Expected Utility Theory, the study examined how individual risk preferences and socio-demographic attributes shape gambling decisions among financially literate populations. An exploratory research design was adopted, targeting bank employees aged 18–35 years. Primary data were collected through structured questionnaires and analyzed utilizing both descriptive and inferential statistics, including regression analysis. The results indicated that risk attitude had a statistically significant effect on gambling behavior, leading to the rejection of the first hypothesis. Educational level also significantly influenced gambling behavior, resulting in the rejection of the second hypothesis. Gender, however, was statistically insignificant, and the third hypothesis was not rejected. Economic status was found to have a significant effect on gambling behavior, leading to the rejection of the fourth hypothesis. The study concludes that risk attitudes, educational level, and economic status serve a critical role in shaping gambling behavior among employed youths in the banking sector, while gender does not significantly influence such behavior. In view of the findings, the study recommends that young professionals should understand and manage their risk attitudes to strengthen risk management strategies, leverage educational opportunities for informed decision-making, and address economic pressures that influence gambling tendencies
Financial Risk Management Literacy and Its Effect on Financial Sustainability: Insights from Micro, Small and Medium Enterprises in Kakamega County
(Stratford Peer Reviewed Journals and Book Publishing, 2025-10) Shitambasi, Hesborn Kisambo; Makori, Daniel
The objective of the study was to investigate how financial risk management literacy affects financial sustainability of MSMEs in Kakamega County. The study was anchored on prospect theory. Descriptive survey research design was adopted in the study in which the population comprised of 645 managers and proprietors of MSMEs in the county drawn from trading, manufacturing, distribution and service sectors in the county. The study sample comprised of 247 proprietors selected using stratified sampling technique. Primary data collected using structured questionnaires was utilised in the study. Collected data was analysed using SPSS version 26. Both descriptive statistics and inferential analysis were used in data analysis. Descriptive statistics included mean score and standard deviation. Inferential analysis included Pearson's correlation coefficient and multiple regression analysis. The coefficient of determination (R²), F-statistic, beta coefficient and p-values were used in interpreting results. Results showed that MSMEs demonstrated only modest levels of financial risk management literacy and MSMEs achieved financial sustainability only to a limited extent, as many struggled with profitability, cash flow adequacy, and revenue growth. Correlation analysis results showed that financial risk management literacy showed a strong and positive correlation with financial sustainability. Regression analysis confirmed that financial risk management literacy had a positive and statistically significant effect on financial sustainability. It was thus concluded that financial risk management literacy had a positive and statistically significant effect on financial sustainability of MSMEs in Kakamega County.
Effect of Savings Generated After Repayment of Women Enterprise Fund Loan On Profitability of the Women-Owned Enterprises in Kajiado County, Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-10) Mphande, Celestine Chitumbiko; Jagongo, Ambrose; Muchira,Bancy
Women-owned enterprises in Kajiado County demonstrate lower profitability compared to neighboring counties despite comparable growth rates in enterprise numbers. This study investigated the effect of savings generated after repayment of Women Enterprise Fund loans on the profitability of women-owned enterprises in Kajiado County, Kenya. Anchored on the Free Cash Flow Theory, the study employed a positivism philosophy and explanatory research design, targeting 8,100 women entrepreneurs who accessed the Women Enterprise Fund between 2018 and 2022. Using Yamane's formula, a sample of 381 respondents was selected through stratified random sampling across five sub-counties, achieving a 72.4% response rate. Data was collected using structured questionnaires and analyzed using Stata version 17, employing descriptive statistics. The findings revealed a strong positive correlation between savings and profitability (r = 0.930, p = 0.000). Regression analysis demonstrated that savings significantly and positively affect profitability (β = 2.255, p = 0.000). The study concludes that savings constitute a critical determinant of enterprise profitability, providing financial resilience and reinvestment capacity. It recommends strengthening savings incentive programs, linking savings behavior to loan eligibility, implementing financial literacy training emphasizing savings management, and establishing accessible savings infrastructure. Further research should explore sector-specific effects and additional profitability determinants in other counties
Credit Insurance and Quality of Loan Portfolio of Microfinance Banks in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2026-01-02) Muindi, Cellinah Wanza; Koori,Jeremiah; Irungu, Anthony Mugetha
The microfinance sector in Kenya has been grappling with deteriorating loan portfolio quality, as evidenced by the 5.55 percent net non-performing loans ratio between 2019 and 2022, exceeding the International Monetary Fund and World Bank's 5 percent vulnerability threshold. The absolute value of non-performing loans escalated from KES 4.198 billion in 2019 to KES 5.718 billion in 2022, creating a critical contradiction where expanded insurance coverage coincided with worsening portfolio performance. Therefore, this study assessed the effect of credit insurance on loan portfolio quality in Kenya's microfinance banks. The research was grounded in risk management theory. The study employed a positivism research philosophy and descriptive research design, targeting all 14 Central Bank of Kenya-regulated microfinance banks. Secondary data spanning 2019-2023 was analyzed using STATA through descriptive and inferential panel regression techniques. Credit insurance was measured as the ratio of insured loan amounts to total loans issued, while portfolio quality was measured as non-performing loans to total loans ratio. The study found that credit insurance has a statistically significant and negative effect on loan portfolio quality in Kenya’s microfinance banks. The results show that each unit increase in credit insurance is associated with a 0.266-unit decline in loan portfolio quality (β = −0.266, p = 0.000), confirming the rejection of the null hypothesis. This indicates that, rather than strengthening portfolio performance, increased reliance on credit insurance may undermine loan quality within the microfinance sector. The study recommends that regulatory bodies, specifically the Central Bank of Kenya, enforce stricter oversight frameworks for credit insurance implementation in microfinance banks to mitigate identified moral hazard effects. Regulations should mandate complementary monitoring systems that maintain rigorous credit appraisal standards and borrower screening processes even when insurance coverage exists, preventing insurance presence from encouraging lax lending practices. Microfinance institutions should integrate enhanced loan supervision mechanisms alongside insurance adoption, including periodic portfolio reviews, borrower repayment behavior monitoring, and insurance claim pattern analysis to detect early warning signals of moral hazard
Financial Forecasting and Profitability of the Top 100 SMEs in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-12) Mwanzi, James Munyalo; Jagongo, Ambrose; Makori, Daniel
Small and Medium Enterprises constitute critical economic drivers in developing economies, yet their profitability remains volatile despite contributing approximately 24% to Kenya's GDP and employing over 93% of the active labor force. This study examined the effect of financial forecasting on the profitability of the Top 100 SMEs in Kenya. An explanatory research design under positivist philosophy was adopted, employing a census approach that selected 40 consistently listed firms from the Top 100 SMEs ranking. Data were collected through questionnaires for primary information and audited financial statements for secondary data, then analyzed using SPSS with linear regression analysis. The results showed that financial forecasting had a statistically significant positive effect on profitability (β = 2.10, p = 0.027), meaning a one-unit improvement in forecasting increased profitability by 2.10 units. With R = 0.36 and R² = 0.13, the model indicated a moderate relationship where forecasting explained 13% of profitability variation, leading to the rejection of the null hypothesis at the 0.05 level. The study concludes that financial forecasting serves as a statistically significant determinant of profitability among Kenya's Top 100 SMEs, with effective forecasting enabling enterprises to predict cash flow fluctuations, manage liquidity prudently, and identify profit-enhancing opportunities. The study recommends that the Kenya MSME Authority should develop standardized financial forecasting training programs targeting SME managers to enhance predictive accuracy and implementation, the Kenya Association of Manufacturers should establish forecasting benchmarking frameworks enabling SMEs to compare practices against industry standards, financial institutions should integrate forecasting capability assessments into credit evaluation processes while providing technical support to borrowers and policymakers should mandate periodic forecast reviews and documentation for SMEs seeking government support programs to institutionalize strategic financial planning practices that demonstrably improve profitability outcomes.
Financing Options and Financial Growth of Small and Medium Enterprises inKirinyaga County, Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2026-01) Kinyua, Michael Mithamo; Mungai, John
Small and Medium Enterprises (SMEs) are crucial to Kenya's economy, serving as its foundation and supporting numerous families. However, accessing financing remains a persistent challenge for these enterprises. While extensive research examines factors affecting SME performance and profitability in Kenya, few studies have explored constraints SMEs encounter in securing financing from various sources and how these challenges relate to overall performance. Most studies focus on industry or macroeconomic factors rather than financing options. This study investigated the effect of financing options on the financial growth of SMEs in Kirinyaga County, Kenya. Specific objectives assessed the effects of equity financing, debt financing, and informal financing on SME financial growth. The study's significance lies in its potential to inform SME owners and policymakers about effective financing strategies that enhance financial growth, ultimately contributing to sustainable SME development in Kirinyaga County and fostering a more robust regional economic environment. Theoretical frameworks including Pecking Order Theory, Trade-Off Theory, and Agency Theory guided the analysis, providing comprehensive understanding of how different financing options affect SMEs. The study employed a descriptive research design involving 139 SMEs selected through Yamane sampling strategy from 213 registered SMEs as of December 2023. A pilot test refined the questionnaire, ensuring clarity and relevance. Data collection utilized structured questionnaires, prioritizing ethical considerations including confidentiality and voluntary participation. Operationalization and measurement of variables defined key constructs related to financing options. Diagnostic tests assessed data quality. Data presentation included descriptive statistics (means and standard deviations) and inferential statistics to establish variable relationships, analyzed using SPSS version 23. Equity, debt, and informal financing demonstrated positive significant effects on SME financial growth in Kirinyaga County. The study concludes that equity financing provides essential capital for expanding operations, investing in new technologies, and increasing market reach. Debt financing enables businesses to invest in expansion, improve operations, and enhance market competitiveness. Informal financing provides crucial capital to SMEs struggling to access traditional bank loans due to stringent requirements. The study recommends that the County develop targeted financial literacy programs educating SME owners about equity financing options and effectively presenting business cases to potential investors. The government should create platforms for SMEs to showcase business plans and financial needs to potential investors and lenders, facilitating connections that could lead to better financing opportunities
Internal Audit Function's Independence and Financial Reporting Quality in Deposit-Taking Saccos in Kenya
(StratfordPeerReviewedJournalsandBookPublishing, 2026-01) Nyoro, Annah Njeri; Theuri ,Joseph
Financial reporting quality remains a critical concern for deposit-taking savings and credit cooperative societies (SACCOs) in Kenya, with recent scandals highlighting significant deficiencies in financial disclosure and transparency. This study examined the effect of internal audit function's independence on financial reporting quality in deposit-taking SACCOs in Kenya. Grounded in agency theory, the research adopted a cross-sectional design targeting 176 deposit-taking SACCOs regulated by SASRA. Simple random sampling was employed to select 122 respondents from finance, accounting, and internal audit departments. Data was collected using structured questionnaires and analyzed using descriptive statistics, correlation analysis, and multiple regression analysis. The study achieved a 76% response rate with 93 usable questionnaires. Findings revealed that internal audit function's independence had a moderate positive correlation (r=0.458) with financial reporting quality. Regression analysis demonstrated that IAF independence significantly predicted financial reporting quality (β=0.335, p<0.05, t>1.96), explaining 58.2% of the variance in financial reporting quality. The study concluded that strengthening the independence of internal audit functions is crucial for enhancing financial reporting quality in deposit-taking SACCOs. The study recommends that senior managers of deposit-taking SACCOs should remain committed to strengthening the independence of the internal audit function through clear organizational structures, adequate resource allocation, and protection of internal auditors from managerial interference. This research contributes to the understanding of governance mechanisms in cooperative financial institutions and provides practical insights for regulators and SACCO management.
Bank-Specific Characteristics and Financial Distress of Commercial Banks in Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2024-11) Githinji, Mary Wangechi; Simiyu, Eddie; Omagwa, Job
Empirical evidence on the banking industry in Kenya indicates that local banks have been prone to financial distress. Commercial banks in Kenya have been experiencing cycles in Financial Distress and though such cycles have been precipitated by Bank-Specific Characteristics in other countries. It is still a challenge for empirical investigation as to know whether Bank-Specific Characteristics significantly affect Financial Distress in Kenya’s banking industry. Subsequently, the basis of this research was to evaluate the connection between Bank-Specific Characteristics and Financial Distress of commercial banks in Kenya. Explicitly, the research was informed by determining the Income Diversification on Financial Distress of commercial banks in Kenya. The Gambler’s ruin theory and Modern portfolio theory provided theoretical anchorage to the research. Positivism research philosophy and causal research design were adopted for the study. The research was a census of all the 36 fully operational commercial banks in Kenya for the period 2011 through 2019. Secondary data was utilized in this study. Data sources included: websites of the CBK and individual Commercial Banks, audited financial statements and Annual supervision reports. Data analysis entailed use of descriptive and inferential statistics where the latter involved dynamic panel logistic regression analysis. Diagnostic tests undertaken in the study included: model specification, stationarity, autocorrelation, and multicollinearity tests. Hypotheses were tested at a significance level of 0.05. Data was displayed through frequency tables and graphs. Based on the dynamic panel Logistic regression analysis, the research revealed that Income Diversification had a significant effect on Bankometer Score (β=0.3504847, p=0.002) on commercial banks in Kenya. The study recommended that banks should diversify their revenue streams into new business areas and markets while considering risks and capabilities
Cash flow Management Activities and Financial Performance of Manufacturing Firms Listed at Nairobi Securities Exchange, Kenya
(International Academic Journal of Economics and Finance, 2022-12) Odhowa, Feisal Matan; Mutswenje, Vincent S.
The performance of industrial entities contributes significantly to economic development of Kenyan stock market as well as national economy at large. Adoption of cash flow management activities is intended to improve financial performance yet the financial performance of manufacturing firms continues to remain erratic. Hence, it remains unclear whether cash flow management activities significantly affects the performance of industrial entities. Thus, in view of this background, the study sought to assess the influence of cash flow management activities on the financial performance of industrial firms listed at Nairobi securities exchange, Kenya. The specific objectives of the study are: to examine the influence of cash flow management from operating activities, investing activities and financing activities and how they influence financial performance of industrial firms listed at the Nairobi securities exchange, Kenya. Research hypotheses were tested at 0.05 significance level. This study was guided by three theories, which include Keynesian theory of money, Free cash flow theory and cash flow management theory. The study adopted causal research design. The target population comprised eight manufacturing firms listed at the NSE where the study adopted a census. The time scope of the study is five years, that is, year 2017 to year 2021. A data abstraction tool was used to collect secondary data. It adopted the panel regression model. Descriptive statistics (mean and standard deviation) and panel regression analysis was used to analyse data. The diagnostic tests was carried out before the actual analysis. The data was presented using tables, graphs and frequency tables. The study adhered to ethical considerations accordingly. The inferential statistics revealed that cash flow management from operating activities has a statistically insignificant influence on the financial performance of manufacturing firms (p=0.275>0.05). Cash flow management from investing activities was found to have a statistically insignificant influence on financial performance of manufacturing firms (p=0.125>0.05). The findings show however, firm size was not a significant moderator (p=0.562>0.05) in this study. The study suggested that with the establishment of negative correlation on the financial performance, in pursuit of higher profit and better performance the manufacturing firms can utilize management of cash flows, another study was suggested to be done using the same variables but now using the Return on Equity as the dependent variable. The study suggested similar study to be carried out in other sectors
Budget Process and Financial Performance of Postal Corporation Branches in Makueni County, Kenya
(Strategic Journals, 2025-08) Matheka, Mukui Salome; Simiyu, Eddie
The study examined how budget process impacts the financial performance of postal corporation branches Makueni County. The research employed a descriptive research design methodology. A survey was carried out on the entire population, with a sample size of 14 Finance Officers selected. The unit of analysis focused on the 14 officers working in Makueni County postal corporation branches. Data collection involved 14 randomly chosen respondents who completed a structured questionnaire, validated by an expert to ensure its appropriateness. The collected data was analysed using two different types of statistics: descriptive statistics and inferential statistics. Specifically, the study utilized Pearson correlation and linear regression to establish the relationship between the independent variables and the dependent variable. A significance level of 0.05 (95% confidence level) was employed in the regression analysis to determine the strength of the connection between the independent and dependent variables. The findings were presented using tables, pie charts, and graphs. The descriptive statistics revealed a high level of agreement with statements related to budget planning, budget implementation, budget control, budget review, and technology and financial performance of postal corporations in Makueni County. The correlation and regression analysis demonstrated that certain processes had a positive impact on financial performance. The regression statistics indicated that budget control and budget review processes had a positive and statistically significant influence on the financial performance of postal corporations in Makueni County. The study recommends the implementation of a welldesigned budgeting process that promotes transparency, accountability, and control over financial resources. It also suggests proper budget implementation to facilitate monitoring, adjustment, and control of spending, as well as maximizing effectiveness and efficiency. Additionally, the study recommends the development of long-term revenue strategies, prioritization of projects, annual external audits of financial records, and the adoption of appropriate technological advancements to strengthen the postal sector.
Corporate Governance, Firm Size and Profitability of Energy and Petroleum Firms Listed at the Nairobi Securities Exchange, Kenya
(International Academic Journal of Economics and Finance (IAJEF, 2026-01) Venza, Jeniffer Masaa; Aluoch, Moses Odhiambo
Corporate governance is a key determinant of the sustainability and profitability of firms, especially in energy and petroleum sector that face particular challenges. Energy and Petroleum firms must implement customised governance solutions due to sector-specific issues such as infrastructure constraints, volatile global oil prices, and regulatory restrictions. Even though corporate governance is becoming more and more important in Kenya, listed energy and petroleum firms still exhibit uneven compliance and enforcement. Through empirical data, this current knowledge gap was addressed by probing into corporate governance practices impacts (board size, board tenure, board remuneration, board committees and board meetings) on profitability of listed Nairobi Securities Exchange energy and petroleum firms, proxied by Return on Equity and Return on Assets with examination of firm size’s moderating effect. Financial statements of Nairobi Securities Exchange listed energy and petroleum firms was the main sources of data for the years 2015- 2024. The study employed descriptive research with panel data was analysed using fixed effect or random effect. The review’s target populace was the 4 energy and petroleum listed firms as at December 2024. Diagnostic tests of stationarity, multicollinearity and hausman were undertaken. Results were presented by tables and figures. Ethical considerations were upheld throughout the examination. Utilizing correlation and multiple regression model, the review established that board size positively and significantly influenced profitability, while board tenure had a significant negative effect. Board remuneration and board meetings showed positive but statistically insignificant relationships with profitability. Board committees could not be tested due to data non-stationarity. Additionally, firm size significantly moderated corporate governance’s relationship with profitability, particularly for board size and board meetings. The study concludes that larger boards enhance oversight and strategic input, while extended board tenure may hinder adaptability and monitoring. Remuneration and meeting frequency alone do not guarantee improved performance. Finally, firm size is concluded to strengthen governance mechanisms’ effectiveness in larger organizations, highlighting vitality of scale-sensitive governance structures. From the results, the study recommended that management should determine optimal board size that is necessary for effective operation and decision-making to ensure the listed firms at Nairobi security exchange obtain higher returns. In additional, the management should determine the length of board of director to earn stakeholders trust hence gaining interest on the commitment hence output ensuring higher returns for the shareholders
Credit Risk Management Practices and Asset Quality of Deposit Taking Microfinance Institutions in Kenya
(International Academic Journal of Economics and Finance (IAJEF, 2025-11-26) Kevin, Mariita Ontita; Irungu, Anthony
Deposit Taking Microfinance Institutions in Kenya faces insistent challenges in realizing sound asset quality, with nonperforming loans eroding institutional stability and threatening long-run viability. This research determined the effect of credit risk management practices on the asset quality of Kenyan Deposit Taking Microfinance Institutions, concentrating on credit risk identification, credit risk assessment, credit risk monitoring, and credit risk control practices. The research was done on the period between 2019 and 2024 and underpinned on the Asymmetric Information Theory, Credit Rationing Theory, Modern Portfolio Theory, and Agency Theory. A descriptive research method was employed, targeting operations managers, credit managers, and risk managers drawn from all thirteen licensed DTMFIs in Kenya. The research employed both primary and secondary data. Primary data was acquired through structured questionnaires whilst secondary data gathered utilizing data gatherin sheets. Diagnostic tests including Normality Test and Multicollinearity Test were done to ensure robustness of the regression model. Data were analysed utilizing SPSS, for both descriptive and inferential statistics. Descriptive statistics adopted frequencies, means, and standard deviations, whereas inferential analysis included Pearson’s correlation and panel regression techniques. The regression analysis indicated that credit risk identification, credit risk assessment, and credit risk monitoring had statistically positive significant effect on asset quality, concluding that structured screening, rigorous assessment, and continuous monitoring enhance portfolio stability and reduce non-performing loans. Similarly, credit risk control practices had an adverse significant effect on asset quality. The research concluded that effective credit risk identification, assessment, and monitoring practices were core in sustainment of asset quality in Deposit Taking Microfinance Institutions, whereas extreme dependence on rigid control mechanisms undermined Deposit Taking Microfinance Institutions success. The research recommended that Deposit Taking Microfinance Institutions should embrace proactive and technologydriven risk identification and monitoring tools, strengthening borrower appraisal frameworks, and complement enforcement with adaptive strategies such as flexible loan repayment arrangements and financial literacy initiatives. Regulators should also improve supervisory monitoring and promote the integration of predictive analytics to ensure financial stability in the sector. The research adhered to all ethical deliberations by obtaining research license and respondent consents
Climate-Induced Credit Risks and the Financial Stability of Commercial Banks in Kenya
(nternational Academic Journal of Economics and Finance (IAJEF), 2025-11-25) Mwaura, Ruth; Abdul, Farida; Mutswenje, Vincent Shiundu
Commercial banks remain central to credit intermediation, savings mobilization, and payment systems, making their stability essential for sustained economic growth. In Kenya, this stability has been increasingly tested by climate variability heighten financial risks. Sector-wide resilience, measured by the average Z-score, fell sharply from above 100 in 2010 to about 18 in 2013, before settling in a range of 26 to 40 between 2021 and 2024. Although climate shocks are now recognized as key threats to banking systems, empirical evidence on their precise impact, particularly through mediation and moderation channels, has been mixed. This study examined how climate-induced credit risk affect the financial stability of commercial banks in Kenya. The analysis was anchored on Credit Risk Theory and Financial Sustainability Theory. A census of all 39 commercial banks was undertaken using secondary data from audited bank statements, Central Bank of Kenya supervision reports, macroeconomic bulletins, and climate-event records covering the period 2010–2024. Financial stability was proxied by the Z-score, while earnings volatility was measured as the rolling standard deviation of return on assets. Fixed effects panel regressions confirmed that climate-induced credit risk (p
Internal Control System and Financial Efficiency of Deposit Taking Savings and Credit Co-Operatives in Busia County, Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2025-11) Minayo, Sharon; Gitagia, Francis K.
Financial inefficiencies among deposittaking savings and credit co-operatives remain a pressing concern in Kenya, despite the sector’s notable contribution of around 10% to the country’s GDP through savings mobilization and credit facilitation to individuals and small businesses. In Busia County, many DT-SACCOs face persistent inefficiencies characterized by high operational costs and suboptimal resource allocation, even with the implementation of internal control systems. The overall goal of the research was to ascertain the effect of internal control systems on the financial efficiency of DT-SACCOs in Busia County. The specific objectives were to determine the effect of control environment and risk assessment on financial efficiency. Anchored on Agency Theory, Stakeholder Theory, Systems Theory, and the RBV, the research utilized a mixed methods research approach. The unit of analysis comprised all 8 DT-SACCOs in Busia County, whilst the unit of observation included finance/accounting, internal audit, and finance department staff. A census approach was applied to target the full population of 40 staff members. Secondary data were extracted from annual reports to assess operating costs and income, while primary data were obtained utilizing semistructured questionnaires. Quantitative data were analyzed utilizing SPSS version 28 through descriptive statistics Diagnostic tests including normality, multicollinearity, autocorrelation, heteroscedasticity, and linearity were conducted to validate the assumptions of regression analysis. Regression results revealed that control environment and risk assessment had a statistically significant and positive effect on the financial efficiency of DT-SACCOs in Busia County. Correlation results showed a positive association between the internal control variables and financial efficiency. These findings highlight the critical role of robust internal controls in improving the financial outcomes of SACCOs. The research concluded that when the control environment is strengthened and risk assessment mechanisms are improved, DT-SACCOs in the area are significantly more financially efficient. The research suggests that so as to be in compliance with evolving operational dynamics and regulatory requirements, DTSACCOs should regularly review and update their internal control policies and procedures. SACCOs must also have structured training programs to aid employee recognize, assess, and communicate risks
Financial Innovations and Cost Efficiency of Commercial Banks in Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2025-11) Otondi, Faith Moraa; Gitagia, Francis K.
Kenyan commercial banks have adopted various innovations, yet challenges in optimizing costs under inflationary pressures persist. This study examined the effect of financial innovations on the cost efficiency of commercial banks in Kenya. The specific objectives were: to establish the effect of system innovations on cost efficiency of commercial banks in Kenya; to analyze the effect of product innovations on cost efficiency of commercial banks in Kenya. The study was anchored in the Transaction Cost Theory and Innovation Diffusion Theory. The study targeted a census of all 39 commercial banks licensed by the Central Bank of Kenya and employed a descriptive research design with an explanatory approach. Secondary data were extracted from CBK reports and bank financial statements spanning 2020 to 2024, supplemented by primary data from structured questionnaires administered to 68 respondents (response rate: 87.18%). Inferential analysis utilized multiple linear regression models alongside Pearson’s product-moment correlation coefficients, while means and standard deviations supported descriptive evaluation. Correlation outcomes reflected moderate negative relationships with cost efficiency: system innovations displayed the strongest link (r = -0.470) and product innovations (r = - 0.312). The GLS regression findings showed that product innovations had a negative influence on cost efficiency (β = - 0.032, p = 0.003). In conclusion, adopting product and system innovations enhanced cost efficiency in commercial banks. Consequently, the study recommends that banks prioritize system innovations
Working Capital Management and Profitability of Energy and Petroleum Firms Listed at the Nairobi Securities Exchange, Kenya
(International Academic Journal of Economics and Finance (IAJEF, 2025-10) Ithanzu, Anthony Muema; Ng’ang’a, Peter
The profitability of the energy and petroleum corporations trading at the Nairobi Securities Exchange continues to decline and erratically fluctuate despite utilizing working capital management measures as demonstrated over a ten-year period from 2014 and ending in 2023. For the utilization of working capital management measures was intended to improve the profitability yet the profitability of energy corporations trading at the Nairobi Securities Exchange persists in being erratic. Consequently, it is uncertain if working capital management substantially influences the profitability of energy companies traded on the Nairobi Securities Exchange. Therefore, this exploration aimed to determine the influence of working capital management on profitability of energy corporations traded at the Nairobi Securities Exchange Nairobi Securities Exchange. The research’s specific goal was to assess the influence of accounts payable management on profitability of energy and petroleum firms trading at the Nairobi Securities Exchange. Research hypotheses was tested at 0.05 significance level. This research was dictated by Contingency Theory and Agency Theory. The research adopted causal effect research approach. The intended audience was the four energy and petroleum firms traded at the Nairobi Securities Exchange as a unit of analysis and the audited financial statements as the unit of observation with forty data point observations. Census was adopted since the population is small. The analysis encompasses a ten-year period from 2014 to 2023. Secondary data was acquired via a data abstraction tool. A panel regression model was employed. Descriptive statistics, including mean and standard deviation, alongside inferential statistics, was employed for data analysis. The diagnostic tests were steered prior to the definite analysis. The information was exhibited through tabular, graphs, and frequency distributions. The research complied with ethical guidelines properly. The research found that there is statistically significant and favourable influence of accounts payable management on profitability of energy and petroleum firms listed in the Nairobi Securities Exchange with P-value 0.010

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