RP-Accounting and Finance Department

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Fundamental Risk Factors and Financial Performance of Insurance Firms in Kenya
(Research Publish Journals, 2024-09) Mutswenje,Vincent; Sifuna, Douglas; Omagwa,Job
The financial performance of Insurance firms plays a vital role in increasing the sector's market value and leads to the economy's overall growth. There exists substantial empirical literature on fundamental risk factors and the financial performance of commercial banks and microfinance institutions. However, few studies have delved much into the relationship between fundamental risk factors and the financial performance of Insurance firms. The downward financial performance trend of the Insurance firms in Kenya is a cause for concerns among various stakeholders. The financial performance has shown a downward trend from 2011 to 2018 before a little bullish movement in 2019. The study investigates the effect of fundamental risk factors on the financial performance of Insurance firms in Kenya. Operating ratio measured financial performance for the Insurance firms as applied by the Insurance regulatory authority. The study's specific objectives are to determine the effect of inflation, exchange rates, and interest rates on the financial performance of Kenya's insurance firms. The study further establishes the moderating effect of capital adequacy on the relationship between fundamental risk factors and the financial performance of the Insurance firms in Kenya. This study adopts Positivism philosophy and an Explanatory research design. The study the Modern portfolio theory, expectations, and the Liquidity preference theory. The study uses quarterly data obtained from the insurance firms in Kenya and uses STATA software to analyze. Data analysis through Descriptive statistics, Pearson's simple correlation, Time-series regression analysis over a time scope of 10 years, Interest rates have a positive but not statistically significant effect on operating ratio as indicated by the p value (P = 0.081 < 0.05). Furthermore, Inflation rates has positive but statistically insignificant effect on Fundamental risk factors with p value (P = 0.863 < 0.05), exchange rate has a positive statistically significant effect on operating ratio (P = 0.000 < 0.05). rom 2014-2021. The hypothesis was tested at the 0.05 level of significance; findings reveal that Interest rates have a positive but statistically insignificant effect on operating ratio at p value of 0.081. Furthermore, Inflation rates has positive but statistically insignificant effect on Financial performance with p value (P=0.863), exchange rate has a positive statistically significant effect on operating ratio (P = 0.000). Therefore, the research suggests the insurance firms should be keen to quantify and control the effect of foreign exchange gain or loss on their financial performance The firms should also take into account the impact of interest and exchange rates to mitigate the impact of their volatility on financial performance
Effects of Debt Financing on the Financial Performance of Investment Firms Listed in Nairobi Securities Exchange – Kenya
(IJARKE Journals, 2024-06) Gathogo, Stephen Mwai; Irungu, Anthony Mugetha
Achieving optimal financial performance is imperative for businesses, especially in the competitive landscape of global markets marked by intense rivalry and an oligopolistic structure. Many companies listed on the Nairobi Securities Exchange (NSE) have adopted a strategy of leveraging debt to bolster their asset base and enhance profitability. Despite the anticipated benefits for operational support, historical trends underscore a concerning pattern. Companies heavily reliant on loans within their shareholders' wealth have consistently incurred substantial losses, leading to severe credit crises where their debts surpass their total wealth. This study, employing a descriptive survey design focusing on five NSE-listed investment firms, investigates the repercussions of debt financing on financial performance. Drawing on data from diverse sources, including CMA reports and online resources, the quantitative analysis reveals a clear correlation: debt financing corresponds to a decline in the financial success of investment firms. With a mean debt-to-equity ratio (D/E) of 1.247, suggesting adequacy for shortterm obligations, it aligns with the consensus that D/E should not exceed 2.0. The study underscores the need for policymakers and regulatory bodies, particularly the CMA, to formulate effective guidelines and policies for prudent debt management among listed investment firms.
Financial Technology and Financial Inclusion among Youth Operating Businesses in Central Business District Nairobi City County, Kenya
(IJRISS, 2023-12) Nyokwoyo, Douglas Ouso; Musau, Salome; Kosgei, Margret
Financial inclusion is the cornerstone of savings and investment initiatives among. Youth who are financially included have greater access to credit from financial institutions and can create and expand investment opportunities. In addition, the inclusion of youth in financial systems improves access to financial education and planning, which increases employment opportunities and ensures that previously marginalized and alienated youth are reintegrated into the economy. The purpose of this study was to evaluate the effect of financial technology on the financial inclusion of youth owned businesses in Nairobi’s central business district. The researcher targeted a large population of approximately 32100 youth owned business enterprises in the central business district of Nairobi. Convenient sampling was used to select 500 respondents aged between 20 and 35 years, per the definition of youth by the Department of youth affairs. The researcher employed a descriptive research methodology. Using open-ended questionnaire, primary data was collected. The research discovered that the utilization of mobile phones, access to the internet, and the provision of agency services have a noteworthy impact on enhancing the financial inclusion of young individuals. The research findings suggest that the achievement of financial inclusivity for enhancing the participation of young individuals in economic frameworks is facilitated by the utilization of cellular devices, the utilization of online technology, the utilization of services through intermediaries, and the acquisition of financial literacy. Therefore, the formulation of strategies aimed at enhancing financial inclusivity among the youth in the central business district of Nairobi should prioritize the enlargement of entry and amplification of financial technology solutions.
Organizational Structure and Financial Performance of Insurance Companies Listed at Nairobi Securities Exchange, Kenya
(International Research Journal of Economics and Finance, 2025-01-21) Kiraithe, Mawira Robin; Kimutai, Caroline
In Kenya, insurance companies have been experiencing a decline in their financial performance assessed by ROE. In the turbulent and competitive business environment, firm characteristics have been playing a vital role in shaping overall financial performance and market competitiveness. The general aim of this study was to establish the interplay between organizational structure and financial performance of listed insurance companies listed at the NSE in Kenya. This research was guided by the growth of the firm theory. This research applied descriptive research methodology. The target population of this research was 6 firmslisted at the NSE. The period under study spanned from 2018 to 2022. A Census ofthe 6 listed insurersin the NSE in Kenya was performed. This study utilized secondary data, extracted using a data extraction tool. Descriptive and inferential statistics were utilized in data analysis. Descriptive statistics comprised of standard deviation, mean, minimum and maximum. The relationship between independent and dependent variables was established using inferential statistics such as multiple regression and correlation analysis. The study found that organizational structure positively and significantly influences the financial performance of insurance companies listed at the NSE in Kenya. The study recommends that regulatory bodies, like the Insurance Regulatory Authority (IRA), encourage insurance companies to adopt organizational structures that improve decision-making, efficiency, and accountability, alongside supporting training and performance evaluations. It also suggests a decentralized approach to organizational restructuring, empowering lower-level employees, to enhance operational efficiency, innovation, and overall financial performance
Agency Banking and Profitability of Commercial Banks Listed at Nairobi Securities Exchange, Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2024-10-23) Mukhtar, Hassan Matan; Aluoch, Moses Odhiambo; Suva, Mark
Despite the instrumental role played by listed commercial banks in Kenya in terms of employment creation, these institutions are currently facing problems of the profitability. For instance, across the period 2018-2022, the value of return on equity has averaged at 13.15% against similar industry figures in South Africa estimated at 20.15%. This provide a clear indication that majority of the listed commercial banks in Kenya are underutilizing their equities to generate profits for shareholders. The inquiry’s essence was to establish the effect of agency banking liquidity agency banking fee and bank size on profitability. The transaction cost theory, market power theory and public interest theory of bank regulation. Relevant empirical studies were reviewed to inform the development of the conceptual framework anchored the inquiry. Positivist philosophy and explanatory design were used. The study adopted direct regression model and moderation regression model to achieve the analysis of the findings. This study targeted 12 listed commercial banks in Kenya and census was used since the population is small. Information in its secondary nature will be gathered with aid of data collection SPSS for descriptive analysis as well as inferential analysis aided by the sheet on a period from 2018 all trough to 2022. Prior to this, diagnostic tests covering Heteroscedasticity Test, multicollinearity and normality were done and appropriately interpreted. Results presentation was in tabular and graphical means. As part of the ethical concern, the study sought for relevant authorization documents. The study established that agency banking fee had significant effect on profitability of the listed commercial banks in Kenya. Furthermore, firm size was not significant while interaction term was significant and hence firm size as deduced to be a partial moderator variable. In conclusion, agency banking was a significant predictor of profitability of a financial institution. It was recommended larger banks in tier I and II should leverage the economies of scale they enjoy in the market to invest heavily in agency banking for more profit generation.
Inflation targeting and its effect on food price volatility in Kenya
(ajoeijournals, 2024-06) Meni, Fredrick; Kimunio, Isaac
Purpose of Study: The study investigates the effectiveness of inflation targeting in stabilizing food prices by examining its impact on food price volatility and the broader economic factors influencing this instability, including global commodity prices, exchange rate fluctuations, climate variability, and regional conflicts. Inflation targeting, introduced by the Central Bank of Kenya in 2011, aims to control inflation and stabilize prices. Problem Statement: Despite achieving its overall inflation objectives, Kenya continues to face volatile food prices, posing significant socioeconomic challenges, especially for low-income households that are heavily burdened by high food costs. Methodology: The study aopted non-experimental research design with secondary quarterly time series data from 2011 to 2022 sourced from the Central Bank of Kenya, Kenya National Bureau of Statistics, and the Food and Agriculture Organization, this research analyzes factors including the Consumer Price Index, exchange rates, and food prices using a Vector Error Correction Model (VECM). Result: The findings indicate that, while inflation targeting has succeeded in controlling overall inflation, it has struggled to reduce food price volatility. This suggests the need for more comprehensive policies that go beyond traditional monetary strategies to stabilize food prices effectively. Conclusion: The results highlight the necessity for a multifaceted approach involving monetary, fiscal, and trade policies to manage food price dynamics, improve food security, support farmers' incomes, and enhance overall economic stability in Kenya
Inflation Targeting and its Effect on Food Price Volatility in Kenya
(African Journal of Emerging Issues, 2024-06) Meni, Fredrick; Kimunio, Isaac
Purpose of Study: The study investigates the effectiveness of inflation targeting in stabilizing food prices by examining its impact on food price volatility and the broader economic factors influencing this instability, including global commodity prices, exchange rate fluctuations, climate variability, and regional conflicts. Inflation targeting, introduced by the Central Bank of Kenya in 2011, aims to control inflation and stabilize prices. Problem Statement: Despite achieving its overall inflation objectives, Kenya continues to face volatile food prices, posing significant socioeconomic challenges, especially for low-income households that are heavily burdened by high food costs. Methodology: The study aopted non-experimental research design with secondary quarterly time series data from 2011 to 2022 sourced from the Central Bank of Kenya, Kenya National Bureau of Statistics, and the Food and Agriculture Organization, this research analyzes factors including the Consumer Price Index, exchange rates, and food prices using a Vector Error Correction Model (VECM). Result: The findings indicate that, while inflation targeting has succeeded in controlling overall inflation, it has struggled to reduce food price volatility. This suggests the need for more comprehensive policies that go beyond traditional monetary strategies to stabilize food prices effectively. Conclusion: The results highlight the necessity for a multifaceted approach involving monetary, fiscal, and trade policies to manage food price dynamics, improve food security, support farmers' incomes, and enhance overall economic stability in Kenya.
Fundamental Risk Factors and Financial Performance of Insurance Firms in Kenya
(Research Publish Journals, 2024) Sifuna, Douglas; Omagwa, Job; Mutswenje, Vnincet
The financial performance of Insurance firms plays a vital role in increasing the sector's market value and leads to the economy's overall growth. There exists substantial empirical literature on fundamental risk factors and the financial performance of commercial banks and microfinance institutions. However, few studies have delved much into the relationship between fundamental risk factors and the financial performance of Insurance firms. The downward financial performance trend of the Insurance firms in Kenya is a cause for concerns among various stakeholders. The financial performance has shown a downward trend from 2011 to 2018 before a little bullish movement in 2019. The study investigates the effect of fundamental risk factors on the financial performance of Insurance firms in Kenya. Operating ratio measured financial performance for the Insurance firms as applied by the Insurance regulatory authority. The study's specific objectives are to determine the effect of inflation, exchange rates, and interest rates on the financial performance of Kenya's insurance firms. The study further establishes the moderating effect of capital adequacy on the relationship between fundamental risk factors and the financial performance of the Insurance firms in Kenya. This study adopts Positivism philosophy and an Explanatory research design. The study the Modern portfolio theory, expectations, and the Liquidity preference theory. The study uses quarterly data obtained from the insurance firms in Kenya and uses STATA software to analyze. Data analysis through Descriptive statistics, Pearson's simple correlation, Time-series regression analysis over a time scope of 10 years, Interest rates have a positive but not statistically significant effect on operating ratio as indicated by the p value (P = 0.081 < 0.05). Furthermore, Inflation rates has positive but statistically insignificant effect on Fundamental risk factors with p value (P = 0.863 < 0.05), exchange rate has a positive statistically significant effect on operating ratio (P = 0.000 < 0.05). rom 2014-2021. The hypothesis was tested at the 0.05 level of significance; findings reveal that Interest rates have a positive but statistically insignificant effect on operating ratio at p value of 0.081. Furthermore, Inflation rates has positive but statistically insignificant effect on Financial performance with p value (P=0.863), exchange rate has a positive statistically significant effect on operating ratio (P = 0.000). Therefore, the research suggests the insurance firms should be keen to quantify and control the effect of foreign exchange gain or loss on their financial performance The firms should also take into account the impact of interest and exchange rates to mitigate the impact of their volatility on financial performance.
Cash Management Practices andFinancial Performance ofLivestock Marketing Cooperative Societies inMarsabit County, Kenya
(Business Management, Entrepreneurship and Innovation, 2025-02) Hido, Dae Malle; Koori, Jeremiah
An objective evaluation of the performance of livestock cooperative societies is imperative in order to ascertain whether they fully reward members for the use of their equity fund. The evaluation of agricultural cooperatives using the conventional measures of financial performance like return on asset, return on equity, return on operating equity net margins on sales etc do no yield unequivocal results. Livestock marketing cooperatives societies in Marsabit County have continuously used these conventional measures giving mixed results but failing to indicate whether they create value for member producers. The objective of this study therefore sought to establish the effect of cash management practices on the performance of livestock marketing cooperative societies in Marsabit County. The key theories anchoring the study are; Keynesian theory of money, free cash flow theory and stakeholder theory. The current study adopted quantitative research design. The target population was twelve livestock marketing cooperative societies in Marsabit County that have been operational in the period 2019-2023. The unit of observation was the 110 employees in the finance departments. The study used stratified random sampling technique to arrive at a sample size of 86.. The study utilized both primary and secondary data where primary data was obtained from questionnaires that was presented to respondents and secondary data collection tool was used to obtain secondary data from audited financial reports accessible from society’s offices and ministry of cooperatives and micro-small and medium enterprises development. Diagnostic tests including multicollinearity test, normality test and reliability were conducted to confirm the model fitness. Data was analyzed using descriptive and regression analysis. The regression results showed that periodic cash plan (p=0.003, <0.05), investing of surplus cash (p=0.19, <0.05), managing cash flows (p=0.00, <0.05) had positive statistically significant effect on financial performance. Bank credit line had positive effect on financial performance even though the change was not significant. The study therefore recommends that managers of Marsabit county livestock marketing cooperative societies should enhance effective use and preparation of cash budgets and consistent investment of surplus cash. Further, there should be more decentralization of receipts and application of accounting packages. For policy, the study recommends that policy makers and regulators should concentrate on creating regulations that will allow marketing societies to thrive through provision of appropriate infrastructure for wider market.
Internal Audit Function and Financial Accountability of Laikipia County Government, Kenya: Application of Internal Audit Independence
(IOSR-JBM, 2024) Maina, Susan Mumbi; Musau, Salome
The public sector has experienced a growing demand for accountability and the need to optimize value within the constraints of limited resources. This research sought to assess the effect of internal audit function on financial accountability in the county government of Laikipia, Kenya. The specific objective of the study was to evaluate the effect of independence of the Internal Audit function on financial accountability of Laikipia County Government. The study targeted 105 employees working in the finance and economic planning department. Out of these, a sample of 51 employees were chosen and 48 questionnaires were duly filled and qualified for analysis. Data was gathered, sorted, coded, and entered on SPSS for analysis. Descriptive statistical analysis was applied to provide a summary of the data using mean as well as standard deviation metrics. Correlation and multiple regression analysis were employed to explore relationships and provide insights into the variables. The outcomes were presented using tables and charts. The questionnaire was found to be reliable, and the data was normally distributed and homogeneous, with no intercorrelation between the variables under study. The model adopted in the study was confirmed significant using ANOVA. Independence of the audit function was found to be a positive and significant predictor of financial accountability. The study recommended that policymakers should: enhance the independence of the audit function in Laikipia County Government by structurally separating the internal audit section from the Finance and Economic Planning department to strengthen its oversight capacity; implement measures to manage conflicts of interest, minimize management interference, and ensure adherence to auditing standards. To enhance effective financial accountability in the public sector, future research should examine factors influencing internal audit effectiveness.
Financial Technology and Profitability of Small and Medium Enterprises in Nairobi City County, Kenya
(Research Publish Journals, 2025-04) Ndia, Khadija Kawira; Omagwa, Job
Small and medium enterprises are essential to economic growth, wealth generation, and employment in every nation. The manner in which SMEs in Nairobi, Kenya access, manage, and use their finances have been transformed by financial technology. SMEs make up 98 percent of all enterprises, account for 30 percent of annual employment, and make up 3 percent of the country's GDP. However, approximately 400,000, SMEs fail within two years. This has necessitated a rethink of whether these SMEs make profit or not. This research explored the effect of financial technology on Nairobi County's small and medium in size businesses' profitability for the period of 5 years (2019-2023). The objectives of the investigation was to explore the effect of mobile money on the profitability of SMEs, the effect of online banking on the profitability of SMEs, and the effect of agency banking on the profitability of SMEs. The investigation was anchored on technology acceptance, relationship lending and resource dependency theory. Stratified sampling method was utilized in selecting 269 SME representation of the populace. The instrument that was employed to gather data is the questionnaire. Multiple regression analysis was employed and ethical considerations were duly observed. The study found that mobile money services had significant positive effect on profitability; agency banking uncovered an insignificant effect that is positive on profitability as online banking disclosed significant positive effect on the profitability of SMEs in Nairobi City County, Kenya. The government should establish a comprehensive framework that supports the integration and expansion of mobile money services within the SME sector
Financial Planning Practices and Donor Retention Rate of Education-Centered Non-profit Organizations in Nairobi City County, Kenya
(GLOBEEDU Group, 2025-01) Orinda, Victor Omondi; Kosgei, Margaret
This study examines the influence of financial planning practices on donor retention rates in education-based non-profit organizations (NPOs) in Nairobi City County. These organizations are vital in addressing educational disparities in underserved regions, but they have faced increasing donor retention challenges, particularly since 2019. This study relates the need to uncover financial planning practices' effect on the donor retention rate of education non-profits in Nairobi City County. It aimed to evaluate the correlation between budgeting practices and donor retention rates, determine how financial forecasting strategies affect donor retention rates, investigate the effect of cash flow management methods on donor retention rates, and examine the association between risk management approaches and donor retention rates. The study, grounded in stewardship, social exchange, and resource dependency theories, sampled 85 finance and fundraising officers from 109 targeted education-based NPOs. Data were collected through open— and closed-ended questionnaires. Three diagnostic tests were performed before the inferential analysis: the normality, multicollinearity, and heteroscedasticity tests. Descriptive and inferential techniques guided the analysis of data after collection with the help of Excel and SPSS software. The data was analyzed using the Pearson correlation. Multiple linear regression analysis was used as the decision rule for testing the study's hypothesis. The decision rule specified that the null hypothesis rejection or acceptance was established on the coefficient's signage. The findings reveal that all three financial planning practices significantly and positively affect donor retention. The study concludes that effective financial management practices are essential for donor retention and recommends implementing comprehensive financial frameworks. Further research is encouraged to explore these dynamics in other non-profit sectors.
Taxpayer Education and Tax Compliance by Water Vending Businesses in Hargeisa City, Somaliland
(Journal of African Interdisciplinary Studies (JAIS), 2024) Jirde, Hamse Ibrahim; Makori, Daniel
An effective tax system is vital for driving economic growth, and tax compliance is a primary focus of the Somaliland Inland Revenue Authority, which aims to maximize revenue collection for essential public services and wage obligations. This research explores the impact of taxpayer education on tax compliance among water vending businesses in Hargeisa, Somaliland. It specifically examines three key areas: the effect of teaching basic tax principles, the impact of communicating tax-related information for awareness, and how assistance with tax filing influences compliance. The study is based on several theories, including the Economic Deterrence Tax Theory and the Theory of Planned Behavior. A descriptive research design guides the data collection process, targeting 326 registered water vending businesses in Hargeisa City. Using the Yamane formula, a sample size of 179 participants was selected through stratified and simple random sampling methods. Data were collected using structured questionnaires, followed by diagnostic tests and analysis through a multiple regression model, with findings presented in various statistical formats. The results indicate that educational, communicative, and practical assistance strategies significantly enhance tax compliance. Teaching tax essentials improves understanding and adherence to obligations, while effective communication raises awareness and fosters positive perceptions of the tax system. Practical assistance simplifies tax filing processes, reducing compliance barriers. Additionally, socio-demographic factors influence the relationship between education and compliance, highlighting the necessity for tailored programs addressing specific needs. To enhance compliance, the study recommends targeted tax education strategies, effective promotional communication, and the provision of practical assistance. It also emphasizes the importance of understanding socio-demographic factors to develop targeted outreach programs. Further research is suggested to evaluate the long-term effects of these strategies and explore the role of digital tools in improving compliance. Key words: Tax Compliance, Taxpayer Education, Social Demographic Characteristics, Teaching Tax Essentials, Communicating Tax Awareness, Assisting with Tax Filing, Excise Tax, Fiscal Exchange Theory, Economic Deterrence Theory, Water Vending Businesses, Online Tax Filing, Tax Morale
Corporate Governance, Inflation and Profitability of Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-03) Mukaria, Joyline Nkatha; Aluoch, Moses Odhiambo
Despitebeing recognized as pillars of economic upsurgeand development, the manufacturing and allied firms listed at the Nairobi Securities Exchange in Kenya have consistently faced challenges as far as their profitability is concerned. For instance, in the period 2016-2023, their average value of return on assets stood at -0.0134, meaning significant amount of loses were reported by these firms. Against this background, the study soughttoestablish the effect of corporate governance and inflation rate on profitability of manufacturing and allied firms listed at the Nairobi Security Exchange in Kenya. More specifically, this study sought toestablish the effect of boardsize, board independenceandboard diversityon profitabilityof manufacturing and allied firms listed at Nairobi Securities Exchange. The agency, stewardship,resource dependenceand Keynesian theoriesprovidedanchorage to the proposed study.The study adopteddescriptive survey design targeting 13manufacturing and alliedfirms thatwerelisted onthe Nairobi SecuritiesExchangeand census wasadopted. Information from auxiliary sources was gathered on a period 2016-2023 and SPSS guided processing. Correlation results werethat while board size had a moderate but positive relationship with profitability, board independence alsohad a moderate but negative relationship with profitability. On the other hand, board diversity and inflation rate all had strong and positive relationship with profitability of the listed manufacturing firms in Kenya. The study concludesthat corporate governance and inflation have significant effect on profitability. The study recommends thatCapital Market Authority shouldestablish an optimal board size should be used as a benchmark by these listed firms. To improve the profitability of the listed manufacturing firms in Kenya, there is need for more independent and executive directors to be included on boards. Keywords:Corporate Governance, Board Size, Board Independence, Board Diversity, Inflation, Profitability
Corporate Governance and Performance of Community-Based Organizations in Nairobi City County in Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2024) Momanyi,Vane M.; Gatauwa,James M.
Community-Based Organizations (CBOs) in Nairobi City County are facing poor financial performance due to decreased donor financing. The weak management systems and mishandling of cash increase the severity of the financial challenges in the CBOs. This study examined the effect of corporate governance on financial performances of community-based organizations operating in Kibera Sub County, Nairobi Kenya. The primary aim of this study is to evaluate the influence of corporate governance on the financial performance of Community-Based Organizations (CBOs). Specifically, it investigates how the audit committee, directors' compensation, and the quality of external audits affect the financial outcomes of these organizations. The research is grounded in stakeholder theory, agency theory, and stewardship theory. Employing a descriptive research design, the study focused on a population of 11 CBOs to achieve its objectives. A census sampling technique was applied to select these organizations operating in Kibera Sub-County, Nairobi, Kenya. Data was collected from secondary sources by analyzing the financial statements and audit reports of the CBOs. Descriptive statistics and correlation analysis were utilized to interpret the data, while a balanced panel data model was employed to describe the collected information. Several diagnostic tests, including those for autocorrelation, multicollinearity, normality, heteroscedasticity, and the Hausman test, were conducted. Ethical considerations such as confidentiality and informed consent were also prioritized in the study. The findings indicated that managerial ownership has a positive yet insignificant impact on the financial performance of CBOs; directors' remuneration similarly shows a positive but insignificant effect. Conversely, the board structure demonstrated a positive and significant influence on the financial performance of CBOs in Kibera. The audit committee was found to have a positive but insignificant effect, while the quality of external audits significantly and positively impacted the financial performance of these organizations. The research recommends that policymakers should focus on strengthening the governance framework related to board structure. This can be achieved by establishing clear guidelines that promote optimal board size and composition, ensuring a balance between executive and nonexecutive members, and fostering diversity in skills and experience
Assessing the Effect of Financial Literacy on Investment Decisions Among Matatu Savings and Credit Cooperative Societies in Kenya
(International Journal of Financial Research, 2025-04) Wakanyi, Moses Gathecha; Musau, Salome
Financial literacy has garnered significant attention in the realm of investment on a global scale over the years. This phenomenon is ascribed to its pivotal role in the process of making investment decisions. The global economy has undergone increased complexity; thus, it is imperative for each individual to engage actively and astutely in investment decision-making to effectively navigate the escalating cost of living. Numerous individuals exhibit interest in various forms of investments, finding them captivating due to the ability to make decisions and subsequently observe the consequences of those decisions. Nevertheless, not all investment endeavors yield profits, given that investors may not invariably be accurate in their decision-making. Therefore, this research sought to analyze the influence of financial literacy on the investment decisions of designated Matatu SACCO employees in Nanyuki town, Kenya. Specifically, the research involved evaluating the influence of savings techniques, debt management, financial planning, and project appraisal methods on investment decisions. Underpinning theories were information asymmetry, behavioral economics and financial education. A causal research design was employed, focusing on 8 Matatu SACCOs in Nanyuki Town, Kenya, as the units of analysis. Data was gathered from 195 employees of the SACCOs, representing various departments, utilizing a stratified sampling method and simple random sampling techniques for participant selection. The study encompassed a sample of 131 participants. Primary data was acquired through questionnaire. Descriptive analysis, correlation and multiple regression was utilized for data synthesis. The study revealed that saving techniques, debt management techniques, financial planning and project appraisal techniques had a positive significant effect on investment decisions. The study concludes that savings strategies often encourage financial literacy and education. As Matatu SACCO employees engage in saving, they may also seek information on various investment options available to them. Debt management strategies often involve education on financial planning, budgeting, and investment options enabling employees to gain a better understanding of their financial situation, which enhances their ability to make informed investment choices.. The study recommends that the Matatu SACCO should organize regular workshops focusing on financial literacy, covering topics such as budgeting, saving, and investment options. The Matatu SACCO should create a clear debt management policy that outlines acceptable debt levels, repayment schedules, and consequences of default. The Matatu SACCO should invite financial experts and successful investors to share their experiences and insights, providing real-world context to theoretical knowledge. The Matatu SACCO employees in Nanyuki town, Kenya should organize regular workshops and seminars focused on project evaluation methodologies, financial analysis, and investment decision-making
Financial Reporting, Tracking,and Analysis Practices Effect on Financial Performance of Commercial State Corporations in Kenya
(EdinBurg Peer Reviewed Journals and Books Publishers, 2024-07) Mwangi, Nguyo Stephen; Nkuru, Faith
In Kenya, legislative acts by parliament establish state corporations to promotesocial and economic progress. The state corporations advisory committee has identified eight distinct categories of these entities, which include financial, commercial, industrial, regulatory, public universities, training and research, service, regional development authorities, as well as tertiary education corporations. Out of the 33 state corporations in commercial and manufacturing category, 18 fall under manufacturing while 15 are commercial-oriented and therefore by their operational nature expected to make profits or operating surplus. The study focusedon the fifteen (15) profit-making state corporations. Most commercial state corporations are in a state of perennialloss-making. Their financial performance trend between 2016-2020, shows that out of the 15 corporations in the commercial sector, only four (26.67%) are sustainable from their operations. This leaves over 73.33% of them struggling to survive and have to depend on government funding to address their liquidity challenges.This study sought to assess the impact offinancial reporting and analysis on the financial performance of commercialstatecorporations in Kenya. The study assumed a descriptive study design. The study used a census procedure since all fifteen State Corporations under the commercial category were studied. Data was analysed using descriptive and inferential statistics. The inferential statistics results indicate that financial reporting and analysis have a positiveandstatistically significant effect on financial performance of commercial SOEs. The study found that improved financial performance was observed upon conducting periodical operational budget estimations, capital project estimations, periodical cash flow projections, and comparison of actual costs and budget variance analysis. The management and finance department to ensure that financial reporting processes are strengthened to enhance accuracy, openness, and compliance with governing requirements.Keywords:Financial Reporting, Tracking, Analysis, Financial Performance, Commercial State Corporations
Effect of Road Infrastructure on Selected Economic Development Indicators in Kenya
(East African Journal of Interdisciplinary Studies, 2025-05) Njihia, Dennis Kiiru; Nzai, Charles
Kenya, as a developing nation, has been making significant investments in infrastructure projects, including roads, railways, ports, and energy, in recent years. Such infrastructure development is expected to have far - reaching implications for various sect ors of the economy. Efficient and reliable infrastructure networks are crucial for facilitating trade, attracting investments, improving connectivity, reducing transaction costs, and promoting economic activities. However, while there is a general understa nding of the importance of infrastructure, it is essential to conduct a focused study to examine the specific effects and outcomes of infrastructure development in Kenya. The study was anchored by Solow neoclassical growth theory. A longitudinal research d esign was adopted. The study utilized time series secondary data from 1991 to 2021 on an annual basis. The data was obtained from the World Bank and the Kenya National Bureau of Statistics. Empirically, the study developed a transport - growth model that is an extension of Solow (1956) neoclassical growth function and estimate the model with time series data of Kenya. The study adopted Autoregressive Distributed Lag (ARDL) model and Granger causality approach as the technique for testing the study relationshi ps. Diagnostic tests such as normality, Multicollinearity, heteroskedasticity and autocorrelation was conducted to ensure that the assumptions of regression analysis are not violated. Ethical considerations was adhered to by obtaining permit from NACOSTI, Kenyatta university graduate school and the permission from the ethical committee. The short run effect were analysed using ECM informed by the positive cointegration status of the variables all the models. Road infrastructure, labour participation and ins titution quality index significantly affected economic growth. However, technological growth has insignificant effect on economic growth. It can be concluded that, based on empirical results technological progress has not been fully utilised to generate ec onomic growth. It is also important to point out that the creation of a conducive environment, particularly innovation and technological space enhances economic growth. This can be attained by having a tax haven for the inaugural innovators to sustain their motivation. Strong institutions are defined by adherence to the rule of law and conformity to
Digital Financial Services and Profitability of Microfinance Banks in Kenya
(International Journal of Social Science and Economic Research, 2024-11) Kimalit, Betty Jepkorir; Musau, Salome
This study's primary intent was to ascertain how digital financial services influenced Kenyan microfinance banks performance in terms of profitability. More precisely, mobile banking, internet banking, electronic funds transfer and credit card usage effect on profitability of microfinance banks in Kenya were the specific objectives. Transaction Cost Economics, Innovations Theory of Profits, and Technology Acceptance Model theories are the theories that guided formulation of the current study concepts used herein. The research design utilized here is causal research design. The research populace consists of 14 microfinance banks in Kenya which were surveyed in order to collect data from this small group. Drop and pick method was employed to collect data, from the senior managers (finance officers) of the Microfinance Banks. The gathered data was subjected to diagnostic testing, including tests for linearity, and multicollinearity, homoscedasticity, and normalcy. Following this, the data was evaluated using additional descriptive and inferential techniques to test the general evolution of the study variables and each hypothesis respectively. Findings portrayed that digital financial services significantly and positively affected profitability of microfinance banks in Kenya. The management of microfinance banks need to adopt less costly mobile banking approaches when meeting their digital clients’ needs for this will boost the profitability thereof. With reduced cost, it will assure a direct and effective boosting of the financial performance for there is a negative link between cost and earnings of an entity. Regulators including Central Bank of Kenya should develop digital financial services policies which guide on the protection of both the producers and consumers of digital financial services.
The Impact of Loss Ratio on the Financial Stability of Insurance Firms in Kenya
(Journal of Finance and Accounting, 2023-06) Ritho, Bonface Mugo; Simiyu, Eddie; Omagwa, Job
The insurance sector is an essential component for the continued expansion and prosperity of the economy. It is the responsibility of the insurance industry to secure the continued existence of enterprises, to disperse the risk that is caused by financial losses, and to work toward eradicating uncertainty in the minds of investors. Despite the important roleof theinsurance sector in the economy, firms operating in this sector have been having trouble maintaining their financial stability. The insurance sector has faced considerable volatility in profitability, resulting in some firms being placed under receivership or even going out of firm. The purpose of this study wasto analyse the effect of loss ratio on financial stability of insurance firms in Kenya. The study was anchored on the Theory of Distress by Wreckers. The research was conducted using an explanatory research design, and the positivist philosophical approach was utilized. The target population for this study consisted of the 46 insurance firms that held IRA licenses and were operating during the time period under consideration (2014-2021). The census method was utilized for the research thesis, which focused on all 46 insurance firms in Kenya. The study usedsecondary data obtained from audited financial statements, which were publicly available on the websites of individual insurance firms. To gather panel data for the study, a secondary data collection template was employed. In order to draw conclusions from the data that was gathered, this study employed both descriptive and inferential statistical methods. The studyemployed a generalized method of moments modelling guided by static panel regression. The data processing was done using the Stata software. The research findings were presented through the use of tables and trend line graphs. The study adhered to research ethics guidelines. The findings of this study showed that loss ratio had a significantnegative influence on the financial stability of Kenyan insurance companies (β = -0.5795373, p = 0.002 < .05).The study concludes that loss ratios and capital adequacy plays a significant role in the financial stability of insurance firms. A lower loss ratio indicates a more efficient underwriting process and risk management, contributing to better financial performance and stability. As a result, the study recommendsthat to enhance their financial stability, general insurers in Kenya should manage their loss ratio.It's also recommended that Kenya should adhere to the principles of the Solvency II framework.

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