MST-Department of Applied Economics

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Effect of financial inclusion on welfare of persons living with disability in Kenya
(Kenyatta University, 2025-01) Katam, Catherine Chepkemoi
Financial services are difficult for people with impairments to obtain in both developed and developing countries. This is because they are not seen as a sizable consumer base by banks and other financial institutions. The Kenyan government has started a number of programs to help persons with disabilities with their financial circumstances. A cash transfer scheme that encourages the use of assistive equipment is one of these. Additionally, there are subsidies and grants available to assist with the costs of schooling. But raising awareness of these advantages is still difficult, particularly in rural regions. Despite these measures there is still a challenge of financial inclusion especially among the mainstream financial institutions. A large number of disabled individuals in Kenya are presently left outinterms of financial access from mainstream financial institutions like banks because the target audience is restricted to those who have severe disabilities. Despite efforts to implement disability laws, there are still issues with financial inclusion for persons with disabilities in Kenya. This study aimed to investigate the financial inclusion and welfare of households with disabled individuals in Kenya. The specific objectives were to determine the impact of financial inclusion on the welfare of persons with disabilities, to assess the effect of household expenditure on their welfare, and to evaluate the effect of education empowerment on their welfare. The study was based on Social Capital Theory, Theory of Inclusive Growth and Capability Approach Theory. A causal research design was used to clarify the relationship between variables, and the study relied on secondary data from the KenyaNational Bureau of Statistics, the 2019 Census report, the Kenya Integrated Household Budget Survey, and Financial Access surveys. Descriptive and inferential statistics were performed to determine the impact of financial inclusion on the household welfare of individuals with disabilities residing in Kenya. The data set was found to be suitable for analysis after diagnostic tests such as residual autocorrelation, heteroscedasticity of the error term, normality, and multicollinearity were performed. Based on the study's findings, it was determined thatthe coefficient of determination (R2) was 0.791while the adjusted R2 was 0.759. From the finding, it can be concluded that; financial inclusion, household expenditure and education empowerment explains 75.9 percent of the changes in the welfare of persons with disabilities. The results show that persons with disabilities' welfare increases significantly (r=0.0520, p<.05) with each unit increase in financial inclusion.
The magnitude of the informal remittances flow to Kenya: an augmented gravity model approach
(Kenyatta University, 2025-03) Mathenge, Anthony Kagiri
Global remittances reached an estimated $860 billion, with Low and Middle-Income Countries receiving over $669 billion in 2023. Despite being outdone by Official Development Assistance, remittances are a much larger financial boost for developing countries compared to Foreign Direct Investments. However, high transfer costs and the use of informal channels hinder the full impact. In Kenya remittances are now a proper source of external finances. Kenya received $4.19 billion in form of diaspora remittances. Over the years, remittances are proving to be more stable, well diversified and are promising more growth relative to Foreign Direct Investments, Official Development Assistance, private capital and exports. On the micro scale the remittances are helping achieve Kenya’s developmental goals of having a globally competitive human resource and an adequately and decently housed population as outlined in the country’s development blueprint - The Kenya Vision 2030. Though the remittances are these important, official remittance data in Kenya, as well as in many African countries, only include remittances sent through formal channel, that is, banks and Money Transfer Operators. Remittances through the informal channels such as hawalas and hundis are not recorded. This means that the recorded remittances are grossly understated impeding the capacity of policy makers to design appropriate policies aimed at encouraging remittances. This study therefore, is seeking to establish the magnitude of informal remittances in Kenya and to examine how economic conditions influence remittances to Kenya. To achieve this objective, the study employed panel data analysis and a thought experiment on remittance data between 2013Q1 and 2022Q4. Through a thought experiment, the study asks what impact a reduction of the costs of sending remittances would have on remittances if the transaction costs were reduced to that of the informal channels of sending remittances. The analysis revealed that the size of the informal remittances in Kenya is between 20% and 26% of the formal remittances. On the determinants of remittance flows to Kenya, the study establishes that Kenyans in diaspora remit more when the economic freedoms and economic conditions improve in their host nations but send less when economic freedoms back at home improve.
Effect of Road Infrastructure on Selected Economic Development Indicators in Kenya
(Kenyatta University, 2025-06) Njihia, Dennis Kiiru
Kenya, as a developing nation, has made significant investments in infrastructure projects, including roads, railways, ports, and energy, in recent years. Such infrastructure development has led to far-reaching implications for various sectors of the economy. Accessible and efficient road infrastructure are essential for farmers to transport their produce to markets and consumers, enabling economic growth and income generation. However, despite the prior expectations of theory on the relationships between improved road infrastructure and economic growth and poverty levels, data for Kenya revealed contrary behavior which warranted investigation. This study assessed the effect of road infrastructure on economic development in Kenya. The specific objectives were; to establish the effect of road infrastructure on economic growth in Kenya, to establish the effect of road infrastructure on levels in Kenya; and to establish the effect of road infrastructure on per capita income in Kenya. The study was based on four theories namely; infrastructure investment theory, spatial linkages theory, Solow neoclassical growth theory and Theories on Poverty. A longitudinal research design 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. The study adopted Autoregressive Distributed Lag model and Granger causality approach as the technique for testing the study relationships. Diagnostic tests such as normality, Multicollinearity, heteroskedasticity and autocorrelation was conducted to ensure that the assumptions of regression analysis are not violated. Ethical considerations were adhered to by obtaining permit from National Commission for Science, Technology and Innovation, Kenyatta university graduate school and the permission from the ethical committee. The short run effect was analysed using error correction model informed by the positive cointegration status of the variables all the models. Road infrastructure, labour participation and institution quality index significantly affected economic growth. However, technological growth did not have significant effect on economic growth. On the other hand, Technological growth and institutional quality index had a positive and significant influence on per capita income. Population growth has an inverse and significant influence on per capita income. Labour participation influence on per capita income was found to be statistically insignificant. In addition, road infrastructure and institutional quality index have significant influence on poverty reduction. However, human development index did not have significant influence on poverty reduction. It can be concluded that based on empirical results technological progress has not been fully utilized to generate economic growth. Adoption of institutional quality index has been underwhelming and this has impeded per capita income. Potential of human development index has not been fully exploited and this has slowed down poverty reduction initiatives in the country. The study recommends more comprehensive approach to foster human development index in poverty reduction. This can be realized by making healthcare and education affordable through programs such as universal health care and subsidized education. It is also important to point out that to create a conducive environment for innovation and technological growth to enhance economic growth. This can be attained by having tax haven for the inaugural innovators to sustain their motivation. Strong institutions are defined by adherence to the rule of law and conformity to legislation. There is need for people in public sector to embrace the rule of law and existing regulation to reduce theft and corruption.
Trade openness, export quality, and economic growth nexus in Kenya
(Kenyatta University, 2025-05) Washington Mbuthia Gacheru
Economic growth is a major concern for developing and underdeveloped countries. High economic growth creates opportunities for poverty eradication, employment creation, investment, and wealth creation. While measures to enhance cross-border trade are regarded as effective in enabling economic growth, studies have yielded mixed results on their impacts. Kenya’s trade openness level has declined besides the country implementing various policies to strengthen cross-border trade. Trade openness declined from 57 percent to 27 percent between 1990 and 2020, underscoring the need to understand its effects on Kenya’s economy. The general objective of this research was to analyze the impact of trade openness on Kenya's economic growth, and the specific objectives were to determine the impact of trade openness on the economic growth of Kenya and to establish the effects of the quality of exported products on economic growth in Kenya. Ordinary least squares estimation technique was used to determine the relationship among variables. The study established that trade openness does not lead to increased economic growth in Kenya. The research further found that an increase in the quality of exports increases economic growth in Kenya. The study concluded that Kenya should enhance the quality of its exports and diversify its exports to improve economic growth. Further, the paper observed that Kenya should lower the cost of doing business in the country to make her industries and products competitive, which can help ensure trade openness positively impacts the country's economy. It was observed that attempts to restrict trade openness are likely to lead to Kenya experiencing similar measures from its trading partners.
Financial Literacy and Economic Wellbeing of Households in Nairobi City County, Kenya
(Kenyatta University, 2025) Rachilo, Beatrice
In Kenya, financial sector has undergone intensive financial reforms especially financial technology in banking on products such as automated teller machine and mobile banking. Additionally, one of the main targets of vision 2030 is to enhance financial access to all in order to improve financial literacy and allow sound decision making on financial spending which overally influences household wellbeing. The objective of this research was to assess the effect of financial literacy on economic wellbeing of households in Nairobi City County. The specific objectives were; to establish the influence of informed financial decisions on economic wellbeing of households in Nairobi City County; to evaluate the influence of financial savings on economic wellbeing of households Nairobi City County; and to evaluate the effect of financial spending behavior on economic wellbeing of households Nairobi City County. The study was based on three theories namely; prospect theory, dual process theory and life cycle theory. Both descriptive and explanatory research designs were adopted. Data was gathered from a secondary source. This study used secondary data from the data set of the 2021 FinAccess Household Survey. The unit of analysis was 625 households in Nairobi City County included in the survey. The study adopted a multiple linear regression model to examine the connection between financial literacy and the dependent variable. Diagnostic tests such as normality, Multicollinearity, heteroskedasticity and autocorrelation were conducted to ensure that the assumptions of regression analysis are not violated. The results revealed that informed financial decision did not have significant effect on the economic wellbeing. However, financial saving had significant positive effect while financial spending behaviour had significant negative effect on economic wellbeing of households Nairobi City County. The study recommends the need to design financial literacy programs that specifically target debt management. These programs should explain the Cost of Debt: Break down the true cost of debt, including interest rates, fees, and penalties so that households can make informed financial decisions. In addition, there is need to offer financial literacy workshops and seminars focused on budgeting skills and prudent spending habits to enhance financial spending behavior
Influence of Business Training and Financial Literacy on Loan Repayment in Devolved Fund Programmes by Women Entrepreneurs in Homabay County, Kenya
(Kenyatta University, 2025-06) Oluoch, Joseph Ochieng
Over the years, women entrepreneurs have immensely contributed to a nation’s economic development and growth. However, they face a number of challenges including discrimination, finance inaccessibility, loan default, inadequate training in entrepreneurship, and inexperience. Women-oriented microfinance institutions have emerged to leverage women entrepreneurs from the discrimination and funds inaccessibility challenges. However, women entrepreneurs in Kenya still register high levels of loan default. This study assessed how business training and financial literacy influenced loan repayment among Homabay women entrepreneurs engaging in devolved funds programmes. Financial Literacy Framework and the Human Capital Theory guided the study. Data was collected from 397 licensed women entrepreneurs using a structured questionnaire through person-to-person interview. The study adopted descriptive and inferential statistics to analyze the data. A multiple linear regression approach was used to establish the influence of financial literacy and business training on loan repayment. The study sent out 397 questionnaires, but only 359 were completely responded to, giving a 90.43 per cent response rate. The study observed that majority of women entrepreneurs participating in the devolved funds programmes in Homabay County were financial literates, had attained a business training, and were aware of loan repayment. The study found a positive correlation between business training and loan repayment, with a correlation coefficient of 0.839. Additionally, it identified a strong positive relationship between financial literacy and loan repayment, with a coefficient of 0.805. The regression analysis revealed that a unit increase in financial literacy would enhance loan repayment by 0.389 among women entrepreneurs. Similarly, a unit increase in business training would boost loan repayment by 0.571. These coefficients were statistically significant at the 5 per cent level. The study concluded that financial literacy and business training are significant contributors of loan repayment in devolved funds programmes by women entrepreneurs in Homabay County. The study recommends that business training sessions and financial literacy campaigns should be offered to women entrepreneurs to enhance their loans repayment rate.
Effects of Interest Rate and Property Taxes on Housing Prices in Kenya
(Kenyatta University, 2022-11) Koome, Rodrick
Abstract
A Sectoral Analysis of Trade Openness and Women Employment in Selected East African Community Countries
(Kenyatta University, 2023-06) Muthoka, Edna Katumbi
Abstract
Effect of Exchange Rate Volatility on Performance of Commercial Banks in East Africa Community
(2023-04) Njagi, Mercy Muthoni
The performance of commercial banks indicates their capacity to generate profits sustainably. As a sector, commercial banking in- Kenya has been experiencing fluctuating performance, which could be detrimental to their survival, The current study will seck (o determine the effect of the risk associated with exchange rate volatility on the profitability of commercial banks in the East African Community. This investigation will specifically seck o establish the level of exchange rate volatility hence estimating the risk: and also analyse the effect of e change rate volatility on commercial banks’ performance. The study was grounded on (he monetary theory with sticky prices to develop the volatility and foreign exc nge exposure theory in dclcnnining how risk associated with exchange rate volatility affects the profitability of commercial banks in East Africa. It will employ explanatory research design. The study will cover the period 1990 to 2020 and utilized time series data sourced from Central Banks and World Bank, The study employed a panel estimation procedure, since the data was collected in panel series. the study concludes that volatility exists as a risk to the profitability of commercial banks in East Afiican Community. Using the coefficient of variation, the study found that Uganda performed better than Tanzania. As a result, Tanzania and Kenya saw greater currency rate volatility than Uganda. Further the results showed that the volatility influenced commercial banks performance proxied by Return on Assets for the period between 2000 to 2020. The relationship was however found to be weak and negative.
Analysis of Contract Farming Participation and Profitability among Smallholder Sorghum Farmers in Laikipia County
(Kenyatta University, 2024-09) Muhia, Kelvin Thuku
Agricultural productivity and profitability should be improved to enhance incomes and food security among smallholder farmers. The Laikipia County government has been deliberately putting effort into encouraging smallholder sorghum producers to embrace contract farming (CF) to mitigate market failures linked to spot markets that are a result of information asymmetry. However, empirical studies on participation decisions in CF among smallholder sorghum farmers are limited. The study examined determinants of participation decision and intensity, and profitability of CF among smallholder sorghum farmers in Laikipia to bridge the information gap. Multistage sampling was used, and the research first used purposive sampling to pick Laikipia West and East sub-counties as the study sites. The second stage was random sampling to identify small-scale sorghum farmers within specific wards. The data was collected from 188 sorghum farmers between the years 2016 and 2017 using a semi-structured questionnaire. The research used a double hurdle (DH) model to determine the decision to participate in CF as well as the intensity of participation. Multiple linear regression (MLR) assessed the determinants of profitability among smallholder sorghum farmers. The results revealed that the significant determinants of CF participation were land ownership, distance to a major town, land acreage, group membership, and the number of extension visits, which significantly influenced the decision to participate in CF. Participation intensity in CF was influenced by farming experience, extension access, credit, and land tenure. CF participants attained an annual profit of Kes 57,170 per acre with a value of 1.69 for return on investment (ROI). Age, education, and land size influenced profitability among the CF non-participants. Education, land size, and credit access determined CF participants’ profitability. The study concluded that land tenure was a motivating factor that influenced the decisions of sorghum producers in CF to participate due to the security of tenure. Smallholder sorghum production under contract farming was a profitable business. Credit accessed through the CF scheme increased participation intensity and profitability in sorghum farming. The study recommends that the County government of Laikipia improve on the extension services to augment those offered by the East Africa Malting Limited agents. The County government should assist as many farmers as possible in acquiring land title deeds, which increases their enterprise profitability. The Necco Fosa Cooperative Society agents and Laikipia county extension providers ought to work together to inspire CF non-participants to join the CF scheme to access credit.
Per Capita Income, Public Health Expenditure, Maternal Care Utilization and Their Effects on Infant Mortality Rate in Kenya
(Kenyatta University, 2024-11) Thuku, Beatrice Nduta
Infant mortality remains a pressing public health challenge and an indicator of socio-economic well-being globally. In Kenya, despite significant progress in reducing infant deaths, the infant mortality rate remains above global and regional targets, necessitating further investigation into its determinants. This study examines the effects of per capita income, public health expenditure, and maternal care utilization on infant mortality in Kenya. The research is guided by specific objectives: to determine the influence of per capita income on infant mortality, analyze the impact of public health expenditure, and assess the role of maternal care utilization on infant survival rates. The study employed a non-experimental quantitative research design, analyzing secondary data spanning the years 1991 to 2020. Using Grossman's Health Capital Model as a theoretical framework, the study utilized an Autoregressive Distributed Lag model to estimate the short- and long-term effects of the variables. Data were sourced from reputable institutions such as the World Bank and the Kenya National Bureau of Statistics. Diagnostic tests ensured model validity and reliability. Findings revealed that higher per capita income significantly reduces infant mortality by enabling better healthcare access and improved living conditions. Public health expenditure was found to have a strong negative correlation with infant mortality, particularly when allocated to essential maternal and child health services. Increased maternal care utilization, measured through prenatal care coverage and skilled birth attendance, demonstrated a significant positive impact on reducing infant mortality rates. However, disparities in utilization between urban and rural areas and among different socio-economic groups remain a challenge. Policy implications emphasize the need for targeted interventions to bridge socio-economic and geographic disparities in healthcare access. Increased investment in public health, particularly in maternal and child healthcare, is critical. Expanding financial risk protection mechanisms to reduce out-of-pocket healthcare expenses and enhancing health system infrastructure are also recommended. Furthermore, programs promoting maternal education and awareness of healthcare services should be scaled up. This study underscores the multifaceted nature of infant mortality determinants and provides actionable insights for policymakers to enhance child survival and achieve Sustainable Development Goals related to health equity and well-being.
Determinants of Efficiency of Microfinance Institutions in Kenya
(Kenyatta University, 2024-04) Mutuku, Calvin Mutiso
Microfinance is one of the concepts that was coined and developed in order to provide saving and borrowing solution to the poor population of the world. Microfinance has come up as one of the ways to improve financial incorporation for the bottom econonomically weak population of the world and the small and medium enterprises that have always been left out by the mainstream commercial banking system. Despite this important role, microfinance institutions efficiency in Kenya has not been fully attained in recent years. The objectives of the study was to assess the efficiency determinants of Kenya’s microfinance institutions. The objectives of the study was anchored on investigating the determinants of both technical efficiency and cost efficiency of the microfinances in Kenya. This study utilized secondary data obtained from relevant sources with mix market and association of Microfinance institutions in Kenya between 2015-2019. The study employed use of Data Envelopment analysis (DEA) for cost and technical efficiency scores generation then ran panel data using tobit analysis for regression to examine the determinants for cost and technical operation efficiency among microfinances in Kenya. A sample of 10 microfinances was considered especially those which had submitted complete data with mix market. The study used non experimental research design since the researcher has no control over what was happening but can only report what is happening or what has happened. The findings of the study indicated that credit risk had a negative impact on technical efficeiy which was significant. Also, capitalization was found to have a positive significant impact on cost efficiency and total expenses was found to have negative and significant effect on cost efficey of microfinances in Kenya. Understanding factors that determine the efficient of microfinances ought to help managers know the areas to emphasize on, in order to improve on efficiency, leading to improved financial performance hence enhancing economic growth and development. Further areas of studies can be pursued on assessing the technological impact on cost and technical efficiency of microfinances. In addition, a study can be conducted on macroeconomic variables and microfinances efficiency in Kenya.
Impact of Covid-19 on the Financial Stability of Commercial Banks in Kenya
(Kenyatta University, 2024-07) Mathenge, Noah Muthondu
Countries worldwide were gripped by the COVID-19 pandemic for the greater part of 2020 and 2021. COVID-19 spread to virtually all nations around the globe causing contraction in the global economy and Kenya was no exception. Governments worldwide deployed social distancing, lockdowns, and curfews, resulting in employee lay-off, business closure, and suppressed demand for commodities and services eventually trickling down to commercial banks. The Kenyan banking sector experienced deterioration in asset quality which has been worsening since 2014 when it stood at 5.6 percent, reaching an all-time high of 14.5 percent in 2020, whereas Return on Assets which has also been declining since 2014 stood at 4.46 percent dropped to a record low of 2.07 percent in 2020 during the pandemic. Therefore, the researcher sought to establish how the COVID-19 shock has impacted the financial stability of Kenyan commercial banks. The study sought to specifically establish how the COVID-19 pandemic impacted both Z-score and capital adequacy of Kenyan commercial banks. The study was anchored on the financial intermediation theory, capital buffer theory, and the financial instability hypothesis. A non-experimental research design was embraced while the financial stability proxy was Z-score. The study targeted 19 commercial banks in Kenya between the years 2015 to 2022 which had complete data on all the study variables. Annual bank level secondary data was acquired from Kenya`s Central Bank annual reports of supervision from 2015 to 2022. The event study methodology was used while collecting data whereby, the event window was 2020 to 2021, the span before the event (COVID-19) was 2015 to 2019, and the spell after the event was 2022. The study embraced a panel vector autoregression methodology for data analysis whereby, impulse response functions were generated. The outcome of the impulse response functions revealed a negative impact of COVID-19 on both Z-score and capital adequacy. Based on the study findings, the Government of Kenya ought to institute non-disruptive pandemic control measures such as practicing proper hygiene and wearing of masks as opposed to quarantines and lockdowns which are detrimental to businesses ultimately leading to a decline in income for commercial banks. Moreover, since capital acts as a shock absorber for banks, Kenyan commercial banks should strive to achieve and maintain the minimum capital adequacy ratios set by the Central Bank of Kenya. This will ensure commercial banks in Kenya cushion themselves against economic shocks generated by pandemics such as COVID-19.
Income Inequality and Household Saving in Kenya
(Kenyatta University, 2024-11) Joakim Gichuki
Household saving in a country is a critical source of funding to its investments especially in a developing economy like Kenya. Household saving emerges as an integral part towards national saving level in that country. Most studies conducted in developing countries with Kenya in inclusion show that these countries savings are below 30% of their Gross Domestic Product. Currently, Kenya’s national saving stands at 12% of its Gross Domestic Product. Over the past three decades, Kenya has shown a declining trend in gross domestic savings since it was at 23% of Gross Domestic Product in the early 1990s and dropped to 12% in the early 2020s. This declining saving rate could be explained by the country’s level of income inequality which also has detrimental effects on economic growth as well as the poverty reducing effects of a growing economy. Kenya has been having a declining rate of income inequality portrayed by declining Gini indices. Observing an unconventional trend between income inequality and gross national savings in Kenya, serves as the base for this study. The general objective of this study was to determine the effects of income inequality of household saving in Kenya. This study proposed to fulfil the following specific objectives; to investigate the effects of income inequality on household saving rate in Kenya and to determine the effects of income inequality on household saving option in Kenya. The study was anchored on saving and income theories; Life-Cycle Income Hypothesis, Permanent Income Hypothesis, and Absolute Income Hypothesis. The study took stance based on the previous empirical evidences and theoretical discussions pertaining the relationship between income inequality and household saving. This study used cross-sectional financial data collected from households in Kenya using the various Kenya Integrated Household Budget Surveys and ensured that all information that was analyzed reflected households from all over Kenya. For the Gini Index, the study generated it from the available income data from FinAccess. Data analysis involved descriptive statistics, diagnostic checks, and probit regression analysis. The study showed that the mean income of the respondents is Ksh. 7834, the mean age was 38 years and 65.66% of the households are located in the rural areas at 65.66% and the remaining 34.34% reside in the urban areas. The study findings were that income inequality had a negative effect of the likelihood of a household to save. The age, location, education level, gender, occupation, income level, household size and ownership of a bank account, all had a significant effect on the likelihood of a household to save. The estimates also showed that income inequality negatively affected household saving option for formal financial institutions. The size of the household and the gender of the household head did not determine the household saving option.
Effect of Foreign Debt on Human Development in Kenya
(Kenyatta University, 2024-05) Wafula, Gideon Makhanu
Human development places emphasis on an individual’s wellbeing using the Human Development Index indicators; education, health and income. Public debt is acquired to enhance investments in areas that promote social welfare of an economy’s citizens. Foreign debt is intended to bridge the gap between domestic savings and investments. The successful utilization of these debts is measured by improved wellbeing of the citizens using human development index. There has been a negative trend in human development indicators in Kenya in the recent past at a time when external debt is rising. In the fiscal year 2021/2022 public debt as a percentage of gross domestic product was recorded at 67 percent which was higher that the debt ceiling at 55 percent of gross domestic product. External debt accounted for 52% of this total debt as at 2022 recording a continuous increase as from 2013, surpassing domestic debt. As the public debt was bursting its ceiling, the human development indicators were showing a declining trend, which begged the question on the effect of foreign debt on human development. The study determined the effect of foreign debt on Human Development Index proxies namely; literacy rate, health and poverty. The study used secondary data published by various regional and international organizations from 1990 to 2021.The study was pegged on a consumer utility maximization of a merit good (education and health) theoretical framework constrained by the government’s financing. The relevant time series and diagnostic tests were performed on the data series and models. Auto Regressive Distributed Lag model was used for estimation using ordinary least squares. The findings were that, foreign debt had a negative effect on human development in Kenya in the long run. However, in the short run, foreign debt had a positive influence on literacy rate and led to a decline in morbidity. The study recommends prudent management of foreign debt
Flexible Loan Products and Financial Performance of Agricultural Enterprises in Mount Kenya Region
(Kenyatta University, 2024-06) Nambiro, Dennis Emmanuel
Agriculture remains a top contributor to the Kenyan economy, significantly affecting the country's Gross Domestic Product. However, agricultural businesses have historically performed poorly, contributing to high food insecurity. Access to credit is crucial for improving productivity in this sector. Yet, the seasonal nature of agricultural income, due to biological processes of maturity, harvesting, and sale, complicates credit availability. Financial institutions typically offer rigid, fixed repayment schedules aimed at promoting fiscal discipline, reducing transaction costs, and simplifying procedures. These schedules, however, clash with the irregular revenues of agricultural businesses, causing disparities in cash flows and irregular loan repayments. The Agricultural Finance Corporation (AFC) has introduced flexible loan products tailored to match loan repayment schedules with projected cash flows from various agricultural enterprises, addressing the mismatch between cash flows and loan repayment. Despite the potential benefits of flexible loan products, limited evidence exists on their impact on the financial performance of agricultural borrowers. This study aimed to investigate the effect of flexible loan products on the financial performance of borrowers in the agricultural sector, specifically examining their impact on annual sales turnover and the coping mechanism index. Additionally, the study explored other factors affecting the financial performance of agricultural enterprises. A cross-sectional survey methodology was employed, gathering primary data from 198 active borrowers of AFC in the Mt. Kenya region using questionnaires. The questionnaire was pre-tested before the final survey. Descriptive statistics revealed that 159 respondents had received some form of flexible loan, while 31 had not. All respondents had attained some level of education. Among the respondents, only 32 were aged between 18-35, with the rest being older. On average, two-thirds of the respondents had undertaken the financed venture for more than five years. The average coping mechanism index was 0.55.Regression analysis indicated that flexible loan products did not have a significant effect on sales revenue. Instead, education and experience significantly affected sales revenue at a 5% significance level. However, flexible loan products significantly impacted the coping mechanism index at a 5% significance level. The study recommends that AFC and other lenders continue issuing flexible loan products and encourage agricultural borrowers to have additional income sources. There is also a need to develop youth-friendly loan products to increase their participation in agricultural activities. Further studies should investigate the trade-offs between flexible loan products, loan default, and loan repayment
Income Inequality and Its Implications on Households Consumption, Investment and Financial Inclusion in Kenya
(Kenyatta University, 2024-05) Kamande, Mercy Njeri
Across the world, nations face unique challenges in the quest to deal with the problem of income inequalities. Some developing countries have the largest disparities in income distribution. In Kenya, inequality in income is a major challenge. The inequality index is about 0.416, with considerable discrepancies in education, consumption, investment, employment, and agricultural sectors as well as financial accessibility and availability. Inequality in income distribution has facilitated reduction in access of quality education, investment, consumption and financial access by households in the economy. The main focus of this study is to determine the effect of income inequality on household consumption patterns, investments and financial inclusion in Kenya. The study employed; non experimental research design with time series data for a period 1990-2021 for the variables: household’s investment, consumption, government expenditure, wealth endowment, land ownership, inflation rate, population size, domestic credit, level of education and income inequality in the Country. Data analysis was achieved through regression analysis; the Auto regressive Distribution Lag (ARDL) method was helpful to estimate the parameters in the equation. The study found that income inequality proxy by per-capita income has a negative and significant effect on household’s investment, consumption, financial inclusion in Kenya. The study recommended that government should enact policies to ensure even distribution of income to reduce inequality across the country thereby enhancing household’s investment, consumption and financial inclusion. This finding is very useful for the national government, sub-national governments, and other researchers as an insight to design long-term solutions to equality in income distribution to households. This is in line with the constitution of Kenya (2010), equality distribution of income for all and also in line with the United Nations sustainable development goals number one and two; no poverty and hunger.
Determinants of gender wage gap in Kenya: a case of Bungoma County, Kenya
(Kenyatta University, 2024-06) Machogu, Ronald Ondigi
Differences in wages based on gender remain a topical policy area in all countries. Since attaining political independence in 1963, Kenya has taken legislative, administrative, programmatic and policy measures to promote gender equality. Among the major efforts are enactment of the Employment Act 2007, which provide for equal pay for work of equal value performed by men and women, and non-discrimination on account of gender in all aspects of remuneration and employment. The Constitution of Kenya (2010) also guarantees equality of opportunity and elimination of discrimination such as gender-based bias in employment and remuneration. In an effort to advance gender equality, the government also formulated the National Policy on Gender and Development in 2000, and a revised National Gender and Development Policy in 2019 to provide policy and institutional framework for promoting gender equality in the country. The policies emphasize the need to eliminate gender discrimination in access to employment and ensure equity in remuneration. The government also established the National Gender and Equality Commission as a constitutional body to provide the institutional anchor for addressing gender gaps and promoting gender equality in the country. Despite the policy, legal, regulatory and institutional interventions, gender-based bias in employment and remuneration persist. Kenya’s gender wage gap was 68 percent in 2020, implying that women earned KSh. 68 for every KSh. 100 earned by men for doing similar work. In 2014, women earned 64.7 per cent of men’s earnings, on average. This study sought to establish the determinants of gender wage gap in Kenya with a focus on Bungoma County. Through its integrated development plan, Bungoma County has made efforts to address the male-female gap as it relates to employment outcomes. A cross-sectional research design was used, and data collected from 410 employees sampled from Bungoma County. The research employed multiple regression method in the analysis. The study results reveal that, holding other variables constant, a male worker in Bungoma County earned KSh. 8,231.65 more than a female worker. The study also established that gender, education, age, marital status, work experience, religion and employer are important determinants of gender wage gap in Bungoma County. Given that the existing policy framework at national and county levels covers gender-based discrimination, increasing compliance with the policies would be necessary to bridge the wage gap. Additionally, short-term measures such as investing and promoting female education would contribute to reducing the wage gap
Inflation Targeting and Its Effect on Food Price Volatility in Kenya
(Kenyatta University, 2024-07) Wambui, Fredrick Meni
Inflation targeting was adopted by the Central Bank of Kenya in 2011 to control inflation and ensure price stability. Despite this strategy, Kenya persistently experiences volatile food prices, presenting substantial socioeconomic challenges. High and unpredictable food prices predominantly affect low-income households that allocate a significant fraction of their earnings on food. The study aims to add to the literature gap by investigating the efficacy of inflation targeting in stabilizing food prices within Kenya. Even though the Central Bank has met its inflation objectives over the past decade, it has found it challenging to mitigate recurring food price shocks due to various factors, including global commodity prices, exchange rate dynamics, climatic changes, and regional disputes. The research specifically delves into three primary objectives: assessing the contribution of food prices to Kenya's overall inflation, scrutinizing the influence of global food prices on domestic prices, and examining the impact of inflation targeting on food inflation. The research leverages secondary time series data from 2011-2022 sourced from Central Bank of Kenya, Kenya National Bureau of Statistics , and Food and Agricultural Organisation reports, encompassing parameters like the Consumer Price Index, exchange rates, food prices, and broader macroeconomic variables. This investigation employs a multivariate linear regression model in the STATA software. The findings reveal that inflation targeting, while meeting overall inflation objectives, has been less effective in curbing the volatility of food prices. The study suggests that to ensure food price stability, a broader approach incorporating additional policies is necessary. The findings of this study offer insights into supplementary policies required to safeguard food price stability in Kenya, highlighting the need to venture beyond mere monetary policies. The significance of this investigation is manifold. For policymakers, especially within the Central Bank of Kenya, it offers nuanced insights that can guide monetary and fiscal policies, acknowledging the layered complexity of food price dynamics. As volatility in food prices can reverberate through the socio-economic fabric of Kenya, affecting food security, farmers' incomes, and the general populace's welfare, these findings provide a roadmap for harmonizing strategies across monetary, fiscal, and trade domains. Investors and the business sector too can benefit, using the gleaned knowledge to navigate the labyrinth of food price instability and making sagacious financial choices. Furthermore, this study underscores the imperative of empirical analyses in emerging economies, which can act as touchstones for sculpting policies that aim at poverty mitigation and sustainable development.
Financial Sources, Socio-Cultural Factors, and Government Regulation on Performance of Women-owned Manufacturing Enterprises in Kisumu County, Kenya
(Kenyatta University, 2023-11) Otieno, Julia Adongo; Nelson H. W. Wawire
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