MST-Department of Applied Economics

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Unsystematic Risk and Financial Performance of Investment Banks in Kenya
(Kenyatta University, 2025-09) Kapkea, Caroline Jerop
Investment banks have experienced significant global and regional growth over the past two decades. In Africa, and specifically in Kenya, investment banks have gradually grown, with the Capital Markets Authority (CMA) licensing fifteen (15) investment banks in 2022, up from two (2) in 2002. Despite this growth, the sector in Kenya has faced erratic and generally declining financial performance, with many banks recording negative financial ratios that is Return on Assets and Return on Equity over the study period. From the literature review, it is evident that most risk-based studies have predominantly focused on commercial banks, SACCOs and the manufacturing sector, leaving investment banks particularly in Kenya largely understudied. Existing research on unsystematic risk has often employed alternative dependent variables, with limited emphasis on the combination of variables undertaken in this study. This study sought to investigate the causes of underperformance, focusing on the impact of unsystematic risks on financial performance (FP) among investment banks in Kenya. Key unsystematic risk variables examined include revenue diversification risk, liquidity risk, capital adequacy risk, operational risk and exchange rate risk. The study also examined the moderating role of competition and the controlling influence of firm size on the relationship between unsystematic risk and financial performance. The study was anchored on several theoretical frameworks: modern portfolio theory, liquidity preference theory, trade-off theory, risk management theory, interest rate parity theory, and profit maximization theory. A quantitative research design was used, analyzing financial reports from all 15 licensed investment banks through descriptive and inferential statistics, including correlation and regression analyses. The results revealed that revenue diversification risk, liquidity risk and capital adequacy risk have a positive and significant relationship with financial performance, suggesting that diversified income streams, adequate liquidity and strong capital buffers contribute to improved profitability. Conversely, operational risk and exchange rate risk showed a negative and significant relationship with financial performance, indicating that inefficiencies in operations and exposure to currency fluctuations adversely affect profitability. Additionally, competition was found to moderate the relationship between unsystematic risks and financial performance, while firm size significantly influenced the interaction between these risks and performance. The study underscores the importance of strategic risk management and scalability for sustained growth in the sector. It concludes that maintaining adequate liquidity and capital, diversifying revenue sources and managing exchange rate and operational risks are critical to enhancing financial performance. The findings also emphasize the role of competitive positioning and firm size in mitigating risk impacts. Recommendations include regular regulatory monitoring of capital and liquidity requirements and promotion of revenue diversification. Investment banks are urged to integrate these unsystematic risks into their Enterprise Risk Management (ERM) frameworks, strengthen internal controls and conduct competitor benchmarking. Investor sensitization on inherent risks and conducting due diligence are also advised to safeguard stakeholder interests and improve sector stability.
Financial Technology and Financial Inclusion Effect on Women Economic Empowerment in Kenya
(Kenyatta University, 2025-10) Peter, Grivines Omondi
The Fintech industry in Kenya is expanding rapidly, propelled by mobile technology platforms such as M-Pesa, which offer a distinctive prospect to augment financial inclusiveness. Even with the widespread use of mobile technology, there is still a sizable gender disparity in financial access, with women being less likely than males to actively use financial services. Fintech can help close these gaps, however there are now limitations in women's access and usage, which begs the question of how well-suited present Fintech solutions are to promote true economic empowerment and inclusion. The primary objective is to examine the impact of Fintech and financial inclusion on women's economic empowerment in Kenya. This entails understanding how Fintech could enhance women's financial behaviors and contribute to the reduction of the gender disparity in financial inclusion. Examining the effects of fintech and financial inclusion on women's economic empowerment in Kenya is one of the study's main objectives. The study used a cross-sectional survey from the Kenya National Bureau of Statistics' 2021 FinAccess Household Survey. Principal component analysis will be utilized to create indexes for women's economic empowerment and Fintech usage. Additionally, the relationship between Fintech usage and demographic characteristics is examined. The multinomial logit model is used to examine the data. The study found that fintech has a negative significance on women economic empowerment while financial inclusion has positive significance effect on women economic empowerment in Kenya. The study's policy implications highlight the necessity for tailored interventions, including enhancing financial literacy among women, reducing digital transaction costs, and implementing gender-sensitive financial policies. The research contributes to the broader discourse on leveraging FinTech to promote economic inclusion and empowerment, particularly for marginalized groups such as women in developing economies
Gendered Access to Livelihood Assets among Refugees in Kakuma Refugee Camp, Turkana County, Kenya
(Kenyatta University, 2025-04) Kinyanjui, Mary Nyambura
Kenya has remained a leading host for displaced persons amid the global surge in displacement. Refugees in camps in Kenya are primarily situated in Turkana and Garissa counties, which are among the most marginalised areas in the country. The push factors for displacement, combined with the conditions in Turkana, exacerbate the vulnerability of the refugees. The management of refugees in Kenya is guided by a comprehensive policy framework, with efforts from global, national, regional, and humanitarian actors aimed at fostering self-reliance and economic inclusion for refugees. Despite this, female refugees continue to face challenges related to limited access to resources and heightened vulnerability. The study employed the Social Vulnerability, Sustainable Livelihood Approach, and MVI developed in the researcher’s earlier work to examine vulnerability from a gendered perspective and how gender dynamics influence refugees’ access to assets. It utilised cross-sectional data collected in 2019 by the United Nations High Commissioner for Refugees database and The World Bank and included 2,217 randomly sampled households. Following Heteroscedasticity, Model Specification, and Goodness of Fit tests, the study implemented a Fractional Regression model and a Multivariate Logistic Model. The findings indicate that gender significantly influences vulnerability in many refugee households, with women being more susceptible. Additionally, male-headed households also experience vulnerability and lack access to essential resources. We recommend policies targeting both men and women, recognising that male refugees are equally vulnerable. Furthermore, women refugees are 0.104 percent less likely to engage in farming and 4.15 percent less likely to possess a bank account. We advocate for targeted yet inclusive policies, particularly regarding school enrolment and farming, to address food insecurity, climate change, and financial inclusion.
Portfolio and Foreign Direct Investments Effects on Youth Unemployment in Kenya
(Kenyatta University, 2025-11) Kioko, Josphat Mutuku
Foreign firms have established themselves in financial services, insurance services, educational institutions, communication technology, trade and manufacturing in Kenya, bringing in much needed foreign direct investments. Portfolio investors in Kenya have invested in mobile money transfers, agricultural processing, banking sector, health care services, information communication technology, renewable and non-renewable energy, extractives, retail trade, transport infrastructure and hospitality industry. Meanwhile, youth unemployment rates rose from 6.676 in 1993 reaching 12.012 in 2023, see attached appendix A4 data, indicating growing economic challenges despite investment inflows. Despite the rise in Kenya’s foreign direct investments from 2.53% of Gross Domestic Product in the year 1993 reaching 0.67% of Gross Domestic Product in the year 2023 and portfolio investments from 0.32% of Gross Domestic Product in the year 1993 reaching 0.597% of Gross Domestic Product in the year 2023 see attached appendix A4 data, empirical understanding of relationship between youth unemployment and these forms of investments has been elusive due to mixed results. This study, therefore, aims to examine the effect in Kenya of both foreign direct investment and portfolio investment on the youth unemployment. The two specific objectives are (i) to assess the effects of foreign direct investments on youth unemployment rate in Kenya; (ii) to establish effects of portfolio investments on youth unemployment rate in Kenya. Investments have not been prioritized to affect the level of youth unemployment; this informs this research work. The Keynesian theory of unemployment anchors the study. This research is non-experimental as the time series data is sourced from secondary databases such as International Monetary Fund (IMF) and World Bank Development Indicators(WDI) for 1993 to 2023 period. Several diagnostics tests such as unit root test, cointegration bound test, heteroskedasticity test, test for normality, autocorrelation test, model stability test and omitted variable test were done and the model passed all diagnostics tests. The effects of foreign direct investments on youth unemployment in Kenya and the effects of portfolio investments on youth unemployment in Kenya were assessed through the use of ARDL model. Findings of the research, foreign direct investments are significant in the short run and insignificant in the long run. Portfolio investments are insignificant in the short run and long run. Conclusion of study, foreign direct investments create new demand in the short run which creates new job opportunities for the youth while in the long run it does not create employment opportunities due to mergers and acquisitions of entities. Portfolio investments don’t create employment opportunities for the youth in the short run and long run. The study recommends that the ministry of investment, trade and industry, the incoming foreign direct investments should be directed towards youth employment absorbing sectors in agro processing, construction, manufacturing and horticulture. Foreign direct investments can be used to expand sectors with low youth unemployment and create new sectors that can absorb youth. Portfolio investments cannot be relied on employment creation for the youth.
Public Debt, Current Account Deficit, and Exchange Rate Dynamics in Kenya
(Kenyatta University, 2025-12) Nyoro, Ndindi
Kenya’s sovereign debt has increased throughout the years to reach a figure of above Kenya Shilling 10 trillion. As at the end of June 2023, the total public debt, excluding that which is guaranteed publicly and pending bills, stood at around Ksh. 5.39 trillion in debt externally owed and domestic debt of Ksh. 4.90 trillion. As a result, the country is facing a debt crisis and fiscal distress due to high debt service. The public debt service is consuming around 83 percent of the public revenues as per 2024/2025 Kenya fiscal budget. As the public debt is growing, the fiscal deficit has also been increasing and averages about 13 percent of GDP as of the 2023/2024 fiscal year. To sustain government operations, therefore, more borrowing will be likely. High fiscal deficit is creating the need for further borrowing and putting the country into a debt trap. The consequence is huge public debt, and more borrowing to refinance the existing debts. The problem is more pronounced on the external debts. This is because Kenya needs to earn more foreign currency to service the debt. This, however, is not happening as the exports continue to decrease as imports continue expanding. Consequently, the country faces a problem in its current account. The rate of exchange has also been observed as overvalued, creating a misalignment in the real exchange rate. This adversely affects trade and generates pressure and volatility in the exchange rate market, consequences that are undesirable for the stability and overall growth of the Economy. The situation leads to depreciation or loss of strength of the local currency. However, the monetary authority constantly intervenes to manage the exchange rate and prevent depreciation. This raises the question whether the observed misalignment in the real exchange rate is related to the growth in the public debt. The study, therefore, sought to get more information on the dynamic relationship between public debt with the current account deficit, and exchange rate misalignments in Kenya. It employed secondary time series data running from the year 1980, when the country started the journey to adopting the floating exchange rate, to the year 2023. The study made use of the Vector Auto Regressive Model to analyze the direction of causality and impact response. It is deduced from this study that the Budget Deficit is a strong determinant of Exchange Rate Misalignments, Current Account Deficit, and External Debt. Additionally, the three variables are dynamically interlinked, with bidirectional feedback loops. Current Account Deficit both influences and is influenced by Exchange Rate Misalignments and Budget Deficit, showing a complex macroeconomic adjustment mechanism. This means that persistent budget deficits fuel both external imbalances and public debt. Misalignments not only worsen the current account but are themselves affected by fiscal and external indicators. Rising external debt is influenced by fiscal and external sector pressures, necessitating coordinated macroeconomic management
Analysis of the Effect of Response of the Tax System on Corporate Tax Revenues in Kenya
(Kenyatta University, 2025-11) Emojong, Reuben
Despite the uncertainties and fluctuations associated with the global and national economic environment, corporate tax stands as an integral pillar of Kenya's total tax revenue. However, there are still several challenges and shortcomings that prevent the corporate income tax system from being considered optimal. This study strives to investigate the influence of corporate tax policy on total tax revenues in Kenya. The specific objectives are twofold: first, to analyze the effect of transfer pricing on corporate income tax in Kenya. Secondly, to examine the impact of tax system buoyancy on corporate income tax. The study's scope focuses on understanding the relationship between corporate tax and total tax revenues in Kenya, utilizing data from the Kenya Revenue Authority and other reputable sources. The period for analysis covered the years 1990 to 2022, enabling an examination of historical trends and considering potential future implications of corporate tax changes. The study used The Error Correction Model on the time series data to achieve its objectives. The findings from this research will contribute valuable insights to understanding how corporate tax policies influence overall tax revenues in Kenya. This study examines the impact of transfer pricing regulations and economic indicators on corporate income tax in Kenya, highlighting the complexity and long-term effects of such policies on the tax base. Through empirical analysis, it identifies a stable corporate tax environment. At the same time, it points out significant variability in economic factors such as Gross Domestic Product growth and trade balance. This variability underscores the challenges in maintaining tax revenue amidst economic fluctuations. It emphasizes the need for nuanced policy formulation, considering the intricate relationship between economic growth, tax policy effects, and the importance of historical tax levels on current corporate income tax through the lens of an Error Correction Model, suggesting a multifaceted approach to enhance tax system responsiveness and revenue generation. This research suggests exploring alternative policy measures, such as targeted incentives and tax base broadening, to enhance corporate income tax revenues without hindering economic progress, emphasizing the importance of strategic policy development and efficient tax administration.
Effect of Exchange Rate Volatility on Performance of Commercial Banks in East Africa Community
(Kenyatta University, 2023-06-26) 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.
Nexus between inflation and economic growth in Kenya
(Kenyatta University, 2025-02) Ng’etich, Francis Kiprop
The objective of Kenya's Vision 2030 is to attain and maintain an annual average economic growth rate of 10%. A steady and predictable macroeconomic climate is necessary for growth, investment, and development. The main categories of commodities and services that drive inflation in Kenya include food and non-food products. A deeper understanding of the intricate link between inflation and economic growth in Kenya is necessary to determine the appropriate economic policies that both preserve stable prices for goods and services and foster sustainable economic growth and development. The major goal of the study was to ascertain the connection between inflation and GDP growth in Kenya by establishing the relationship between the category of inflation that is unrelated to food and examining the impact of food inflation on economic growth. The study is premised on the Cobb-Douglas production function and the Solow growth model. Non-experimental research methodology together with time series data from the Kenya National Bureau of Statistics, Central Bank of Kenya, World Bank and other international organizations’ databases covering the years 1980–2023 were used in the study. Before analysis, the variables were subjected to various diagnostic tests, such as residual testing, co-integration, correlation analysis, and stationarity tests. The study revealed that neither nonfood inflation nor economic growth granger-causes each other whereas food inflation has a significant negative effect on economic growth. The study recommends that the government of Kenya through monetary policy authority should enact policies that are anti-inflationary by holding money circulating in the economy to check on inflation that sustains favorable economic growth in the country. Further, the government should also enact fiscal policies that control excessive taxation to avoid increase in the costs of food items which affects the levels of consumption, savings and investment necessary for economic growth.
Government Expenditure on Manufacturing, Infrastructure, Agriculture Components, and the Level of Economic Growth in Kenya 1985-2021
(Kenyatta University, 2025-03) Livingstone, Matete
There is often contention and discussion regarding the optimal way to allocate public funds to different expenditure components and how they promote economic growth. Government spending has several importance; it raises aggregate demand, increasing employment levels. This eventually spurs a country's economic growth. Public expenditure also helps provide public goods due to market failures and economic exploitation. Public goods such as infrastructure (roads, bridges, and airports), education, healthcare, and security are essential for economic growth. Public expenditure also improves the macro-economic supply side, enhancing economic growth. In addition, the government can offer subsidies to sectors that might require financial assistance for their operations or expansion, which stimulates investment, promotes innovation, increases capital expenditure, and then job creation, which leads to economic growth. It also helps to redistribute income and promote social welfare. The study's main objective was to establish the effect of various public expenditure components on Kenya's economic growth. The specific objectives were to scrutinize the effect of the manufacturing component of government spending on Kenyan economic growth, assess the effect of the infrastructure component of government spending on Kenyan economic growth, and scrutinize the effect of the agricultural component of government spending on Kenyan economic growth. The study adopted a non-experimental longitudinal research design. Secondary time series data between 1985 and 2021 from Economic Surveys, Statistical Abstracts, Economic reports, and public expenditure reports of the government of Kenya was sed. The study conducted the stationary test, cointegration, and causality test on the data and employed the Vector Error Correction Model in data analysis. The results showed that public expenditure's manufacturing and agricultural components had a positive impact on Kenyan economic growth, while infrastructure had a negative impact in the long run. Manufacturing drives industrialization, which leads to economies of scale, technological advancements, and more efficient production methods. This conforms to endogenous growth theory. Agricultural investment helps sustain economic growth by supporting rural development, reducing poverty, and improving food security. The structural transformation theory suggests that as agricultural productivity improves, resources (e.g., labor and capital) are freed up to be employed in other, more productive sectors. The results of infrastructure negatively impacting economic growth align with fiscal sustainability theory, which states that infrastructure spending may eventually become unsustainable if it leads to persistent fiscal deficits. Governments might need to increase taxes or cut spending in other productive areas (e.g., social services and education), which could dampen economic growth in the long term. Overall, the outcome showed that government spending and potential Kenyan economic expansion are correlated through a sustained relationship. This is evidenced by the R squared, which is at 0.8975. This implies that public expenditure explains 89.75% of the variations in GDP. The study recommends that the government choose the critical area of infrastructure component to invest in. In the long run, the findings showed that infrastructure spending negatively impacts economic growth, which could suggest inefficiencies or corruption in the allocation or execution of infrastructure projects. However, poor infrastructure planning, corruption, cost overruns, or investments in non productive or underutilized projects could explain the negative long-term impact. The Kenyan government should invest more in the manufacturing sector in areas like agro-processing, the textile industry, pharmaceuticals, healthcare products, automotive assembly, and parts manufacturing, which helps to reduce imports that tend to be high in Kenya. With the agricultural component having a positive effect on Kenyan economic expansion, the state could invest in agriculture sector's areas like Irrigation and Water Management, Sustainable Agriculture, Climate Resilience crops, Agricultural Research and Extension Services, High-Value Crops, agro processing, and Value Addition.
Do Regional Economic Disparities Promote Regional Value Chains? A Case Study of East Africa Community Member States
(Kenyatta University, 2025-03) Kainga, Erastus Chokera
Background, Problem, Objective, Methodology and Findings Regional economic disparities in developing countries impact growth of regional value chains to compete in the global markets. Regional economic disparities are the difference in economic capabilities between states in a region. The objective of this paper is to explore the impact of regional economic disparities (RED) on growth of food and beverage regional value chains (RVCs) in the East Africa Community (EAC) manufacturing sector. The paper employs the New Economic Geography (NEG) model in investigating the dynamics of promotion of regional value chains in EAC’s manufacturing sector. By making use of secondary data from five member states, the author surveys labour in the manufacturing sector, total income of labourers and executives, taxes, intraregional and extra-regional trade in foods and beverages, and gross value added as the regional value chain determinant. To answer the research questions, regression analysis was used to shed light on (i) the effect of regional economic disparities on promotion of regional value chains in EAC and (ii) the effect of prices on regional value chains. The findings show disparities having a positive and significant effect on promotion of RVCs, price, intra and extra-regional trade, and executive salaries while labourers’ salaries and taxation have a negative and significant effect on the promotion of RVCs. The significance of this research lies in the potential to enable EAC member states to realize and leverage their protection, industrialization, export performance and economic development strategies. Future research work may look into Climate Changes, Export Controls and Politics as promoters of regional value chains as well as infrastructure, and technology. The results show need for labourers to acquire more skills necessary to remain relevant in the ever transforming manufacturing sector. Further, that technology absorption is crucial among producers and regional tax agreements are necessary in industry location decisions. Finally, that wages determine production and the nations paying their workers more tend to enjoy more intra-regional trade. According to these findings, EAC member states need to increase intra-regional trade, apply some protectionist policies as well encourage increased budgets for education and building of institutions while also attracting foreign direct investments with tax reliefs. Keywords: Trade diversion, regional value chains, regional economic disparities, global value chains, intra-regional trade, competitive advantage and price volatility,
Trade Openness, Export Quality, and Economic Growth Nexus in Kenya
(Kenyatta University, 2025-06) Gacheru, Washington Mbuthia
Economic growth is crucial for reducing poverty, enhancing social opportunities, and building economic resilience. Trade liberalization is recognized as a primary catalyst for economic expansion, enabling domestic businesses to access global markets, secure foreign investment, adopt cutting-edge technologies, and boost productivity through international competition. Despite Kenya’s implementation of trade liberalization measures, its economic growth has remained slower than that of peer nations from the same period of independence, particularly East Asian countries. Various scholarly studies suggest that enabling economic growth requires a multidimensional approach, and trade liberalization alone is insufficient; export quality is a critical determinant of a nation’s competitiveness in the global market. High-quality exports can enhance economic stability by reducing exposure to external shocks, while low-quality exports face greater risks of imitation. Trade liberalization can also improve access to quality resources and facilitate technology transfer, potentially elevating production standards. This study aimed to assess the impact of trade openness on Kenya’s economic growth, considering the role of quality of the country’s export. The research incorporated a review of existing journals on trade openness, export quality, and economic growth, while also employing quantitative techniques to examine data spanning 1990 to 2020. Sources of data in the research project included the Kenya Government publications, The World Bank, and the United Nations. A correlational research design was employed to analyze relationships between economic growth and variables such as trade openness, export quality, and other control factors. The study was grounded in the Romer growth model. Prior to estimation, diagnostic tests confirmed the suitability of an autoregressive distributed lag model, which was later validated for reliability through post-estimation analyses. The findings indicate that in the short-run, trade openness has marginal negative impact on Kenya’s economic growth. However, the impact is not significant in the long-run. The findings suggest that trade openness results in adjustment costs that outweigh the benefits in the short-run. In the long-run, local firms overcome these initial challenges, which leads to neutral long-term effects of trade openness on Kenya’s economy. Meanwhile, enhancement of the quality of Kenya’s exports has a significant and positive effect on Kenya’s economy in the long-term, but the impacts are not significant in the short-term. The findings demonstrate that improving quality of exports is beneficial to Kenya’s economy although these gains materialize gradually. In this regard, Kenya should focus on progressively liberalizing the economy to mitigate against adjustment costs, while offering tailored assistance to struggling firms to protect them against adjustment costs. The government should also make its industries more resilient and able to exploit opportunities in international markets through investment in higher education, offering technical support, and enabling access to credit. Additionally, Kenya should implement a long-term export strategy that prioritizes value addition in key sectors like agriculture, textiles, and manufacturing, alongside enhancing product standards and certification to elevate global market credibility, since quality improvement of Kenya’s exports has a positive impact on the country’s economic growth. To achieve this goal, Kenya should focus on, infrastructure investments needed for enabling production of quality products, such as in energy, transportation, storage, and telecommunications. It should also focus on institutional development, such as police service, judiciary service, and tax authority like Kenya Revenue Authority, to ensure compliance standards on quality.
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.
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.

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