MST-Department of Accounting and Finance

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Technological Financial Systems and on the Financial Efficiency of Humanitarian Organizations in Kenya
(Kenyatta University, 2025-10) Othigo, Victor Ochieng
The purpose of this study was to examine the effect of technological financial systems on the financial efficiency of humanitarian organizations in Kenya. Specifically, the study sought to determine the influence of Enterprise Resource Planning (ERP) systems, assess the effect of cloud-based accounting software, and examine the role of blockchain technology in enhancing financial efficiency. A descriptive and correlational research design was employed. The target population comprised approximately 700 employees drawn from local and international humanitarian organizations in Kenya, with a sample selected through stratified random sampling. Data were collected using structured questionnaires and analyzed using descriptive statistics, correlation, and multiple regression analysis. The findings revealed a strong and significant positive relationship between technological systems and financial efficiency. ERP systems had the greatest influence (β = 1.8436, p < 0.001), followed by blockchain technology (β = 1.2845, p = 0.007) and cloud-based accounting software (β = 0.9273, p = 0.0239). The model exhibited strong explanatory power (Adjusted R² = 0.7857; F = 67.4243, p < 0.001), indicating that 79.85% of the variance in financial efficiency was explained by the three technologies. The study concludes that ERP, cloud-based, and blockchain systems each significantly enhance transparency, timeliness, and cost-effectiveness in financial management. It recommends that NGOs prioritize ERP adoption, strengthen cloud data security, and pilot blockchain initiatives to improve accountability and donor confidence
Financial Innovations and Cost Efficiency of Commercial Banks in Kenya
(Kenyatta University, 2025-12) Otondi, Faith Moraa
The banking sector in Kenya has experienced fluctuating cost efficiency amid rapid financial innovations, raising concerns among regulators and practitioners about sustainable operational performance. Persistent high cost-to-income ratios, averaging 48% from 2020-2023, imply elevated operational risks and reduced profitability, which undermine financial intermediation and economic growth. It is therefore critical to enhance cost efficiency to bolster sector resilience and investor confidence. Kenyan commercial banks have adopted various innovations, yet challenges in optimizing costs under inflationary pressures persist. This study examined the effect of financial innovations on the cost efficiency of commercial banks in Kenya. The specific objectives were: to determine the effect of product innovation on cost efficiency of commercial banks in Kenya; to establish the effect of system innovations on cost efficiency of commercial banks in Kenya; to analyze the effect of process innovations on cost efficiency of commercial banks in Kenya; and to evaluate the moderating effect of inflation on the relationship between financial innovations and cost efficiency of commercial banks in Kenya. The investigation was anchored in the Efficiency Structure Theory, Transaction Cost Theory, Resource-Based View Theory, and Innovation Diffusion Theory. The study targeted a census of all 39 commercial banks licensed by the Central Bank of Kenya and employed a descriptive research design with an explanatory approach. Secondary data were extracted from CBK reports and bank financial statements spanning 2020 to 2024, supplemented by primary data from structured questionnaires administered to 68 respondents. Inferential analysis utilized multiple linear regression models alongside Pearson’s product-moment correlation coefficients, while means and standard deviations supported descriptive evaluation. Correlation outcomes reflected moderate negative relationships with cost efficiency: system innovations displayed the strongest link, followed by process innovations, and product innovations. The GLS regression findings showed that product innovations had a negative influence on cost efficiency, system innovations a stronger negative effect, and process innovations a significant negative effect. Moreover, results from the Whisman moderation test revealed that inflation positively moderated the association between financial innovations and cost efficiency, amplifying cost pressures annually. In conclusion, adopting product, system, and process innovations enhanced cost efficiency in commercial banks, though inflation eroded these gains, particularly for system and product innovations. Consequently, the study recommends that banks prioritize system and process innovations while implementing inflation-hedging strategies, such as dynamic pricing and fintech partnerships, to maximize operational efficiency
Risk Attitude, Socio-Demographic Factors, and Betting and Gambling Behavior among Employed Youths in the Banking Sector in Kenya
(Kenyatta University, 2025-09) Momanyi, Enosh
Betting and Gambling have increasingly become prevalent among employed youths in Kenya, particularly within the banking sector, raising concerns about financial stability and responsible behavior among professionals. While gambling is often perceived as a leisure activity, emerging patterns show that some individuals resort to taking personal loans, liquidating assets, or selling property to sustain gambling habits, resulting in financial distress. Notably, individuals not only lose money they have earned but also borrow and still incur further losses in their attempt to maintain gambling behavior. Youth aged between 18–35 years make up approximately 35% of the population and form a significant proportion of the workforce, particularly in urban sectors such as banking and finance. This study investigated the influence of risk attitude and socio-demographic factors—specifically gender, educational level, and economic status—on gambling behavior among employed youths in Kenya’s banking sector. Grounded in Prospect Theory and Expected Utility Theory, the study examined how individual risk preferences and socio-demographic attributes shape gambling decisions among financially literate populations. An exploratory research design was adopted, targeting bank employees aged 18–35 years. Primary data were collected through structured questionnaires and analyzed utilizing both descriptive and inferential statistics, including regression analysis. The results indicated that risk attitude had a statistically significant effect on gambling behavior (p < 0.05), leading to the rejection of the first hypothesis. Educational level also significantly influenced gambling behavior (p < 0.05), resulting in the rejection of the second hypothesis. Gender, however, was statistically insignificant (p > 0.05), and the third hypothesis was not rejected. Economic status was found to have a significant effect on gambling behavior (p < 0.05), leading to the rejection of the fourth hypothesis. The study concludes that risk attitudes, educational level, and economic status serve a critical role in shaping gambling behavior among employed youths in the banking sector, while gender does not significantly influence such behavior. It recommends that young professionals understand and manage their risk attitudes to strengthen risk management strategies, leverage educational opportunities for informed decision-making, and address economic pressures that influence gambling tendencies. The findings offer valuable insights for policymakers, financial institutions, and regulators in designing targeted interventions that promote responsible gambling and mitigate financial risks among youth in Kenya’s formal employment sector.
Sustainability Investments and Financial Performance of Commercial Banks in Kenya
(Kenyatta University, 2025-11) Gakinya, Caroline Njeri
Sustainability investments have become increasingly important in the global financial landscape, yet their impact on the financial performance of commercial banks remains contested, particularly in emerging economies such as Kenya. This study examined the relationship between sustainability investments and the financial performance of Kenyan commercial banks, focusing on four key areas: education programs, health initiatives, environmental investments, and economic empowerment programs. The research employed an exploratory design and analyzed secondary data from annual reports, sustainability reports, and financial statements of all ten commercial banks listed on the Nairobi Securities Exchange between 2018 and 2023. Panel data models, including pooled OLS and fixed effects regression, were used to examine the effect of sustainability initiatives on return on equity (ROE), with all hypotheses tested at a 95% confidence level. The study adopted a significance threshold of p < 0.05, meaning that any variable with a p-value below 0.05 was considered statistically significant in influencing ROE. The findings revealed that educational programs had a strong and statistically significant positive relationship with ROE, with correlation values ranging from 0.51 to 0.84. Environmental sustainability initiatives also showed a significant positive effect on ROE, with the fixed effects and pooled OLS models yielding coefficients of 0.325 and 0.352, respectively, highlighting the operational and reputational benefits of environmental sustainability. Economic empowerment initiatives also exhibited a small positive influence of (0.061). Meanwhile health programs showed a slight negative but insignificant effect on ROE (- 0.064). This study suggests that while economic empowerment initiatives showed positive yet insignificant effects, these investments may require longer time horizons to realize measurable financial returns. This study concludes that sustainability investments in education and environmental programs contribute substantially to the financial performance of Kenyan commercial banks, while health and economic empowerment initiatives provide long-term societal benefits that may not immediately translate into monetary gains. These findings provide valuable insights for policymakers, regulators, and banking institutions in aligning sustainable banking practices with profitability goals
Internal Control Systems and Financial Performance of Private Security Firms in Nairobi City County, Kenya
(Kenyatta University, 2025-11) Kisaingu, Francis Munyao
Effective internal control systems safeguard organizational resources, ensure compliance with laws, create further operative efficiencies, and thereby secure solid financial footing. Given that over the years it has been said there have been huge cash losses, the public's attention has been turned towards private security companies that engage in cash transit. Theft during transportation has also been blamed, not only on G4S security firms but also on other companies engaged in the same activity. Security officers with KK allegedly stole Ksh82 million while transferring it from Westlands to Central Bank of Kenya. In another incident, Wells Fargo security failed to protect Ksh94.9 million belonging to a local supermarket from loss during a cash transit operation. These incidents indicate that current private security measures are inadequate to secure business assets. Private security companies play an important role in maintaining the safety and security of commercial premises, residential areas, public gatherings, and other related activities. The study intended to determine the impact of internal control systems on the financial performance of private security firms in Nairobi City County, Kenya. The specific objectives were to assess the impact of access control on financial performance, evaluate the role of risk assessment, examine the effect of monitoring activities, and determine the influence of personnel skills on the financial performance of these firms. Agency Theory, Stakeholder Theory, Resource-Based View (RBV), and Capital Structure Theory formed the theoretical base from which the relationship of variables was viewed in a causal research design. The study involved a target population of 81 licensed private security firms from which a sample of 25 was chosen using stratified sampling. Data was collected using a structured questionnaire with closed questions. Data were summarized using descriptive and inferential statistics. Mean and standard deviation were used as descriptive statistics, whereas inferential statistics included regression analysis and ANOVA to investigate relationships and measure significant levels. To enhance the validity of the regression model and prevent any misleading results from materializing, diagnostic tests such as tests for normality, multicollinearity, and heteroscedasticity were carried out. Visual data representations included frequency, percentage tables, and charts. The study was carried out in adherence to ethical consideration where authorization approval was acquired from Kenyatta University and a research permit by NACOSTI. Results indicated that the internal control components, namely access control, risk assessment, monitoring, and personnel skills, together account for 75.5 percent of the financial performance of private security firms indicated by an R² of 0.755. Additionally, a very strong positive correlation of R = 0.869 was noted, thus signaling a strong joint impact of these control measures. A p-value of 0.003, which is below the 0.05 significance threshold, confirmed that these variables had a statistically significant effect on financial outcomes. The research remarked that strong internal control system especially those related to staff competence, access control, risk assessment, and continuous monitoring are essential in improving the financial outcomes of private security companies. It recommended that managers in these firms focus on consistently strengthening their internal control systems. In particular, the study emphasized the need for regular training programs to enhance employee expertise, along with coordinated efforts between stakeholders and policymakers to create a supportive environment for adopting internal control best practices within the private security industry.
Budgetary Governance and Budget Absorption in Nairobi City County, Kenya
(Kenyatta University, 2025-11) Ombaso, Jared
Budget absorption has been a concern for project developers and other stakeholders, such as donors globally. This is because budget absorption has a direct impact on project success. Low budget absorption implies inefficiency in the planning, allocation, and implementation of projects. This study aimed to investigate the influence of budget governance on the budget absorption of Nairobi City County. The study examined the effect of budget allocation, budget execution, and budget control on the budget absorption of the Nairobi City County Government. The main theories anchoring this study included agency theory, stewardship theory, resource-based view, and budget theory. The design for this study was a cross-sectional research design, allowing for the collection and analysis of data at a specific time. This research’s target population was 304 managerial staff of the Nairobi County government. The study adopted a stratified random sampling technique to select a sample of 172 participants. Data from both primary and secondary sources were used in the research. A data collection sheet was used for secondary data collection, and primary data was collected via a semi-structured questionnaire. Descriptive statistics, correlation analysis, and multiple linear regression analysis were used to examine the data. We used correlation analysis to find out how budget absorption relates to budgetary governance and what kind of connection it is. To ascertain the extent to which differences in budgetary governance explain the observed budget absorption variability, regression analysis was used. Content analysis was used to analyze qualitative data, and results were expressed in prose form. To ensure that the data collected was accurate and consistent, the instruments used to gather it were tested for reliability and validity. Diagnostic tests were run on the gathered data to establish the regression model's assumptions. Among the tests administered were those for heteroskedasticity, normalcy, and multicollinearity. The study used Statistical Package for Social Sciences (SPSS) version 25 to analyze the data. Tables, graphs, and charts were used to display the results. The study examined the impact of budget allocation, budget execution, and budget control on budget absorption in Nairobi City County. Correlation analysis revealed that budget execution (r = 0.755, p = 0.000) had the strongest positive relationship with budget absorption, followed by budget control (r = 0.721, p = 0.001) and budget allocation (r = 0.632, p = 0.002). Regression analysis confirmed that all three variables significantly influenced budget absorption, with budget execution (β = 0.529, p = 0.000) having the highest effect, followed by budget control (β = 0.478, p = 0.002) and budget allocation (β = 0.215, p = 0.008). The model explained 87.4% (R² = 0.874) of the variation in budget absorption, confirming the strong predictive power of the independent variables. The findings emphasize the importance of strengthening execution frameworks, enhancing budgetary allocation and aligning allocations with expenditure capacity to improve budget absorption efficiency in Nairobi City County. The study findings would be relevant to various stakeholders, including the Nairobi City County Government, as the findings can inform policy and decision-making processes related to budget. Other county governments in Kenya can also draw insights from the study to enhance their budgeting practices.
Macroeconomic Environment and Financial Performance of Small and Medium Enterprises in Nairobi City County, Kenya
(Kenyatta University, 2025-12) Guyo, Abuswaleh Abdi
Kenya's small and medium-sized businesses are vital to the country's growth and development economically. Nevertheless, the majority of Kenyan SMEs are not doing well financially; in the last five years, 2.2 million SMEs have closed, and 46.3% of SMEs have closed before their first year of operation has ended. Therefore, this research aims at investigating the effect of economic environment factors on the performance of Nairobi County’s small and medium enterprises in Kenya. Particularly, taxation, inflation, government laws and policies and government activity effect was assessed on Nairobi County small and medium enterprises performance. Open system theory, balanced scorecard theory, Gibbs theory, and institutional theory served as the study's foundations. Descriptive design was used. Targeted population constituted five hundred and thirty-two (532) of these businesses in Nairobi County, Kenya. A sample size of one hundred and fifty (150) firms was chosen utilizing stratified simple random sampling techniques, with the owners or managers acting as the participants in the survey. Information from primary and secondary sources was used. Structured, closed-ended surveys were the main tool used to gather data; a document review guide was utilized to get secondary information from these businesses' financial records between 2018 and 2023. The study instrument's validity and dependability was examined. To examine the data, both descriptive and inferential statistics was utilized. The researcher utilized a panel regression analysis. Autocorrelation, heteroscedasticity, multicollinearity and normality assessment were performed as tests for diagnostic. All ethical considerations were duly followed. Finding demonstrated that taxation possess an inverse and insignificant effect on the enterprises financial performance; inflation revealed a significantly positive effect on the enterprises financial performance; government laws and policy demonstrated also significant positive effect on the enterprises financial performance; Furthermore, government activity disclosed an insignificant but positive effect on the financial performance of these enterprises. The government should consider revising tax policies to create a more favorable environment for these enterprises. Specifically, the government should explore reducing tax rates and simplifying tax compliance processes to alleviate the financial burden on SMEs, enabling them to allocate more resources towards growth and innovation. Additionally, implementing targeted tax incentives and support programs could encourage formalization and compliance among SMEs, ultimately fostering a more robust business ecosystem that contributes to economic development and job creation in the region.
Foreign Exchange Volatility and Financial Performance of Bond Market in Kenya
(Kenyatta University, 2025-10) Maratani, Padwick Brinktonish
Bond markets play a crucial role in the economy by influencing interest rates, facilitating government and corporate borrowing, and signaling economic health. Its movements directly impact borrowing costs for consumers and businesses, and it serves as a key indicator for investors and policymakers alike. However, foreign exchange rate volatility has characterized the Kenyan market environment leading to effects on the markets. This study explored the interrelation between financial performance and foreign exchange volatility of bond markets in Kenya. The precise goal was to investigate the effect of inflation, money supply and interest rate on bond markets performance from a financial perspective. The period of study was from 2010 to 2023. The research was underpinned on the interest rate parity theory, quantity theory of money, monetary theory of inflation, and modern portfolio theory. The research utilized a causal research design and targeted 26 institutions from various sectors including banks, investment Firms, pension funds and insurance. A census was employed in analyzing these institutions. Data collection was done using a secondary data collection tool and the analysis was done using a panel regression model with the aid of Stata version 14. Descriptive statistics, correlation analysis and inferential statistics were conducted. The diagnostic tests which include normality test, heteroscedasticity test and multicollinearity tests were equally carried out. A Hausman test was done to determine whether a fixed effect or a random effect model will be applied in the study. Finally, the study adhered to the ethical considerations throughout the period of study. The findings also indicate that the R2 (coefficient of determination) is 0.694 implying that 69.4 percent of the changes in bond market turnover is explained by inflationary changes, interest rates and money supply. The findings from panel regression analysis indicate an inverse and significant relationship between inflation and bond market turnover holding other variables constant. The outcome from panel regression analysis indicates that interest rates and bond market turnover have a significant and positive relationship. The regression analysis shows that money supply has a positive effect on bond market turnover, holding other factors constant. The study concludes that foreign exchange volatility components (inflation, interest rates and money supply) have a significant effect on bond market turnover. Specifically, inflation has a major and negative correlation with bond market turnover, hence an increase in inflation negatively and significantly influences bond turnover. The study also concludes that interest rates have an important and positive impact on bond market turnover implying that rise in interest rates results in an increase in bond market turnover holding other variables constant. Finally, the study concludes that supply of money has a positive but insignificant effect on bond market turnover. The study recommends that investors should closely monitor inflation rates. Understanding these factors can assist investors make well-versed decisions about when to enter or exit bond positions based on anticipated changes in currency values. Investors should use financial instruments like forward contracts, options, or futures, to guard against unfavorable movements. This strategy helps ensure that inflationary effects do not erode the returns from the bond investment. Regarding the significance of interest rates in bond markets, the study recommends that in volatile markets, focusing on short-term bonds may be advantageous as they typically have less sensitivity to interest rate changes compared to long-term bonds. Additionally, extending duration strategically during periods of expected rate cuts will enhance returns while managing risks associated with foreign exchange fluctuations.
Financial Resource Mobilization and Counties’ Sustainable Development in Kenya: A Case Study of Tharaka Nithi County Government
(Kenyatta University, 2025-09) Kabete, Mathew Muturi
County governments in Kenya are constitutionally assigned fourteen responsibilities, which demand substantial financial resources beyond the allocations received from the national government. However, local governments have historically faced financial constraints and inefficiencies, creating a persistent gap between their potential revenue generation and actual fiscal performance. Tharaka Nithi County, like many others, has underperformed in mobilizing local revenue despite its capacity to enhance fiscal independence. This study sought to investigate the effect of financial resource mobilization on sustainable development in Tharaka Nithi County, Kenya. The specific objectives were to determine the effect of revenue diversification on sustainable development in Tharaka Nithi County Government, to evaluate the effect of budget utilization efficiency on sustainable development in Tharaka Nithi County Government and to analyse the effect of community participation on the relationship between financial resource mobilization and sustainable development in Tharaka Nithi County Government.. The study was guided by the Public Goods Theory and the Sustainable Development Theory and employed a mixed-methods design, combining quantitative and qualitative approaches. Data were collected through questionnaires and interviews involving county officials, national government personnel, and local citizens, using both stratified random and purposive sampling techniques. Reliability and validity of the research instruments were ensured through pilot testing, expert review, and statistical checks, while ethical research standards were strictly observed. Data were analyzed using Microsoft Excel and SPSS and presented thematically and descriptively. Findings revealed that taxes and levies, grants and transfers, public-private partnerships, and county enterprises income all played a significant role in promoting sustainable development within the county. These revenue streams contributed to infrastructure development, improved service delivery, and promoted inclusive growth. However, the study also established that several challenges hindered effective financial mobilization, including an inflated public payroll, ethnically-driven politics, illicit financial outflows, overreliance on external borrowing, and widespread corruption. The study concluded that strengthening Own Source Revenue is vital for reinforcing county-level sustainable development, as it enhances fiscal resilience, funds essential services, and reduces dependency on national allocations. It recommended that Tharaka Nithi County should expand its revenue base by formalizing the informal sector, streamlining tax procedures, and fortifying institutional and legal frameworks. Moreover, leveraging public-private partnerships can facilitate infrastructure projects, promote economic growth, and enhance service delivery, thereby ensuring long-term sustainable development.
Microfinance Interventions and Financial Empowerment of Women Entrepreneurs in Eldama Ravine Sub-County in Baringo County, Kenya
(Kenyatta University, 2025-10) Tallam, Beatrice Bundotich
Women's financial empowerment is one of the pillars for sustainable and inclusive development since women are at the center of community development, household welfare, and national production. Despite the increased microfinance operations in Kenya, women entrepreneurs have continued with restricted access to credit, weak savings facilities, and limited advisory and business development services. In Eldama Ravine Sub-County, such restrictions have prevented women-owned enterprises from flourishing and being self-sustaining, raising the question of whether previous microfinance interventions have been effective in translating into quantifiable improvements in terms of empowerment. The study took into account the effect of microfinance interventions by microcredit, microsavings, business development services (BDS), and advisory and consultancy (AC) services on financial empowerment among women entrepreneurs in Eldama Ravine Sub-County, Baringo County, Kenya. Guided by the Social Learning, Resource-Based, and Financial Systems theories, this research employed an explanatory research design with 735 registered women-owned businesses. Slovin's formula was utilized to calculate the sample size at 144 respondents and stratified random sampling for sector representation. Data were collected utilizing pre-tested structured questionnaires for validity and reliability, and analyzed utilizing descriptive and inferential statistics. Normality, multicollinearity, and autocorrelation diagnostic tests confirmed model fitness, on a Durbin–Watson of 2.110 and good VIF values. Kenyatta University and NACOSTI ethical clearances were obtained, with informed consent and confidentiality maintained strictly. Findings indicated that microcredit (p=0.044), microsavings (p=0.018), business development services (p=0.023), and advisory and consultancy services (p<0.001) were significantly influential towards women's financial empowerment, and the four variables explained 51.8% of variance (R²=0.518). Advisory and consultancy services were the most significant determinant in empowering women to make financial decisions and sustain their businesses. The study concludes that microfinance intervention has played an important role in empowering women in Eldama Ravine Sub-County. It suggests that policymakers and microfinance institutions expand advisory and consultancy services, expand savings mobilization, and customize business development programs to accommodate rural women entrepreneurs.
Operational Internal Controls and Financial Performance Efficiency of Selected Non-Governmental Organizations in Nairobi City County, Kenya
(Kenyatta University, 2025-07) Matheka, Samuel Kimuyu
Operational internal control systems played a critical role in promoting financial performance efficiency, particularly in the Non-Governmental Organization (NGO) sector, where accountability, transparency, and optimal resource utilization were essential. In Kenya, NGOs continued to face persistent challenges such as financial mismanagement, inadequate budgetary control, delayed financial reporting, and the inability to account for donor funds. These challenges were often associated with inadequate or poorly executed internal oversight structures. This research endeavored to scrutinize the impact of functional internal oversight—namely preventative, detective, directive, and managerial oversight—on the fiscal output effectiveness of non-governmental organizations active within Nairobi City County, Kenya. The investigation centered on how crucial oversight mechanisms such as task separation, authorization protocols, internal assessments, fiscal guidelines, and budgetary methods affected fiscal effectiveness metrics, encompassing the program effectiveness index, resource mobilization effectiveness index, overhead expense index, budget deviation analysis, and recipient expense effectiveness. Anchored in Agency Theory, Stewardship Theory, Contingency Theory, and the COSO Framework, the research offered a multifaceted comprehension of the connections between internal oversight systems and fiscal results. A descriptive survey research approach was utilized, targeting NGO personnel engaged in fiscal administration. Layered probabilistic sampling was employed to choose a representative subset of 157 participants from a group of 263 NGOs. Information was gathered via standardized questionnaires and examined using both descriptive and inferential statistics. Multiple linear regression was utilized to assess the associations between internal oversight classifications and fiscal output effectiveness. Instrument consistency was evaluated using Cronbach’s Alpha, while validity was determined through specialist evaluation, factor analysis, the KMO statistic, and Bartlett’s test of sphericity. Multicollinearity was verified using Variance Inflation Factors (VIF). The research anticipated yielding empirical proof regarding the importance of functional internal oversight in improving fiscal output effectiveness in NGOs. The outcomes provided significant understanding for NGO administrators, benefactors, and policy creators aiming to reinforce fiscal governance, responsibility, and long-term viability within the non-profit domain. The study found that preventive controls had the strongest positive effect on financial performance efficiency (r = 0.691, B = 0.521, p < 0.001), followed by management controls (r = 0.772, B = 0.374, p < 0.001). Directive (r = 0.667, B = 0.439) and detective controls (r = 0.352, B = 0.423) also showed significant positive effects. The model accounted for 64.45% (R² = 0.6445) of performance variation among NGOs in Nairobi City County. The study concluded that operational internal controls significantly influence the financial performance efficiency of NGOs. Preventive controls were most impactful, emphasizing the need for proactive risk mitigation. Detective, directive, and management controls also contributed meaningfully to transparency, compliance, and strategic oversight. Collectively, these controls enhance financial stewardship and accountability, confirming their critical role in ensuring sustainable financial practices in Nairobi-based NGOs. NGOs should institutionalize robust preventive controls like duty segregation. Regular audits should reinforce detective controls. Directive controls such as staff training and policy manuals should be standardized. Lastly, management controls, including budgeting and performance appraisals, should be strengthened to ensure strategic financial alignment and efficient resource use
Corporate Social Responsibility and Financial Performance of Tier 1 Commercial Banks in Kenya
(Kenyatta University, 2025-11) Mwangi, Sheila Nyawira
Corporate Social Responsibility (CSR) matters remain a main strategic practice enhancing the financial performance of companies. Companies being the society’s integral part, have CSR continually determining confidence of stakeholders and consequently firms’ sustainable performance. Nevertheless, in spite of the fact that CSR affects the financial position of firms, it is revealed Tier 1 Kenyan commercial banks experience challenges related to CSR and affecting financial position directly and indirectly. This research sought to investigate the significant effect of corporate social responsibility (CSR) on the financial performance of Tier 1 commercial banks in Kenya. Specifically, the research focused on three key objectives: assessing how education-related expenses, healthcare-related expenditures, and environmental costs influence the financial outcomes of Kenya’s leading commercial banks. The main theory that guided this research was the agency theory. It was supported by other models which included social view theory and theory of stakeholders’. This research considered a cross-sectional research design. Ten targeted Tier 1 commercial banks produced 60 respondents who formed the target population where 6 of the respondents were selected from each of the 10 banks by use of purposive sampling technique. The 6 comprised one finance manager, one chief executive officer, two marketing officer and two branch managers. The tool used to collect primary data were questionnaires with closed ended items. Tier 1 Kenya commercial banks financial statements and documents from the human resources provided secondary data. Data analysis was done using statistical package for social sciences version 24. It consisted descriptive analysis, correlation analysis, in addition to multiple regression analysis. The data analyzed was presented using figures and tables. The research additionally adhered to ethical considerations. The study found that the p-value for medical cost was 0.029, which is less than the threshold of 0.05, leading to the rejection of hypothesis H01 and indicating that medical cost had a significant effect on financial performance. Similarly, the p-value for environmental cost was 0.000, also below 0.05, resulting in the rejection of hypothesis H02 and suggesting that environmental costs had a significant effect on financial performance. Additionally, the p-value for education cost was 0.013, which is under 0.05, prompting the rejection of hypothesis H03 and confirming that education costs had a significant effect on financial performance. The investigation concluded that corporate social responsibility is a noteworthy financial performance determinant. The research endorses that all commercial banks in Kenya should increase their expenditure in education corporate social responsibility as doing so would enhance their financial performance. All commercial banks in Kenya should review their strategic goals and intents to align with environmental component of Sustainable Development Goals and doing so would lead to an improvement in their financial performance. There is need for more investment in health CSR activities by commercial banks in Kenya to support the National Health goals of the Government
Working Capital Management Practices and Firm Value of Manufacturing Companies Listed in Nairobi Securities Exchange, Kenya
(Kenyatta University, 2025-10) Cheboi, Solomon Kimutai
Firm value is a critical indicator for publicly traded companies, as it directly shapes investor perceptions and investment decisions. High firm value signals effective management and financial health, which motivates investors to commit capital, while declining market valuations may indicate inefficiencies, deterring investment. Recent trends in manufacturing firms listed on the Nairobi Securities Exchange (NSE) reveal a decline in market worth, evidenced by erratic share returns over the 2014–2023 period, highlighting a pressing need to examine the determinants of firm value. This study investigates how working capital management practices—specifically accounts receivable management, accounts payable management, and inventory management—affect firm value of manufacturing companies listed on the NSE. The research was anchored on transaction cost theory, the cash conversion cycle, and shareholder wealth theory, providing a conceptual basis for understanding how efficient management of current assets and liabilities contributes to value maximization. An explanatory research design was adopted to allow in-depth analysis of cause-effect relationships. The target population comprised all nine manufacturing firms listed on the NSE, with a purposive sample of seven firms consistently listed between 2014 and 2023 included in the study. Data were collected from audited financial statements, and both content and construct validity were ensured through expert review and alignment with theoretical constructs. Reliability was assessed using Cronbach’s alpha, with a threshold of 0.7 considered acceptable. Numerical data were analyzed using STATA. Descriptive statistics (means, standard deviations, minimum and maximum values) summarized central tendencies and variability, while inferential analyses, including correlation and regression modeling, evaluated relationships and predictive effects. Tests for normality, collinearity, serial correlation, and Hausman specification were conducted to ensure robustness. Data were presented using tables and figures for clarity. The study found that efficient accounts receivable management—reflected in shorter collection periods—enhances firm value by signaling strong credit policies and improving investor confidence. Strategic accounts payable management was shown to require balancing liquidity benefits against supplier relations, as excessive payment delays can signal financial distress. Lean inventory management practices were associated with reduced holding costs, improved operational efficiency, and enhanced competitiveness, directly contributing to firm valuation. Based on these findings, manufacturing firms should implement comprehensive credit risk assessment systems, adopt automated receivables management tools, establish transparent supplier partnerships, and deploy advanced inventory technologies including AI-driven forecasting. Additionally, organizations should develop integrated working capital frameworks with cross-functional performance metrics to ensure coordinated management of receivables, payables, and inventory. Significance of the study: The findings provide empirical guidance to managers and investors on the strategic management of working capital to enhance firm value. Policymakers can use the insights to promote corporate governance practices that improve liquidity management and investor confidence in the NSE-listed manufacturing sector
Econometric Evaluation of Economic Freedom and Health Outcomes in East African Community
(Kenyatta University, 2025-11) Wachira, Margaret Wanjiru
Economic freedom encompasses a range of mechanisms that influence the health outcomes in economies worldwide. Decreasing the size of the government and implementing lower taxes, both of which are elements of economic freedom, could potentially lead to a reduction in government spending on healthcare, so putting health outcomes at risk. Despite improvements in health outcomes in East African countries like Kenya, Uganda, Tanzania, and Rwanda, including decreased newborn death rates and increased life expectancy, the East African Community still falls behind its Asian counterparts. This research aims to ascertain the connection between health outcomes and economic freedom in the East African Community. The study purpose was to look at the relationship between economic freedom and both life expectancy and the rate of newborn mortality in the East African Community. The selected study design was descriptive, using secondary quantitative data obtained from world development indices. A variety of tests were performed and it was determined that fixed effects regression was suitable on the panel data generated from the 4 countries of East Africa between1997 to 2021. The study established that Carbon emissions have positive relationship with mortality rates per 1000 live births. Similarly, actions of government such as increase in consumption expenditure, gross domestic product percapita, labour force, trade all had significant p values at 0.05 level and therefore any increase in these variables result to minimal infant fatality rates and also increases probability of life expectancy. This study also confirmed that urbanization has no significant influence on life expectancy as well as mortality rates per 1000 lives. The findings of this study show that different aspects of economic freedom influence health outcomes in the EAC in distinct ways, and each variable points to its own policy direction.
Working Capital Management and Financial Sustainability of Micro and Small Cleaning Enterprises in Kakamega County, Kenya
(Kenyatta University, 2025-11) Ongoya, Peter Wandabwa
Financial sustainability of Kenya’s Kakamega County micro and small cleaning businesses, is a pressing issue that has significant implications for local economies and employment. However, many micro and small cleaning businesses report monthly revenues below Kenya Shillings 30,000, which is often insufficient to cover operational costs, let alone reinvest in the business. The profit margins are typically low, averaging around 10-15%, primarily due to high competition and low pricing strategies to attract clients. Therefore, this review purposed to ascertain working capital management effects on Kenya’s Kakamega County micro and small cleaning enterprises in financial sustainability, specifically establishing influences of cash flow management, credit management and inventory management. Theories of resource-based view, Keynesian liquidity preference, Credit Risk and Economic Order Quantity anchored the review. Explanatory research design was adopted with 243 registered cleaning businesses in Kakamega County as analysis units. The unit of observation was 243 owners of these businesses. Random sampling guided respondent selection, with data amassed via a semi-structured questionnaire and preceded by a pilot involving 25 individuals, which constitutes 10% of the sampled population of 243. The assessment of the questionnaire's validity involved three specific types of tests: content, construct and criterion validity tests. This study used Cronbach's Alpha to evaluate questionnaire’s reliability, aiming for a 0.8 coefficient. The study gathered qualitative and quantitative data for a holistic comprehension of the subject. Qualitative data was amassed through open-ended questions and analyzed thematically, while quantitative data came from closed-ended questions. Diagnostic tests of multi-collinearity, heteroscedasticity and normality were performed. Descriptive statistics, including means, standard deviations, and frequencies were conducted in addition to the inferential statistics, which includes correlation and multiple regression analysis. Results were delineated by tables and figures. Ethical considerations were followed and upheld throughout. The study found that that cash flow, accounts receivable, accounts payable and inventory management positively significantly influenced Kenya’s Kakamega County micro and small cleaning enterprises’ financial sustainability. The study concludes that cashflow effective management enables the enterprises to achieve their operational costs without problems and make better decisions concerning their expenditure, investment and opportunities for growth. Proper management of accounts receivables has a direct influence on the enterprise cash flow enabling these enterprises to sustain a sound cash influx which is crucial in cushioning the cost of operations and growth opportunity reinvestment. The management of accounts payable by the enterprises ensures that they strengthen relationships with their customers and service providers eventually minimizing their cost in operations. Proper management of inventories by the enterprises helps in achieving optimum stock levels, reduce the likelihood of overstocking. The study recommends that the cleaning business should implement a strong budget system to have accurate tracking of income and expenses. The cleaning businesses should implement a strong invoicing system that guarantees timely and accurate service billing made to minimize payment delay. The cleaning businesses should automate invoicing systems to improve the accounts payable process efficiency and reduce errors that could arise when doing it manually. The cleaning businesses should use simple inventory management software or mobile applications to offer real-time stock level tracking and assist in making decisions based on data analytics
Financial Risk Management Practices and Asset Quality of Deposit Taking Saccos in Nyeri County, Kenya
(Kenyatta University, 2025-09) Njuguna, Sarah Wambui
Globally and locally, deposit-accepting Savings and Credit Cooperatives (SACCOs) are vital in promoting financial inclusion and economic progress by offering accessible financial services to marginalized populations and encouraging savings and credit access. The quality of their assets is paramount for the overall sustainability of these SACCOs, directly influencing their fiscal well-being, stability, and capacity to effectively manage potential hazards, thus securing their long-term viability. Within Kenya, SACCOs have experienced variability in asset quality, with non-performing loans fluctuating between 1.98% and 2.4% from 2019 to 2023. Nyeri County's asset quality has exhibited even wider fluctuations, varying between -1.4% and 3.5%, suggesting more pronounced difficulties in preserving financial soundness relative to nationwide benchmarks. This research intends to determine how financial risk management approaches influence the asset quality of deposit-taking SACCOs in Nyeri County, Kenya. Specifically, it will examine the impact of managing liquidity, interest rate, operational, and strategic risks on the asset quality of these SACCOs within the county. The study will cover the period between 2019 and 2023 and will be guided by the Liquidity Preference Theory, Interest Rate Parity theory, Operational Risk Management Theory, and the Resolving on Quality Asset Theory. A descriptive research design will be employed. The units of analysis will be the 11 deposit-taking SACCOs in Nyeri County, with operations managers, credit managers, and risk management managers from each SACCO serving as the units of observation. A census will be used to select a sample of 33 managers. Both primary and secondary data will be utilized. For the acquisition of firsthand information, surveys will be the chosen method. Conversely, existing information will be compiled through the utilization of data extraction forms. A preliminary investigation will be carried out in the municipality of Nyeri, encompassing a pair of Savings and Credit Cooperatives. The consistency of the research tools will be evaluated via Cronbach’s Alpha for reliability, and the relevance and predictive power will be examined for validity. Several diagnostic evaluations, such as tests for Normal distribution, collinearity among variables, unequal variance of errors, serial dependence, and the appropriateness of random or fixed effects models, will be executed. The Statistical Package for the Social Sciences will serve as the main analytical software. Both summary statistics and statistical inferences will be employed for data interpretation. Summary statistics will include proportions, counts, central tendency metrics (average), and variability metrics (standard deviation), whereas inferential analysis will involve correlation and panel regression techniques. The presentation of findings will utilize tabular and graphical formats. All ethical principles to guarantee the accuracy of the information will be strictly followed
Internal Control Systems and Financial Governance of Nairobi City County, Kenya
(Kenyatta University, 2025-11) Mahat, Abdikher Billow
Nairobi City, Kenya’s capital and largest urban center, is a key driver of the country’s economy. However, it faces significant financial challenges that impact its overall performance. The county only manages to collect between 40% and 50% of its potential tax revenue, falling short of the national urban average .Additionally, outdated revenue collection systems and inefficiencies in tax administration, including reliance on manual processes, have caused delays and revenue leakages. Corruption and mismanagement within collection agencies have eroded public trust and compliance, complicating reform efforts. Therefore, this study strived to ascertain internal control systems effects on financial governance of Nairobi City County, specifically on theeffect of control environment, risk management, control activities, monitoring activities and information communication. Resource dependency, agency and systems theories anchored the review. Employing explanatory design, the study targeted 89 employees from ministry of finance and economic planning. A census method was applied and therefore, the sample size was 89 respondents. For data collection, a structured questionnaire for collecting data was utilized. Quantitative data obtained from the questionnaire was analyzed via statistical methods, including descriptive measures such as the mean and variability indicators like the standard deviation. Inferential statistics, including regression and correlation analyses, were employed to investigate variables’ relationships, with the outcomes depicted in graphs, charts and tables for clarity. The control environment, risk management, control activities, monitoring activities and information communication were found to have significantly influenced Kenya’s Nairobi City County financial governance. The study concludes that whole financial management effectiveness and integrity of the County had been positively influenced by its control environment mechanisms. Risk management of the County had enhanced the financial monitoring and process of making decision by the County. The control activities influence the County's financial governance by ensuring that financial operations are conducted transparently and accountably. The County's monitoring efforts help identify misappropriations and areas of financial mismanagement, allowing for prompt corrective measures to be implemented. The County’s communication of information guarantees that all its stakeholders gain improved understanding of its financial policies, budget allocations, and expenditures, fostering trust and accountability. The study recommends that the County needs to establish thorough training initiatives for employees to improve their knowledge of internal controls and financial management. The county ought to perform a thorough risk assessment to formulate strategies aimed at mitigating these risks. The County should allocate resources towards robust management of the financial system to enhance financial reporting’s accuracy and efficiency. The County should set forth explicit objectives by determining the areas that necessitate monitoring, and by defining specific, measurable goals to facilitate the process and create a framework for monitoring initiatives.
Innovation Banking Services and Profitability of Commercial Banks Listed At the Nairobi Securities Exchange (Nse), Kenya
(Kenyatta University, 2025-12) Ireri, Ephantus Mwangi
For banks to survive in the unstable and evolving market and meet their goals and objectives in a market-driven environment, they have implemented creative approaches geared towards sustainability and growth. The specific objectives of this study was to determine the influence of product innovation on profitability of commercial banks listed at the Nairobi securities exchange, Kenya, to examine the influence of process innovation on profitability of commercial banks listed at the Nairobi securities exchange, Kenya and to evaluate the influence of technological innovation on profitability of commercial banks listed at the Nairobi securities exchange, Kenya. The study incorporated three theories, namely; digital transformation theory, open innovation theory and dynamic capabilities theory. The study utilized causal research design where by the study population was the 12 commercial banks listed at the Nairobi securities exchange. The study covers a period of five years from 2020 to 2024. Data was collected from the 11 banks using both a questionnaire and data collection sheet to take care of both the primary and secondary data respectively. Data collected was analyzed using multiple regression model. The research finding depicted that product innovation had a direct influence on the profitability of commercial banks listed at the Nairobi securities which was significant. Process innovation had significant influence on profitability of commercial banks listed at the Nairobi securities and technological innovation had a direct influence on the profitability of commercial banks listed at the Nairobi securities exchange which was significant The management of commercial banks listed at NSE, Kenya reap manifold advantages for one, the management are able to appreciate the banking evolution process of the banking industry and have an insight on the logic of lowering operating costs which has been a threat in the old dispensation of conventional banking where many branches are needed for profitability increase. Policymakers will also benefit from the research findings. For instance, central bank of Kenya which is the oversight body for commercial banks will be able to focus on an online regulatory framework to set standards to eliminate cybercrime issues hence protect the interest of the depositors in a seamless manner. The academicians are amongst the beneficiaries of this endeavor for the commercial banks adopting the innovative approach in banking gives the former new tools for applying in financial management and a base for areas of further research which in return positively contribute to the existing body of knowledge.
Internal Control Practices and Own Source Revenue Growth Rate of Kisii County Government, Kenya
(Kenyatta University, 2025-11) Birisi, Lilian Kerubo
The study addressed a significant financial issue in Kisii County's revenue generation, highlighting a persistent shortfall in Own Source Revenue collection compared to targets. Despite an increase in Own Source Revenue contribution to the annual targets from 13% in the initial years of devolution to 27% in the Financial Year 2022/23, Kisii County consistently underperformed, with collection rates ranging from 27% to 62% of approved budgets in various fiscal years. The study focused on understanding how internal controls affect the growth of local government funding through internal sources in Kisii County of Kenya. The investigation examined how control environment combined with risk assessment along with information and communication systems and control activities under monitoring activities influence Own Source Revenue growth within Kisii County Government in Kenya. The study was anchored on three theoretical frameworks: Agency Theory, Stewardship Theory, and Institutional Theory. The research employed a descriptive approach design. The target population included employees from the Finance and Economic Development department, county assembly members, chief officers, and a director, with a total of 76 individuals, of whom 66 were sampled using stratified random sampling. Primary data was collected via semi-structured questionnaires, and secondary data from county financial reports for 2019-2023. A pilot study consisting of 6 respondents working in Kisii County government offices participated. The study ensured validity and reliability through expert reviews and Cronbach's Alpha for internal consistency. Data analysis used the Statistical Package for Social Sciences, where descriptive statistics such as mean, standard deviation, and frequencies were generated. In addition, multiple regression models tested hypotheses, and diagnostic tests checked assumptions, including linearity, normality, multicollinearity, autocorrelation, and homoscedasticity. The findings indicated that control environment, risk assessment, information and communication, control activities and monitoring activities significantly and positively affects own source revenue growth. The study recommends that county governments should prioritize developing policies that enforce ethical standards, accountability, clear organizational structures incorporating technology and data analytics, timely and accurate information sharing and supported by digital platforms to enhance internal control systems. Further study should focus financial sustainability in the county government and how it is affected by internal control practices.
Value Added Tax Reforms and the Financial Performance of Manufacturing Companies in Nairobi City County, Kenya
(Kenyatta University, 2025-05) Aritho, Ireen K.
Kenya is known for its vibrant manufacturing sector, which has the potential to drive economic growth and create jobs. However, recent statistical data reveals a troubling trend indicating that a significant number of manufacturing companies are struggling financially. The manufacturing sector saw a contraction of approximately 2.2% in 2022. This follows a trend where growth has been stagnant over the past few years, raising alarming questions about the sustainability of this sector. Data shows that exports from the manufacturing sector fell by about 3% in the last fiscal year and over 40% of manufacturers reported reduced sales volume compared to pre-pandemic levels. Therefore, this study sought to assess the effect of value-added tax reforms on the performance of manufacturing companies in Nairobi City County Kenya. Specifically, this study seeks to; determine the effect of standard rate adjustment, assess the influence of exemptions and zero-rating changes, examine the impact of VAT reverse charge mechanism, and examine the impact of VAT automation and technology upgrades on the financial performance of manufacturing companies in Nairobi City County. The study is anchored on the following theories: consumer demand theory, theory of excess burden of tax, and optimal tax theory. This study employed a cross-sectional approach using a descriptive survey design. The study targeted 40 manufacturing firms in Nairobi, aiming to survey 600 finance department employees including finance managers, auditors, and accounts assistants. A stratified sampling technique was used, followed by simple random sampling, resulting in a final sample of 240 respondents. Primary data was collected using questionnaires, while secondary data came from the firms' audited financial statements. A pre-test was conducted at two unrelated fast-food establishments. The questionnaires aligned with the research objectives, and reliability of the questionnaire was assessed using Cronbach's Alpha and an aggregate alpha value of 0.784 was achieved showing that the questionnaire items were reliable. The analysis of quantitative data was done using descriptive statistics and inferential statistics used such as correlation and multiple regression analyses. The study revealed that standard rate adjustment reforms, exemptions and zero-rating reforms, VAT reverse charge mechanism reforms and VAT automation and technology upgrades reforms had a positive significant influence on the financial performance of manufacturing companies in Nairobi City County. The study concludes that changes in corporate tax rates, value-added tax, and other levies can directly impact the profitability of manufacturing firms. Exemptions and zero-rating lead to lower operational costs for manufacturing firms and by reducing the tax burden, firms retain a larger portion of their revenues, thereby increasing profit margins. The reverse charge mechanism may improve cash flow for firms that previously faced delays in VAT refunds. Automation reduces the time and effort required for tax-related tasks, allowing firms to allocate resources more effectively. The study recommends that the companies should organize regular workshops to educate stakeholders, including business owners, employees, and policymakers, about the implications of rate adjustments. The companies should assess existing tax exemptions and zero-rating policies to identify gaps and inefficiencies. The companies should conduct workshops and seminars for manufacturing firms to educate them about the reverse charge mechanism, its benefits, and compliance requirements. The companies should implement comprehensive accounting software that integrates VAT management can streamline the invoicing process, automate tax calculations, and ensure accurate reporting.

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