MST-Department of Accounting and Finance

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Corporate Governance and Quality of Financial Reporting of Commercial Banks Listed at the Nairobi Securities Exchange, Kenya
(Kenyatta University, 2025-05) Kisanya, Antony Luvusi
In Kenya, the banking sector is heavily regulated to safeguard investor trust, given the critical economic function of banks. However, research indicates that even healthy organisations operating financially secure have experienced problems related to their financial strategies. Several banking institutions in Kenya have experienced failures over time, largely attributed to financial misappropriation linked to substandard financial reporting. Consequently, those listed must incur substantial agency costs to mitigate information asymmetry and counteract the self-serving behaviours of managers. The Capital Markets Authority of Kenya introduced the 2015 Corporate Governance Code to replace the 2002 guidelines, aiming to align with global best practices in response to changing business environments. The study purposed to assess the effect of corporate governance on the quality of financial reporting of commercial banks quoted at the Nairobi Securities Exchange. The research’s main goal was to demonstrate how board independence, board expertise, external audit tenure and board gender diversity affected the quality of financial reporting among commercial banks quoted at the Nairobi Securities Exchange. This study further examined the moderating effect of bank size on the relationship between the variables. Six theories agency, positive accounting, stakeholder, upper echelons, resource dependence and signalling guided the study. Positivist research philosophy and explanatory research design were deployed. The target population was all eleven listed commercial banks from 2017 to 2021. Data for the analysis was collected from audited annual reports using a document review guide and analysed through both descriptive and inferential statistics. Descriptive analysis included the calculation of mean, standard deviation and ratios. A panel regression model was used to investigate the relationships between variables. Diagnostic tests conducted included tests for normality, multicollinearity, panel unit root, autocorrelation, heteroscedasticity and random or fixed effects. Panel data was analysed using the random effects model, as Hausman’s test found it consistent. The results revealed that board independence had a significant influence on the quality of financial reporting. However, board expertise, external audit tenure and board gender diversity revealed positive but insignificant influence on the quality of financial reporting of commercial banks quoted at the Nairobi Securities Exchange. The study further observed that bank size moderated the relationship between corporate governance and the quality of financial reporting of commercial banks quoted in Kenya. This study recommends that board independence among the non-executive directors be enhanced to improve the quality of financial reporting of listed commercial banks in Kenya. Further, the study recommends the need to re-evaluate the role of board independence as banks expand, given its critical influence on maintaining high-quality financial reporting.
Microfinance Services, Financial Literacy and Financial Health of Women Members of Selected Microfinance Banks in Kenya
(Kenyatta University, 2025-03) Riro, Jerusha Kerubo
Financial health of women has been identified by the World Bank as key poverty reduction constituent elements, as they are important in aiding economic development goals. Gender mainstreaming is also made a priority in financial assistance, with the Word Bank in process2of2implementing2an2ambitious2strategy to2this2effect. Microfinance makes use of a wider variety of assets and household items as collateral to lending facilities. Despite the fact that individuals with low incomes are unable to get access2to conventional financial2services2such2as2credit, 2savings, 2and2insurance, microfinance companies successfully bridge this gap by offering these services to these individuals. The7 main7 objective7 of7 this7 study7 was7 to7 assess7 the7 effect7 of7 microfinance services, financial7 literacy7 and7 financial7health of women members of selected microfinance banks7 in7Kenya. Specifically, the study sought to examine the7 effect7 of7micro-credit services on financial health of women members of selected microfinance banks in 7Kenya; to7 establish7 the7 effect7 of7 micro7 savings7 services7 on7 financial7health of women members of selected microfinance2banks2in2Kenya; to find out the2effect2of business micro-insurance services on financial2health2of women members of selected microfinance banks in7 Kenya7 and to determine the7 moderating7 effect7 of7financial literacy on7 the7 relationship7 between7 micro7 finance7 services7 and7 financial7 health7of women members of selected microfinance1banks1in1Kenya. The2study2was2guided2by2empowerment theory, gender stratification theory, finance growth theory, and information asymmetry theory. The study adopted positivism philosophy to explore a true reality regarding financial health and use of microfinance services among women in Kenya as this cannot be changed by social actors. This research employed explanatory research design. The7 target7 population7 for7 this7 study7comprised of 37,773 women members in women members of microfinance banks clients who currently hold active deposit accounts and active loan accounts in the 14 microfinance banks within in Kenya. The researcher adopted a7 combination7 of7 purposive7 and7stratified sampling techniques to select women members of microfinance banks. The sample size was 384 respondents. The study concluded that micro-credit services7 have7 a positive significant influence7 on7 financial7health of women members of selected microfinance7 banks7 in7 Kenya. The study also concluded that micro-saving7 services7 have7 a positive significant influence7 on7 financial7health of women members of selected microfinance7 banks7 in7 Kenya. The study further concluded that micro-insurance7 services7 have7 a positive significant influence7 on7 financial7health of women members of selected microfinance7 banks7 in7 Kenya. In addition, the study concluded that financial7 literacy significantly and positively moderate7 the7 relationship7 between7 microfinance7 services7 and7 financial7health of women members of selected microfinance7 banks7 in7 Kenya. The2study2recommends2that there2is a2need for microfinance institutions to diversify their financial products beyond conventional micro-credit services. This study also recommends that there is a pressing need for targeted educational programs aimed at augmenting awareness and comprehension of micro-saving services among women beneficiaries. In2addition, this2study2recommends2that there is a critical need for targeted educational initiatives aimed at augmenting awareness and understanding of micro-insurance services among women beneficiaries.
The Macro-Economic Variables, Tax Revenue and Performance of Financial Institutions in South Sudan
(Kenyatta University, 2025-02) Nek, Gum Majur Anhiem
The different financial institutions, including those in the South Sudan, have continued to have an uncertain future due to the changes in the macroeconomic environment and the political state of the Country. The argument of financial reforms and arrangement requires South Sudan’s authorities to devise some informed decisions on how to critically match money supply and fulfillment of demand for money to fairly standardized financial system. However, in order for any organization to have a going concern, the same have to be able to make profits and have good positive payoffs in all its investments. The South Sudan’s currency has also taken a hit by the occurrences brought about by the political class which has warranted the changes in strategy by the Central Bank of South Sudan (CBSS) and other statutory bodies in a bid to protect the SSP from free fall. The researcher analyzed effect of the Macroeconomic variables, Tax Revenue and performance of financial institutions specifically commercial Banks in South Sudan. Specific objectives that underpinned the study include; to examine the effect of foreign exchange rates; to establish the effect of inflation rate; to determine the effect of interest rates and to analyze the moderating effect of tax revenue on the relationship between macroeconomic variables and performance of financial institutions in South Sudan. The theories that guided this study include the purchasing power parity theory, the monetarist theory and fisher’s effects. The study was based on the positivism philosophy and descriptive research design was used. The target population used were 30 registered commercial banks. The researcher adopted secondary datasets in order to get the findings of the study. Apart from the descriptive statistics and the diagnostic tests, the researcher also conducted regression and correlation analysis in order to check for effects of independent variables on the dependent variable and the linear relationship between the variables respectively. The different financial institutions that were considered in the study were identified by systematic random sampling. The researcher collected the data from different sources that are from the leading financial institutions in South Sudan. The Econometric views (EVIEWS) software was utilized for data analysis and management. Further, regression model was also estimated to show association between the dependent variable (financial institutions’ performance) and independent macroeconomic variables. It was established that there was an inverse statistically significant relationship between macroeconomic variables and tax revenues and performance of the financial institutions in South Sudan. In conclusion, the government can actually utilize macroeconomic variables in order to influence the performance of financial institutions to enhance policy formulation and implementation. The study recommends that the government should develop policy and formulate laws that are able to inform the financial sector and the banking environment to allow for proper functioning of the financial institutions and hence, increased profitability. It also recommends that the different macroeconomic policy such as the fiscal policy and the monetary policy should be addressed in such a way that they are favorable to the financial environment and the money market within the South Sudan. Finally, it recommends that in some of the policy making, the central bank committees must also work hand in hand with the financial institutions in order to understand how they will be able to manage the financial markets and the financial systems
Financial Technology Services, Government Regulations and Financial Inclusion of Small-Scale Fish Farmers in Homa Bay County, Kenya
(Kenyatta University, 2025-03) Opiyo, Fredrick Omondi
The significance of financial inclusion lies in its ability to offer affordable and accessible financial services to every category of people. The financial exclusion rate in Homa Bay County stands at 15% while formal access by population is at least at 81.8%. Small-scale fish farmers in the county often engage in informal economic activities, typically facing barriers like limited financial literacy, lack of collateral, and geographical constraints. These challenges are consistent with the characteristics of financially excluded groups. The purpose of this study was therefore to investigate effects of financial technology services particularly agency banking, mobile money services and online banking services with the moderating effect of government regulations on financial inclusion of small-scale fish farmers in Kenya’s Homa Bay County. Anchored on theoretical underpinnings such as Innovation Diffusion Theory, Financial Intermediation Theory, Technology Acceptance Theory and Public Interest Regulation Theory, the study aimed at providing insights to leveraging government regulation and fin-tech services towards achieving financial inclusion for the fish farmers in Homa Bay County. This study used causal research design with a target population of 495 small scale fish where a sample of 144 respondents were selected using stratified random sampling technique. Data analysis was aided by SPSS software version 26.0 involving both descriptive and inferential analysis. The specific descriptive statistics included mean, standard deviation, frequency and percentages, while inferential analysis included both correlation and regression analysis. The study used multiple linear regression model to link the independent variables to financial inclusion. Findings revealed significant effects of agency banking, mobile money services and online banking which together explained 58.1% of variation in financial inclusion. Therefore, it is concluded that financial technology is vital in enhancing financial inclusion among small scale fish farming communities through increased access to bank accounts; secured transactions processes and agent incomes respectively. In view of the findings, the study recommends that policymakers should improve agency banking infrastructure to expand financial access for small-scale fish farmers. Strengthening cyber security and consumer protection regulations will improve trust in mobile and online banking services. Additionally, regulatory frameworks should be streamlined to support fin-tech innovations while ensuring that financial inclusion remains a priority.
Determinants of Corporate Bond Demand by Listed Firms in the Nairobi Securities Exchange, Kenya
(Kenyatta University, 2025-03) Domiziano, Douglas Kobia
When making corporate financing decisions, corporate finance managers ‘options to range from internal sources to external ones. Corporate bond issue is an external financing source that does not dilute ownership rights, has longer maturities and does present bigger pool of investors to raise funds from. However, the bond market in Kenya, both the primary and secondary is over dominated by over treasury bonds according to some studies. The corporate bond market has very low liquidity and turnovers are quite insignificant compared to annual government bonds turnover. According to data from CMA, the yearly frequency of treasury bonds issues is about 10 times that of corporate bonds in Kenya. Observations from the same reports also reveal more equity IPOs than those corporate bonds. In order to unravel the above paradox, this study sought to establish what factors determine corporate bond issuance and how do each of these factors impact on the corporate bond issue size or volume. The general objective of the study was to establish the impact of determinants of corporate bond demand on the issuance of corporate bonds by listed firms on the Nairobi Securities Exchange, Kenya. To achieve the objectives, the study was anchored on the agency theory, liquidity preference theory, market segmentation theory, financial intermediation theory, arbitrage pricing theory, Modigliani-Miller Theory and pecking order theory. The study used a descriptive research design and purposive sampling method with a sample size of 19 corporate bonds drawn from 23 corporate bonds issued between 2014 and 2023. Empirical regression model was used for analysis. The data was subjected to inferential and descriptive analysis. Descriptive analysis included the mean, median, mode, range, standard deviation while the inferential analysis included f-and t-tests. Diagnostics test carried were normality, autocorrelation, heteroscedasticity, and multicollinearity tests. The study put into considerations all the ethical considerations as per the university requirements. The findings reveal that interest rate, government securities, bank loans, and political instability has a negative effect on CB issuance while cash flows, coupon rate and GDP growth rate had a positive relationship with CB issuance. The regressed empirical model (p-value=0.0118) explained 90.04% of the changes in size of CB issued by listed firms. Finally, inflation was found to have a moderating effect on the relationship between independent variables and corporate bond issuance. The study recommends study to evaluate the effect of the role of Central Bank in CB issuance.
Internal Control Activities and Operational Performance of Supermarket Chains in Kenya
(Kenyatta University, 2025-03) Omburo, Duncan Ouma
The retail sector in Kenya has emerged as a dynamic and attractive investment hub in sub Saharan Africa, driven by rising disposable incomes and a growing consumer base. However, this promising growth trajectory has been marred by significant challenges, including the disruptive impact of the Covid-19 pandemic and a troubling trend of financial instability within the supermarket industry. Over the past decade, several prominent supermarket chains, such as Uchumi, Nakumatt, and Shoprite, have faced severe financial crises, culminating in closures or market exits. These challenges have been largely attributed to mismanagement, inadequate cash flow systems, and weak internal controls, underscoring the critical need for effective governance and operational strategies. Against this backdrop, this study investigates the relationship between internal control activities and the operational performance of supermarket chains in Kenya, with a focus on segregation of duties, inventory management controls, authorization and approval procedures, monitoring activities, and the moderating role of cash management. Drawing on the Miller Orr Model, Agency Theory, and the Institutional Theory of Organizations, the study sought to elucidate the intricate relationships between dependent and independent variables. This study adopted a positivist research philosophy, utilizing a cross-sectional research design to examine the relationship between internal control activities and operational performance in supermarket chains in Kenya. The target population comprised 39 supermarket chains, with data collected from key managerial roles: finance and accounts managers, human resources managers, and operations managers to ensure a comprehensive perspective on internal control practices and their impact on operational outcomes. A judgmental sampling technique was employed to select knowledgeable respondents, and data from 117 individuals were aggregated at the supermarket level for analysis. The study utilized both descriptive and inferential statistics. Additionally, the moderating role of cash management was explored using interaction terms in the regression model. Data collection was conducted through structured questionnaires, employing a five-point Likert scale to ensure consistency and reliability. Through a comprehensive analysis, the study reveals that segregation of duties, inventory management controls, and authorization and approval procedures significantly enhance operational performance, underscoring their importance in fostering accountability, efficiency, and transparency. However, monitoring activities were found to have a negative impact on performance when excessively implemented, suggesting that over-monitoring can lead to bureaucratic inefficiencies and employee dissatisfaction. The study further identifies cash management as a critical moderating factor, demonstrating that effective cash management strengthens the positive relationship between internal control activities and operational performance. These findings highlight the need for a balanced and integrated approach to internal controls, supported by robust cash management practices. The study contributes to the existing body of knowledge by providing empirical evidence on the role of internal controls in operational performance, emphasizing the contingent nature of their effectiveness, and offering context-specific insights for supermarket chains in developing economies. Practical recommendations include optimizing inventory management, streamlining authorization processes, and adopting strategic monitoring systems.
Central Bank Prudential Guidelines, Audit Committee and Financial Performance of Commercial Banks in Kenya
(Kenyatta University, 2025-04) Wanjiru, Beatrice Nyokabi
The financial performance of banks have been dwindling in Kenya. Kenya’s commercial banks’ ROA has been fluctuating over years for example ROA for commercial banks in Kenya was 3.3 % in 2019, 2.07 percent in 2020 and 3.3 percent in 2021, an indication of unstable financial performance. In January 2013, the CBK issued regulations referred to as prudential guidelines that outlines several aspects of financial management. This study sought to establish the effect of central bank prudential guidelines on financial performance of commercial banks. The specific objectives sought to establish the effect of capital adequacy, liquidity requirements and credit risk requirement on financial performance of commercial banks. It also sought to determine how audit committee moderate the relationship between CBK prudential guidelines and financial performance of commercial banks operating in Kenya. Four theories guided the study; Institutional Theory, Public Interest Theory of Regulation, Stewardship Theory and firm growth theory. The explanatory research design was adopted involving 39 commercial banks in Kenya according to CBK 2022. A census of all the 39 commercial banks was undertaken. Descriptive and inferential tests were adopted in analyzing the data. The descriptive tests included means, minimums, maximums, standard deviation, Kurtosis and Skewness. The particular inferential tests were the panel multiple regression model. Prior determining the multiple regression model, diagnostic model assumption tests were tested. The diagnostic tests comprised the normality tests, serial correlation test, heteroscedasticity, and Multicollinearity and Hausman tests. Presentation of results were done through figures and tables. The findings from the study showed that capital adequacy has positive and significant effect on financial performance of commerce banks. Similarly, liquidity requirements indicated positive and statistically significant effect on financial performance of commercial banks. However, credit risk requirement depicted negative and statistically significant effect on financial performance of commercial banks. Finally, audit committee moderated the relationship of prudential guidelines outlined by CBK on financial performance of commercial banks. A conclusion was made that capital adequacy positively and significantly predicts financial performance of commercial banks. In maintaining financial soundness of the bank, capital adequacy is essentially important. The study also concludes that credit risks erode profitability of banks arising from defaults or delay in remitting loans on time. A conclusion is thus made that liquidity of the bank is crucial in enabling the bank fund its assets and meet their day to day operational obligations. Finally, it was concluded that audit committee moderates the effect of CBK prudential guidelines on financial performance of commercial banks in Kenya. A recommendation is made that banks ought to strictly maintain requisite capital adequacy at all times. Tightening of liquidity measures especially taming illicit money is important in enhancing liquidity in the banks. The banks are supposed to revise existing regulations in order to mitigate the growing concern of non-performing loans. The study recommends more audit meetings annually to ensure that all systems and activities of the bank are undertaken as required. There is need for review credits systems so that lending procedures are tightened.
Portfolio Investment, Firm Size and Financial Performance of Listed Investment Firms in Kenya
(Kenyatta University, 2025-05) Kimorop, Abigael Jeruto
Credit Risk Management Practices and Profitability of Regulated Digital Credit Providers in Kenya
(Kenyatta University, 2025-06) Karanja, Margaret Waithira
The digital credit sector has emerged as a significant component of Kenya's financial landscape, contributing approximately 3.2% to the nation's GDP and serving over 6 million Kenyans. However, profitability challenges threaten the sustainability of these institutions, with industry average Return on Assets (ROA) declining from 3.2% in 2019 to 0.9% in 2021 before a modest recovery to 2.3% in 2023. This study aimed to determine the effect of credit risk management practices on the profitability of regulated digital credit providers in Kenya. Specific objectives included examining the effects of borrowers' screening, credit scoring, credit reminder practice, and credit risk control on profitability. The study employed a comprehensive theoretical framework integrating Credit Risk Theory, Innovation Theory of Profits, Information Asymmetry Theory, and Financial Intermediation Theory. Using an explanatory research design with quantitative methods, the research targeted all 22 digital credit providers licensed and regulated by the Central Bank of Kenya as of January 2023. Data was collected using structured questionnaires administered to credit officers and finance officers, achieving a response rate of 86%. Descriptive and inferential statistics were used to analyze the data following rigorous diagnostic testing. The research established that all four credit risk management practices significantly influenced profitability of regulated digital credit providers in Kenya. Borrowers' screening enhanced profitability through effective evaluation of borrowers' capital, capacity, conditions, and character. Credit scoring improved profitability by enabling more precise risk assessment and appropriate pricing. Credit reminder practices increased profitability by improving repayment rates and reducing collection costs. Credit risk control demonstrated the strongest impact on profitability through comprehensive risk management frameworks. The study concludes that credit risk management practices collectively exert a profound influence on profitability, explaining 79.3% of profitability variation among digital credit providers. The findings establish the critical importance of integrated credit risk management approaches for sustainable financial performance in digital lending operations. Based on these conclusions, the study recommends that digital credit providers implement comprehensive screening frameworks incorporating alternative data sources; develop proprietary scoring models that continuously refine accuracy through performance feedback; design personalized reminder strategies optimizing frequency, timing, and content based on borrower characteristics; and establish dynamic risk control systems adjusting to borrower performance and economic conditions. For regulatory authorities, the study recommends developing guidelines that promote effective credit risk management while supporting innovation in digital lending. For investors, the findings suggest evaluating credit risk management sophistication as a key indicator of digital lenders' long-term profitability potential.
Financial Risks and Financial Performance of Commercial Banks Listed In Nairobi Securities Exchange, Kenya
(Kenyatta University, 2025-04) Malalu, Mable Sophie
Commercial banks serve an essential part in any economy by allocating resources from depositors to investors. In performance of this role the banking sector has experienced major transition because of the volatile environment it operates in leading to collapse of many banks. The performance of banks is influenced by several variables, including the diverse kinds of risks they are exposed to. Despite the implementation of comprehensive risk management systems by commercial banks, the banking sector nevertheless incurs financial losses. Commercial banks listed on the NSE are experiencing declining financial performance. The main objective of the study is to ascertain the effect of financial risk on the financial performance of commercial banks NPAs: Non-Performing Asset NSE: Nairobi securities Exchange NPLR: Non-performing loans Ratio NSFR: Net Stable Funding Ratio PMI: Project Management Institute NIST: National Institute of Science and Technology ROA: Return on Asset ROE: Return on Equity SACCOs: Saving and Credits Cooperative Societies xiv listed on the Nairobi Securities Exchange in Kenya and will be measured by return on equity. Further the study seeks to examine the effects of credit, operational and liquidity risks on the financial performance of commercial banks listed on the NSE, Kenya. This study is based on Merton's Default Risk Model, Agency Theory, Shiftability Liquidity Model, and Risk Management Theory. Explanatory research design was used for study. A census was done on the 11 listed commercial banks with focus being from the year 2018 to 2023. The data collecting sheet was employed to amass the secondary data. The variables were analysed using IBM SPSS Version 25. Tests for multicollinearity, heteroscedasticity, normality, correlation, regression as well as the Hausman test were established. Data was diplayed in tables. From the findings, the study concluded that credit risk has a significant negative influence on financial performance of listed commercial banks. Operational risk has a significant positive influence while liquidity risk has significant positive influence on financial performance of listed commercial banks. To mitigate credit risk,continuous monitoring and evaluation of credit portfolios is recommended. This ensures timely identification and mitigation of potential risks. Banks should engage in scenario planning to anticipate and prepare for potential operational disruptions. This involves simulating various scenarios to test the resilience of operational systems and implementing measures to address identified weaknesses. Listed banks should diversify their funding sources to reduce reliance on short-term funding and promote the development of longer-term funding instruments in the financial markets. All ethical considerations were observed during the study.
Systematic Risk Factors and Non-Performing Loans of Non-Listed Commercial Banks in Kenya
(Kenyatta University, 2025-01) Lekupanai Leleok
Commercial banks are vital in the economic growth and development of countries. The ability of the banking sector to function effectively is essential for promoting economic expansion, attracting foreign and investment from within the country, reducing poverty, and creating jobs. Banks in carrying out their financial intermediation roles are faced with the risk of loan default. Commercial banks in Kenya are characterized by high level of nonperforming loans. It is reported that non listed commercial banks constituted a significant portion of the non-performing loan. The non-performance of loans by listed these banks at the Nairobi Securities Exchange has been attributed to systematic risk factors. The investigation, therefore, examined how systemic risk factors affect the loans that are non-performing of commercial banks that are listed on the NSE. Particularly, it explored how interest rates, inflation, and exchange rates affect the non- performing loans of Kenyan banks that are not publicly traded. Life Cycle Consumption Theory, Deflation Theory and Trade-off Theory were utilized. The study employed exploratory research design. The intended audience included each of Kenya's forty-one (41) commercial banks where a census sampling design was utilized. The time frame 2013 to 2021 was considered. Panel data was utilized and was analyzed using panel regression model. Diagnostics tests for norma1ity, multicollinearity and homoscedasticity were conducted. Findings are accessible in tabular format with inflation having negative and statistically insignificant influence on non-performing loans (NPLs) of these banks over the long term; however, it exhibits a significant positive effect in the short term. The research concludes that the overall influence of inflation on the NPLs of commercial banks is statistically insignificant, attributed to effective policies implemented by the monetary authority aimed at reducing such impacts on bank customers in Kenya. It is recommended that the central bank prioritize short-term strategies to alleviate inflation's effects on the banking sector. Additionally, interest rates have a positive correlation with non- performing loans in Kenyan commercial banks, affecting both the short and long term. While the long-term impact is deemed insignificant, the short-term effect of interest rates on NPLs is significant, leading to the conclusion that rising interest rates increase borrowing costs, thereby affecting customers' repayment capabilities over time. In contrast, fluctuations in interest rates during the short term can prompt borrowers to seek ways to increase their default rates, which adversely influences loan performance for banks in Kenya. Consequently, targeted short-term measures should be implemented by the central bank to manage interest rate volatility and its immediate repercussions on loan performance. Moreover, the exchange rate positively influences non-performing loans among commercial banks in Kenya in both the short and long term. However, its long-term effect on NPLs is considered insignificant, while it has a significant impact in the short term, highlighting that changes in exchange rates play a crucial role in determining non-performing loans for Kenyan banks in the short run. To address excessive volatility in the currency market, it is suggested that the central bank bolster its foreign exchange reserves through strategic interventions. Lastly, gross domestic product (GDP) shows a negative effect on NPLs for these banks across both time frames, yet this effect remains statistically insignificant in both the long and short run. Conclusively, fluctuations in economic growth do not significantly influence the levels of NPLs within the banking sector. Policymakers should focus on enhancing the overall financial stability and operational efficiency of the banking sector rather than relying on GDP growth as a primary lever for managing NPLs.
Itax System Role in Tax Compliance for Residential Landlords in Kiambu Town, Kiambu County, Kenya
(Kenyatta University, 2025-03) Thuku, Joseph Njuguna
The Kenyan government uses taxes as one of its major sources of income and therefore all taxpayers must conform to the laws on taxes. But people have started taking laws easy especially those that protect their rights. Taxes have turned out to be very costly to the business since they are taking a lot of money from their income. For instance, taxes on rental income are crucial for the government’s income but the problem is that the majority of the community does not fulfill tax obligations and therefore the government fails to collect adequate amounts and this hurts the provision of basic services. This is because Kenya`s real estate market has grown but the taxation revenue has not. As a result, this investigation ascertained the function performed by the iTax system on tax compliance among residential landlords in Kiambu Town, Kiambu County. As a result, it specifically looked at how tax rates, cost acceptance, tax literacy, and tax awareness all relate to compliance. The inquiry was based on various theories which include fiscal exchange, ability to pay, institutional anomie, and economic deterrence. Using a descriptive research design, the study investigated 1,004 rental property owners in Kiambu Town. Applying Yamane's (1967) Formula to reach the 286 samples. Data was gathered through a designed questionnaire using a five-point rating scale, questionnaire's reliability was examined in a pilot study with 29 participants; a Cronbach's alpha of 0.7 was achieved. If the value is 0.7 or above then it is considered reliable. To maintain the naturalistic approach the study avoided using technical language. With the help of SPSS, The data which was primary was obtained via a questionnaire completed by the respondents was entered into an Excel file, and then exported into SPSS for evaluation. Quantitative descriptive measures which were adopted within the analysis thus include; frequencies, mean scores, and variability measures, whereas inferential statistics involved a multivariable regression model to evaluate relationships between variables. Additional tests that were conducted included; a multicollinearity diagnostic test, heteroskedasticity test, hausman test, and normality test. Among the ethical issues considered was seeking the approval of Kenyatta University to grant an introduction letter. The multiple regression analysis revealed, the following when every other variable stays unchanged, a rise in literacy regarding tax by unit which equals to 1 results in a 0.364 rise regarding compliance with residential rental taxation in Kiambu (β1= 0.364, p=0.000<0.05). Similarly, a single unit increase in awareness regarding tax leads to a 0.254 advancement in adherence (β1= 0.254, p=0.015<0.05). Regarding cost acceptance, a single unit rise contributes to a 0.235 rise in compliance (β1=0.235, p=0.002<0.05). Conversely, a rise in rates regarding tax causes a .221 decline in compliance (β1equals - 0.221, p equals 0.007<0.05). Examination thereby confirmed that literacy regarding tax, awareness regarding tax, Cost acceptance, and tax rate shape compliance with rental income taxation among estate owners in Kiambu. Research also recommends as follows KRA enhances literacy regarding tax and awareness through educational programs, workshops, and public campaigns to improve residential landlords' compliance. Cost acceptance should be addressed by making tax filing services more affordable and accessible through collaborations with certified professionals. Policymakers should review tax rates to ensure fairness, transparency, and simplicity in calculations. Implementing these measures will promote trust, reduce compliance burdens, and encourage voluntary tax adherence among landlords in Kiambu. Research also recommended subsequent research in this area to assess the impact of stakeholder sensitization and other unidentified factors on residential rental income tax adherence.
Portfolio Composition and Financial Performance of Mutual Funds in Kenya
(Kenyatta University, 2025-06) Mwangi, Stephen Waithanji
Mutual funds provide investors with access to diverse investment opportunities in regional and international markets. In Kenya, the first mutual fund was approved in December 2001 and since then to date; the number of registered mutual funds in the country has grown to 35. Despite the steady growth in assets under management in the mutual funds from Ksh.56.6 billion in 2018 to about Ksh.175.97 billion in June 2023, there has been downturn in performance of several of these funds which may be a discouragement to investors. Several of them have been reporting losses. For instance, in 2022, CIC Unit Trust Scheme and NCBA Unit Trust reported losses of 22.1 million and 8.7 million shillings respectively from their equity investment funds. This research therefore sought to analyze how equity investment, bonds investment and money market investment affect Kenya’s mutual funds’ financial performance. The study’s theoretical foundation was constituted by three theories: the resource based theory, modern portfolio theory and agency theory. The study used explanatory research design. Purposive sampling technique was used whereby the study only covered 27 mutual funds recognized by the Capital Market Authority as at June 2023. Secondary data was used which was obtained from sources such as CMA, NSE, and mutual funds official website published financial reports. The data was analyzed using SPSS where the process entailed descriptive statistic analysis, correlation and regression analysis. The findings revealed that over the period 2019-2022, the mutual funds decreased equity investment while they increased bonds investment and money markets investment in their portfolios. The study also found that that equity investment, bonds investment and money market investment were each positively correlated with financial performance of the mutual funds. The study concluded that equity investment, bonds investment and money market investment significantly influence performance of the mutual funds. The research recommends a careful analysis of equity investment options by fund managers before investing to ensure they identify equity investment alternative(s) that offer better returns. Besides, they should consider introducing more robust diversification policies among other measures.
Electronic Banking and Profitability of Commercial Banks in Kenya.
(Kenyatta University, 2025-03) Kyalo, Benjamin Mbondo
Commercial banks have a crucial role in mobilizing financial resources for investment and wealth creation, making them an important intermediary for financial services in Kenya. In doing this banks must strive to attain favorable profitability levels to enable them cover their operating costs and foster growth. Driven by advancement in technology, the banks have been able to establish E-banking platform which is comprised of services such as internet banking, m-banking, card banking and POS banking. This has enabled the banking sector to serve customers efficiently. Although investment in technology has presented banks with numerous advantages, on the other hand laying the technological infrastructure takes huge amounts of the banks’ financial resources. This is evidenced by the huge budget allocations for maintenance of their tech-based assets. With this demand, it is imperative that commercial banks need to observe their operating costs and risks link with electronic banking so as to maximize on profitability. Given this context, the intent of this research was to analyze the impact of e-banking on the financial health of these financial institutions in Kenya. The research objectives were to ascertain the effect of internet banking, mobile banking, card banking and POS banking on the profitability of commercial banks in Kenya. The research was supported by the subsequent theories: Innovation theory of profits, technology acceptance model, theory of planned behavior, innovation diffusion theory, and self-determination theory. A descriptive research design was adopted. The study focused on a period of 5 years from 2018 to 2022. The target audience was the 39 financial institutions in Kenya. A census was adopted due of the limited population size. The research employed both primary and secondary data. Primary data was collected by interviewing commercial banks senior employees and while secondary data was gathered from commercial banks annual financial statements and CBK’s Annual Banks’ Supervision Reports. Data was then analysed utilizing descriptive and inferential statistics and displayed in form of tables, graphs with appropriate descriptions. A regression model was adopted to illustrate the link between the variables. Diagnostics tests carried out were Normality of distribution tests, multicollinearity tests and homoscedasticity tests. To address ethical considerations, the researcher built rapport with the respondents by ensuring their confidentiality and providing them with an authorization letter from the university and research permission from NACOSTI. The findings revealed a positive and significant relationship between mobile banking and profitability (p=0.019); there was a significant relationship between internet banking and profitability (p=0.037); there was a positive and insignificant relationship between card banking and profitability (p=0.226) and there was positive and insignificant relationship between POS and profitability (p=0.431) of licensed commercial banks in Kenya. Further the study concludes that there was business rivalry in three sets of channels: Mobile banking-Internet banking, Internet banking-POS banking; point of sale banking-card banking. It is recommended for the banking sector to further strategize by enhancing the channels based on the competition and they should work on a trade-off set of strategies in deciding which channels to enhance as some are rivals. This study recommends further research for others in the area of mobile money banking and Profitability and what factors could be challenging this relationship. Further research should also focus on how mobile banking and internet banking can be integrated for positive relationship.
Financial Management Techniques and Financial Health of Inua Jamii Senior Cash Transfer Beneficiaries in Uasin Gishu County, Kenya.
(Kenyatta University, 2025-01) Kariuki, Jesee Maingi
Financial health has been identified by the World Bank as key poverty reduction constituent element, as it is important in aiding economic development goals. The financial health among the vulnerable including the aged is very important in ensuring access to medication, food and other basic amenities. Inua Jamii Programme is crucial in identification of the disadvantage groups and providing them with sustainable programme. The global environment has continuously recorded an increase in the number of people with various challenges. Cash transfer programme has been executed globally to reinforce the vulnerable group. The lubricants of poverty among the ageing population results from poor health, inaccessibility to financial support, household straining to cater for basic needs, ignorance and loss of jobs among others. The key aim of this study was to evaluate the effects financial management skills on financial health of InuaJamii program beneficiaries in Uasin Gishu County, Kenya. The specific objectives will be determine the effect cash management techniques, financial planning techniques , financial literacy techniques and risk management techniques on financial health of InuaJamii beneficiaries in in Uasin Gishu County, Kenya. Theories anchoring the research included ageing theory, financial education theory and empowerment theory. Explanatory research design will be employed. The target population for this study comprised people who are presently receiving the cash transfer from the government who are 4,093. Through Fishers formula, 351 sample size was arrived at. Primary data was gathered by a questionnaire subjected to content validity and Cronbach-Alpha for reliability testing and was subjugated to diagnostic tests, namely; normality test, for linearity, multicollinearity and homoscedasticity test and then other descriptive (mean, standard deviation median) and inferential (multiple regression) approaches for analysis. The research findings were reported using chart and tables. Ethical issues such as permit from the University and NACOSTI permit were accessed. The study revealed that cash management, budgeting management, financial literacy and risk management t techniques had a positive significant effect on financial health among Inua Jamii cash transfer benefices in Uasin Gishu County, Kenya. The examination determines that proper cash management often improves financial health. As the elderly engage in budgetary planning, it helps them to prioritize key basic needs requirements. Financial literacy often involve education on financial planning, budgeting, and investment options enabling the beneficiaries to gain a better understanding of their financial situation, which enhances their ability to make informed decisions and hence improving their financial health. Financial risk management equips the beneficiaries with knowledge about different risk mitigation strategies necessary for financial wellbeing. The study recommends the stakeholders should organize regular workshops focusing on financial literacy, covering topics such as cash management, budgeting and risk management. These skills are geared towards improving beneficiaries’ financial health.
Portfolio Diversification and Profitability of Deposit Taking Savings and Credit Cooperative Societies in Kiambu County, Kenya
(Kenyatta University, 2025-04) David, Jane Kaimuri
Deposit taking Sacco‟s in Kiambu County have all along played a very important role in the enhancement of the economy‟s GDP since their times of establishment. Just like other enterprising organizations, profitability is the bottom line of savings and credit cooperative societies. However, various profitability metrics of these entities in Kenya having been dropping of fluctuating. Therefore, it is important to examine the causative factors of the decline in profitability of DT-SACCOS. This study was done to evaluate the portfolio diversification and its effect on profitability of DT-SACCOS. The study aimed at determining the influence of loans and advances its effect on profitability of DT-SACCOS, real estate investments its effect on profitability of DT SACCOS, financial investments its effect on profitability of DT-SACCOS, and cash equivalents on the profitability of DT-SACCOS in Kiambu County, Kenya. The Modern portfolio theory, the Keynesian theory and the rent theory of profit were the theories applied in this study to understand the relationship between the portfolio diversification and the profitability of DT Saccos Kiambu County. A mix of descriptive and explanatory research designs was adopted. The 13 DT-SACCOS in Kiambu County constituted the accessible target population of the study .The census method was adopted to collect data since the target population was small. Secondary data pertinent to these DT-SACCOS was obtained from their respective audited financial statements and reports through desk analysis. The collected data covered the period from 2013 to 2022, a ten year period of operation of the Sacco‟s. The STATA Version 10 was used for analysis. Various descriptive statistics were used to analyze the collected data such as frequencies, percentages, mean and standard deviation. Correlation, simple linear, and panel regression analyses constituted the inferential statistics. Diagnostic tests that were conducted before undertaking inferential statistical analysis included linearity, normality, homoscedasticity, multicollinearity, and autocorrelation tests. The outcome of the analysis was presented in graphical formats. Various ethical issues were put into consideration throughout the research process. The study found out that loans and advances had a positive significant effect on the profitability of DT- Saccos in Kiambu County, real estates had a positive effect on the profitability of DT- Saccos in Kiambu County, financial investments had a positive significant effect on the profitability of DT- Saccos in Kiambu County and finally cash and cash equivalents had a positive significant effect on the profitability of DT- Saccos in Kiambu County. The study therefore concluded that loans and advances positively influenced the profitability of DT SACCOS, Real Estates as well positively affected the profitability of the DT Saccos, Financial investments also positively influenced the profitability of the DT Saccos and finally Cash and Cash equivalents positively influence the profitability of the DT Saccos in Kenya. The study recommended that the DT Saccos in Kiambu County should increase their investment in Loans and advances, put up more real estate investments, increase their financial investments and also add more to their cash and cash equivalent investments in order to improve on their profitability within Kiambu County. Further studies should also be conducted and using both primary and secondary data to examine how the same factors impact the Sacco‟s return on investments through incorporating different financial performance measures.
Financial Technology And Profitability Of Small And Medium Enterprises In Trans Nzoia County, Kenya
(Kenyatta University, 2025-05) Mutai, Mirriam Chepchirchir
SMEs have continued to face various challenges despite its vital role in the economy. Most African countries depends heavily on SMEs for economic development and industrialization. The government of Kenya has identified the creation of SMEs as a strategy of achieving vision 2030. However, Republic of Kenya Baseline Survey (2019) found out that 65% of SMEs’ fail within the first three years of their operations despite the provision of interventions. The thriving economy of Trans Nzoia County is comprised largely of SMEs which are the main income earners in the region. However, the income generation of these SMEs has been dwindling and consequently, their ability to spur economic growth in the growing metropolis may be affected. The recent report from the county government of Trans Nzoia indicates that operating profit margins of SMEs in the county declined from 11.3% in 2018 to 4.4% in 2022. This trend resulted directly in unemployment which then heightens social inequities and rate of crime. As such, this study explored the influence that deployment of financial technology (FINTECH) had on financial performance of SMEs in Trans Nzoia, County, Kenya. The study reviewed the Agency Theory, Technology Acceptance Model, Profit Maximization Theory, and Resource Based View Theory This study adopted and based its findings on a descriptive research design whose target population constituted of 3610 SMEs registered by ministry of trade, commerce and industry of Trans Nzoia County, Kenya. By using the Cochran, (1977) criterion, the researcher selected a sample frame of 347 SME. Stratified sampling technique was applied to group SMEs while purposive sampling technique was adopted to select respondents. The main research instrument used was the semi-structured questionnaire and included information for both dependent and independent variables. The researcher utilized Likert scale to gather information from questionnaires. Data was analysed using descriptive statistics and multiple regression analysis, using statistical package for social sciences (SPSS) 24.The study found a positive and statistically significant effect of digital credit usage(β=0.385,000), online banking usage(β=1.358,000) and insurtech services usage(β= 0781,000) on profitability of SMEs in Trans Nzoia County, Kenya. Mobile payment usage (β=0.177, 0.123) was found to have positive insignificant effect on profitability. The study recommended that SMEs should continue using mobile payment systems for their operational advantages, but they should not rely solely on them to enhance profitability. Practitioners should thus prioritize the adoption and use of online banking services to streamline their financial operations. The study further suggested that, insurance technology can play a significant role in managing risks and improving financial outcomes for SMEs. Additionally, regulations should be established to protect SMEs from high transaction costs and ensure data protection, thereby encouraging the adoption of FinTech. Lastly, issuing low-cost licenses to FinTech companies can help them offer affordable products and services to SMEs, enhancing financial inclusion and profitability
Corporate Governance and Performance of Kibera Community-Based Organizations in Nairobi City County, Kenya
(Kenyatta University, 2025-03) Mokeira, Vane
Community-Based Organizations (CBOs) in Nairobi City County are facing poor financial performance due to decreased donor financing. The weak management systems and mishandling of cash increase the severity of the financial challenges in Community-Based Organizations. This study examined how corporate governance affects the financial performances of community-based organizations operating in Kibera Sub County, Nairobi Kenya. The primary aim of this study is to evaluate the influence of corporate governance on the financial performance of Community-Based Organizations. Specifically, it investigates how the audit committee, directors' compensation, and the quality of external audits affect the financial outcomes of these organizations. The research is grounded in stakeholder theory, agency theory, and stewardship theory. Employing a descriptive research design, the study focused on a population of 11 Community-Based Organizations to achieve its objectives. A census sampling technique was applied to select these organizations operating in Kibera Sub-County, Nairobi, Kenya. Data was collected from secondary sources by analyzing the financial statements and audit reports of the Community-Based Organizations. Descriptive statistics and correlation analysis were utilized to interpret the data, while a balanced panel data model was employed to describe the collected information. Several diagnostic tests, including those for autocorrelation, multicollinearity, normality, heteroscedasticity, and the Hausman test, were conducted. Ethical considerations such as confidentiality and informed consent were also prioritized in the study. The findings indicated that managerial ownership has a positive yet insignificant impact on the financial performance of Community-Based Organizations; directors' remuneration similarly shows a positive but insignificant effect. Conversely, the board structure demonstrated a positive and significant influence on the financial performance of Community-Based Organizations in Kibera. The audit committee was found to have a positive but insignificant effect, while the quality of external audits significantly and positively impacted the financial performance of these organizations. The research recommends that policymakers should focus on strengthening the governance framework related to board structure. This can be achieved by establishing clear guidelines that promote optimal board size and composition, ensuring a balance between executive and non-executive members, and fostering diversity in skills and experience.
Financial Literacy and Access to Credit by Small and Medium Enterprises in Embu County, Kenya
(Kenyatta University, 2025-05) Kinyua, Pauline Wanjiru
Access to credit remains one of the most pressing issues facing SMEs in spite of their importance in economic development and job creation. SMEs are deemed too risky to advance credit to by financial institutions hence their access to credit remains a problem globally as well as in our Kenyan context. Access to credit by SMEs is critical for their growth, economic growth, and creation of jobs. The research sought to establish the impact of financial literacy on access to credit by SMEs in Embu County, Kenya by assessing four independent variables namely borrowing, book keeping, investment and budgeting literacy. The study adopted cross sectional survey design, and it’s anchored on credit access, prospect and financial inclusion theories. Target population was 1678 SMEs in Embu County, Kenya. Stratified random sampling was utilized and Yamane’s formula applied to derive a sample size of 181 SMEs. The respondents from each category, were the SME owners/managers who were picked through simple random sampling. A data collection and review guide was employed to collect secondary data while analysis was done using means, percentages and panel data regression. Presentation of data was done using tables and charts. Diagnostic tests were carried out to test the assumptions of the panel regression model. The study found that borrowing literacy had a negative but significant effect on access to credit by SMEs in Embu County, Kenya with a p-value of 0.001, while bookkeeping literacy had a positive and significant effect on access to credit by SMEs with a p-value of 0.003. Further, investment literacy had a positive and significant effect on access to credit by SMEs with a p-value of 0.049 while budgeting literacy had a positive and significant effect on access to credit by SMEs in Embu County, with a p-value of 0.002. The study concluded that bookkeeping literacy, investment literacy and budgeting literacy has significant effect on access to credit by SMEs in Embu County, Kenya.
Electronic Banking and Profitability of Deposit Taking Savings and Credit Co-Operative Societies in Kenya
(Kenyatta University, 2025-06) Otieno, Lilian Atieno
The deposit taking Savings and Credit Co-Operative Societies play a crucial role in promoting savings and providing credit to the members who often lack access to traditional banking services. However, recent data indicates that many SACCOs are struggling with profitability. Statistics show that only about 30% of these societies are operating at a profit, which raises questions about their sustainability and efficiency. The recent reports also indicate that the average return on asset stands at approximately 1-2%, which is considerably lower than the financial benchmarks set for effective financial institutions. Therefore, this study sought to investigate the effect of electronic banking and profitability of deposit taking savings and credit co-operative societies in Kenya. The electronic banking was measured in terms of mobile banking, electronic funds transfer, automated teller machine utilization and internet banking. The study was guided transaction cost theory, the technology acceptance model, disruptive innovation theory, diffusion of innovation theory, and Schumpeter's innovation theory. A descriptive research design was used. The study target population was 40 teachers based DT-SACCOs controlled by SACCOs Societies Regulatory Authority (SASRA) and are authorized to function in Kenya. A census of 40 teachers based DT-SACCOs was done. The study used secondary data that was collected using secondary data collection sheet. The data collected was analyzed using descriptive statistics. Inferential statistics like correlation analysis and regression were used to establish how one variable influenced the other. The diagnostic statistics done included; multicollinearity test, normality test, and heteroscedasticity test. The results were presented using tables. The research revealed a significant positive impact of mobile banking, electronic funds transfer, automated teller machines, and internet banking on the profitability of deposit-taking Savings and Credit Co-Operative Societies in Kenya. The research revealed that the SACCOs which implement mobile banking access a wider customer segment, enabling them to draw in additional deposits and enhance their ability to lend. Electronic funds transfer decreases the requirement for handling physical cash, thereby lowering expenses related to cash transport, security, and storage. Automated teller machines offer members round-the-clock access to their accounts, enabling them to withdraw funds, check balances, and conduct various transactions without having to go to a physical location. Online banking increases the quickness and effectiveness of service provision, which boosts customer satisfaction and promotes more regular transactions, leading to higher earnings for SACCOs. The research suggests that SACCOs should create a mobile banking app that is user-friendly and straightforward to navigate, allowing individuals of all ages to utilize it efficiently. SACCOs ought to create intuitive mobile apps that enable users to conduct transactions, view balances, and easily access services. The SACCOs analyzed ought to perform comprehensive market research to pinpoint high-traffic locations where prospective members live or are employed. SACCOs ought to invest in strong online banking systems that are easy to use, safe, and able to grow.

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