MST-Department of Accounting and Finance

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Credit Risk Management and Loan Performance of Digital Lending Companies in Kenya
(Kenyatta University, 2024-11) Kokonya, Stanley Ridon Opemi
In Kenya, more than 50% of loans issued by digital lending companies were defaulted by borrowers, highlighting a significant issue in the credit market. Digital lending companies primarily assessed borrowers' willingness to repay rather than their ability to do so, which led to increased exposure to credit risk and threatened the financial stability of these institutions. This study aimed to address the urgent need for effective credit risk management to enhance loan performance, particularly given the slow growth of digital lending firms attributed to high default rates exacerbated by a lack of collateral. The objectives of the study included examining the effect of risk identification on loan performance, assessing the impact of risk quantification on loan performance, and evaluating the influence of risk measurement on loan performance within digital lending companies in Kenya. The study was guided by the Credit Risk Theory, Asymmetric Information Theory and Agency Theory. The study adopted a descriptive research design targeting a population of 108 digital lending firms in Kenya, utilizing a census sampling technique. Primary data were collected and analyzed using the Statistical Package for the Social Sciences (SPSS) version 28, employing descriptive statistics, correlation analysis, and regression analysis. The analyzed data were presented using pie charts, bar charts, and frequency distribution tables. Ethical considerations were prioritized, including confidentiality, permission, and informed consent. The findings indicated that both risk identification and risk quantification positively and significantly impacted loan performance in digital lending firms. The study concluded that effectively identifying and quantifying risks enhanced loan performance by allowing digital lending firms to detect potential loan defaults through regular monitoring of borrowers’ cash flows. Each identified risk should have been distinctly labeled to avoid confusion with other risk management activities. To mitigate loan default rates, the study recommended that digital lending companies establish a robust institutional framework for effectively identifying loan-related risks. Additionally, appointing dedicated digital lending managers would facilitate timely communication of identified risks to upper management. The Central Bank of Kenya, as the regulatory body for digital lending firms, should have ensured that these institutions proactively identified emerging risks and developed strategic responses. Continuous monitoring of risks was deemed essential, and firms should have reviewed existing risk conditions regularly to determine the necessity of reassessment. Future research should focus on exploring the long-term effects of enhanced risk management strategies on the sustainability of digital lending companies in Kenya, as well as comparative studies involving traditional lending institutions.
Capital Structure and Financial Performance of Investment Firms Listed In Nairobi Securities Exchange, Kenya
(Kenyatta University, 2024-06) Mwai, Gathogo Stephen
Organizational financial performance is crucial, and all businesses should strive for the highest levels of financial performance. businesses engaged in globally competitive markets have demonstrated throughout time that profitability is not a given due to intense rivalry and the oligopolistic structure of such markets. Many NSE Listed companies have followed the same path of obtaining debts in the asset base, so with goal of increasing profitability. The raising of appropriate finances in these organization was also expected to aid the firms in their operations. Nevertheless, in the past, businesses with large loans in their shareholders’ wealth, such as Mumias Sugar Company, Home Africa, Transcentury, Kenya Airways, ARM Cement, and Uchumi Supermarkets have consistently accumulated massive losses and ended up finding themselves in severe credit crisis, owing lenders more than their total wealth. The investigation of the relationship between capital structure and financial performance of investment firms listed on the Nairobi Securities Exchange will be the study's primary goal. The research specific goals were to examine the impact of debt financing on the success of investment firms listed on the NSE, to examine the impression of financial leverage on those NSE firms' performance, and to determine the impression of retained earnings on those NSE firms' financial performance. The study was informed by the Modigliani and Miller Theorem, trade off theory, pecking order theory as well as liability management theory. This investigation used a made use of descriptive plan. The populace was the five (5) investment firms. The survey method was used to select all the five (5) NSE listed investment firms in Kenya. The data for this investigation came from CMA reports, printed articles, journals, and other pertinent resources found online and in libraries using secondary data collection approaches. The research used quantitative examination of the data. STATA was used in data analysis. Descriptive, trends and inferential was conducted. According to the model, capital structure accounts for 61.19 percent of the variance in financial performance. This indicates that capital structure was responsible for 61.19 percent of the variations in financial performance. Outcomes were a clear case that the debt finance resulted to decline in financial success of the investment firms. The outcomes were clear that the financial leverage was noteworthy impacted the financial success of the investment firms. The outcomes were clear that the retained earnings was noteworthy impacted the financial success of the investment firms. The study concluded that debt financing has a negative and significant impact on financial performance of listed investment firms in Kenya. Therefore an increase in debt led to poor financial performance of the listed investment firms in Kenya. Investment firms with little debt might generate higher returns on their assets. The study concluded that the mean D/E was 1.247 indicating that the investment firms listed in the NSE are well financed to cater for the short-term financial obligations. This is in line with the general consensus that debt-to equity ratio should not be above a level of 2.0. The debt to equity ratio shows the companies’ short-term financial health. The study concluded that retained earning has a negative and significant impact on financial performance of listed investment firms in Kenya. Therefore an increase in equity led to better financial performance of the listed investment firms in Kenya. The study also concludes that there was a general rise in net income. The policy makers at listed investment firms should develop policies and regulations that can guide debt management among listed investment firms. As the regulator, CMA needs to develop suitable policies on debt management among the listed investment firms.
Corporate Governance and Financial Performance of Kenya Commercial Bank Limited in Kenya
(Kenyatta University, 2024-10) Wanyonyi, Nelson Sikolia
Since the last financial distresses that occurred in the world over the influence of company, there have been increased interests on the study of the impacts of governance practices on the financial performance of banking institutions. Consequently, this study focuses on determining the role of Corporate Governance and financial performance of KCB Bank Kenya limited. The results of previous researches that were conducted between company governance and financial performance are mixed and inconclusive. The lack of internal controls, weak company governance practices, weaknesses in restrictive and superior systems, business executive loaning and conflict of interest are factors behind the history of poor governance system within the banking system which have resulted to the problems of the many financial institutions with others sinking into receivership. Despite the measures put in place by establishments like CBK, Capital Markets Authority and Centre for corporate Governance campaigning permanently on governance, the matter of corporate governance is nonetheless yet to be solved. The study therefore sought to establish the effect of corporate governance on financial performance of KCB Bank Kenya limited. The study was guided by the following objectives: to establish the effect of board composition, board size, board independence and internal controls on financial performance of KCB Bank Kenya limited. The study was grounded on agency and stakeholder theory. On the other hand, the study utilized descriptive research design. The study target population consisted of 241 management staff of KCB Bank Kenya based at its headquarters in the capital city of Nairobi. Stratified random sampling was utilized for its primary and secondary data. The study’s primary data was gathered by the use of questionnaires involving the research assistants to administer them. The study’s secondary data was gathered by the use secondary data collection sheet from the firm’s annual financial statement. The gathered data was then analysed by the use of inferential and descriptive statistics using SPSS software. The findings were presented through percentages, standard deviation, means and tables. The study established that corporate governance was significant and to a great extent affected the financial performance of KCB Bank Kenya limited. The study concluded that the bank board had in place a board structure with fair and balanced constitution, experienced, skilled and knowledgeable board members who propelled the firm to profitability. It was further concluded that the firm has a independent board that makes decisions in a free and fair way without undue influence and embraces integrity. The study concluded that the firm had significantly sound internal control mechanisms with the board taking charge in expenditure oversight, advocating for strong internal audit, accounting system, accountability and integrity and approving expenditure coupled with holding the CEO accountable to the board. The study recommends that KCB Bank Kenya Limited needs to embrace a leaner and effective board size that is swift in decision making, efficient and coordinative. The study recommends that the company board needs to embrace independency, accountability, transparency and integrity to ensure firm’s resources are diligently utilized. The company board needs to have a flexible structure that constitutes experienced, skilled and diverse members who can bring in new ideas to propel the firm to peak performance. The firm also needs to enhance board oversight on the company expenditure, management and resource monitoring to promote accountability and efficiency.
Financing Structure and Liquidity Position of Microfinance Banks in Kenya
(Kenyatta University, 2024-10) Mecheo, Verah
Microfinance banks' liquidity positions have been erratic and unstable over time. Between 2012 and 2017, the overall liquidity trends of Kenyan MFBs fluctuated between a low of 25% and a high of 36%, with some individual microfinance banks registering liquidity ratios below the regulatory threshold of 20%, indicating instability. This study aimed to investigate the effect of financing structure on the liquidity position of microfinance banks (MFBs) in Kenya. Specifically, it sought to determine how customer deposits, debt financing, and equity financing influence the liquidity position of these banks, as well as the moderating effect of firm size on this relationship. The study was anchored in agency theory, pecking order theory, trade-off theory, and liquidity preference theory. An explanatory research design within the positivist philosophy framework was adopted. The target population comprised the 13 MFBs registered with the Central Bank of Kenya (CBK), utilizing panel data from publicly available audited financial statements. Data analysis was conducted using panel regression, Pearson correlation, and descriptive statistics, and the results were presented in tables and figures. Hypotheses were tested at a significance level of 0.05, and ethical guidelines were followed throughout. The study found that customer deposits and equity financing had positive and significant effects on the liquidity position of MFBs, while debt financing had a significant negative effect. Firm size also had a strong moderating effect on the relationship between financing structure and liquidity position. Based on these findings, the study recommends policy measures that encourage MFBs to increase their reliance on equity financing by promoting access to diversified equity sources and offering incentives like tax breaks. To minimize over-reliance on debt, policymakers should implement frameworks that support responsible lending while fostering equity market participation. Additionally, promoting innovation in savings products and implementing educational campaigns can enhance customer deposit mobilization. Tailored regulations that support the growth of smaller MFBs, alongside mentorship programs with larger banks, can further strengthen liquidity management and operational efficiency. These policy recommendations aim to foster a more stable liquidity environment for microfinance banks in Kenya.
Financing Options and Growth of Real Estate Firms in Savings and Credit Cooperative Societies in Nairobi City County, Kenya
(Kenyatta University, 2024-11) Sangori, Roselyne Auma
Real estate firms drive economic growth by facilitating property development, providing housing and commercial spaces, employment opportunities, and wealth creation and investment diversification. Savings and Credit Cooperatives Societies financing supports real estate firms within Savings and Credit Cooperative Societies by providing affordable and flexible financial solutions, such as equity, mortgage, lease, and savings financing, enabling property acquisition and investment while fostering member-driven economic growth and financial empowerment. However, the challenges confronting real estate firms in Kenya, especially within Nairobi City County, are substantial, regarding financing decisions given the capital-intensive nature of their projects. The evident gap between annual housing demand and actual supply underscores the critical need for effective financing mechanisms to improve the expansion and development of the real estate industry. The research concentrated on investigating the effect of various financing options available through Savings and Credit Cooperative Societies in Nairobi City County is particularly relevant, given Savings and Credit Cooperatives s' role in offering financial services to their members. Evaluating the effects of mortgage financing, lease financing, savings financing, and equity financing on real estate firms’ growth can offer valuable insights into the feasibility of different funding avenues for these enterprises. Considering the moderating influence of real estate firm size on the relationship between financing options and growth rates enriched the analysis, acknowledging that a firm's size and scale can significantly shape its financing strategies and growth trajectory. Drawing on theoretical frameworks such as the housing cycle theory, lien theory of mortgage financing, transaction costs theory, and resource dependency theory provided a robust foundation for understanding the dynamics of financing and growth in the real estate sector. Adopting a descriptive research design, along with panel data analysis spanning a five-year period (2019-2023), facilitated an examination of trends and patterns among real estate firms operating within Savings and Credit Cooperative Societies in Nairobi City County. By employing a census approach to collect data from the entire population of 72 real estate companies, the study ensured a representative sample, enhancing the reliability and validity of the findings. The study found a significant and positive effect between mortgage financing, lease financing, savings financing, and equity financing and growth of real estate in Savings and Credit Cooperative Societies. The result indicated a moderating effect on the relationship between financing options and growth of real estate firms in Savings and Credit Cooperative Societies. The study concluded that the real estate sector in Nairobi City County requires effective financing options, relying on mortgage, lease, savings, and equity financing to optimize resource allocation and drive growth, with Size of real estate firms in Savings and Credit Cooperative Societies significantly and positively moderating the effect of these financing options on firm performance. Based on the study findings, policy recommendations include reducing mortgage costs through subsidies and regulatory reforms, increasing lease financing options via innovative structures, boosting savings financing through mobilization programs, facilitating equity financing with improved market mechanisms, and optimizing these firms, performance through targeted training. The study enriches understanding by demonstrating the significant effect of various financing options on real estate firm growth, advancing theoretical frameworks, addressing methodological gaps, and providing practical policy recommendations to support sector expansion.
Corporate Governance Attributes and Sustainability of Selected Commercial State Corporation in Kenya
(Kenyatta University, 2024-06) Somo, Meymuna Abdullahi
Kenya's commercial State Corporations faces instances of mismanagement, financial improprieties, and inadequate disclosure have expressed concerns regarding the sustainability and efficacy of these institutions. This study sought to address these issues by examining the link between corporate governance characteristics and the viability of commercial state corporations in Kenya. The objectives were to evaluate the effect of board members' occupational expertise, board committee meetings, board tenure and board size on the sustainability of commercial state corporations in Kenya. The study was guided by Agency Theory, Stakeholders Theory, Resource Dependence Theory and Transaction Cost Theory. This study employed an explanatory research design and descriptive research design. The study focused on the target population of five commercial state corporations: Kenya Railways Corporation, Kenya Electricity Generating Company, Kenya Ports Authority, Kenya Power and Lighting Company, and Kenya Electricity Transmission Company using purposive sampling method. The unit of observation were the audited financial reporting of these five corporations for the period 2014 to 2023 making a total of 50 observations. Panel regression analysis was the chosen empirical model, considering the panel data nature of the research. The audited financial reports of the five firms served as the source of secondary data. The data collection procedure involves obtaining necessary permissions from Kenyatta University and National Commission for Science, Technology and Innovation, followed by the extraction of relevant information from the financial statements using a data collection schedule guide. Data analysis includes both descriptive and inferential analyses. Descriptive analysis involved means and standard deviations, while inferential analysis utilizes panel regression analysis. The results were presented in tables showcasing means, standard deviations, frequencies and coefficients for clear interpretation. Various diagnostic tests, including multicollinearity, normality, stationarity, heteroscedasticity, and the Hausman specification test, were conducted to ensure the sturdiness of the results. The study adhered to ethical guidelines set by Kenyatta University emphasizing the importance of avoiding data fabrication and falsification. The coefficient for board committee meetings was not significant, suggesting that meeting frequency does not significantly affect sustainability. Board tenure demonstrated a significant positive impact on sustainability, while board size also showed a significant positive effect. In an increasingly dynamic business environment, commercial state corporations should embrace innovation and adaptation to remain resilient and sustainable. This may involve leveraging emerging technologies, exploring new business models, and anticipating and responding to evolving market trends and regulatory requirements. Boards should encourage a culture of innovation and agility to drive long-term value creation and competitiveness.
Sacco Based Financial Characteristics and Financial Performance of Deposit Taking Savings and Credit Co-operative Societies in Kenya
(Kenyatta University, 2024) Tarus, Carolyne
In Kenya, DT-SACCOs have been facing certain problems that have had disastrous effect to their financial performance characterised declining return on assets. Although literature has associated financial performance with financial characteristics, extant empirical research works suffer from conceptual and contextual gaps. This motivated the current research to assess SACCO based financial characteristics as a suitable tool for spurring financial performance of Kenya DT-SACCOs. The specific objectives were to; establish the effect of capital adequacy, asset quality, financial investments, and liquidity on financial performance of Savings and Deposit Taking credit co-operative societies in Kenya. The study further assessed the moderating effect of SASRA regulation on relationship between SACCO based financial characteristics and financial performance of Deposit Taking Savings and credit co-operative societies in Kenya. The theories that were useful for underpinning the study concept will include; financial intermediation theory, pecking order of capitalization, financial growth theory, bad management hypothesis, liquidity premium theory. In the analysis, descriptive research design was adopted in this study, which was carried out in Nairobi city County, Kenya. The 190 DT-SACCOs were the study's target population. The study used purposive sampling; the inclusion criteria include Kenya DT SACCOs that had been in existence since 2016. Data was gathered for this study using secondary data for period between 2018 to 2023 on a data collection tool developed by the researcher. In order to produce both descriptive and inferential statistics, the study analysed the data using quantitative approach. The research estimated a direct model on the association between the variables using panel regression. It also evaluated how SASRA risk regulations moderated the relationship between SACCO based financial characteristics and financial performance of DT-SACCOS in Kenya. The autocorrelation, multicollinearity and heteroscedasticity, normality, fixed and random effects were tested for. The Hausman test was adopted in the research investigation to determine the form of outcome as either being fixed or random. The study came to the following conclusions: capital adequacy had statistically significant positive effect on financial performance, asset quality had statistically significant negative effect on financial performance. While financial investments had statistically significant negative effect on financial performance, liquidity had positive association with financial performance of Kenyan DT-SACCOs. SASRA risk regulations. The association between SACCO based financial characteristics and financial performance is thus found to be significantly moderated by SASRA risk regulations. In accordance to those findings, this research recommends that DT-SACCOs in Kenya ought to keep the capital adequacy at the optimal institutional capital value, practise careful asset quality management and regularly monitor loan management in order to build sound lending policies optimise their financial investments by boosting sufficient funding of operational expenses, and maintain the suggested quantities of liquidity. They ought to conduct safe handling of assets and closely keep track of the oversight of loans for the creation of reasonable lending recommendations that do not negatively impact the business.
Financial Innovation and Profitability of Commercial Banks in Kenya
(Kenyatta University, 2024) Rotich, Davis Kipngeno
The Kenyan financial system has witnessed massive transformations over the previous two decades. Numerous changes have been made to the industry that have boosted the number of financial products, operations, and organizational structures, as well as enhanced and raised the financial system's efficiency and profitability. The driving forces behind this shift have been shifting economic conditions and technological advancements. Profitability trends of commercial banks in Kenya however, show high variability. Some banks have consistently posted increased profits whereas others have reported losses and even collapsed or were placed under receivership. This research aimed to determine the influence of 7financial 7innovation on the 7profitability of Kenya's 7commercial banks. The study specifically investigated the effect of debit card banking, mobile banking, ATM banking, and agency banking on profitability in Kenya's banking sector. The analytical framework for this study leaned on the Agency 7Theory, 7Diffusion of 7Innovation Theory, 7Transaction-Cost 7Innovation Theory and 8Technology 8Acceptance 8Model. Adopting a 8descriptive 8research approach, the study targeted all 38 8commercial 8banks in 8Kenya that are 8licensed by the 8Central 8Bank of 8Kenya (CBK). Census sampling was used and therefore, all the 38 commercial banks 8were 8included in the 8sample. The data for this 8research was sourced from secondary means, specifically the CBK's quarterly reports and the financial statements of banks from 2019 to 2023. Through time-series modeling, the study identified trends and dynamics to ascertain the role of 8financial 8innovation in shaping the profitability of 8commercial 8banks in 8Kenya. The analysis employed E-views statistical software, and the findings were 7presented using 7tables, 7charts, and 7graphs for clear understanding and 7interpretation. The findings revealed that, debit card banking, mobile banking, ATM banking, and agency banking had a positive and significant influence on profitability in Kenya's banking sector (β =0.0007, p=0.0003, β =4.5947, p=0.0004, β =0.0001, p=0.0301, β =0.0250, p=0.0002) respectively. From the study results, it was recommended that Banks should actively promote the use of debit cards among their customers, continue to invest in and upgrade their mobile banking platforms, seek to optimize their ATM networks and expand their agency banking networks, particularly in underserved and rural areas.
Financial Risks and Shareholders Wealth of Deposit Taking Saccos in Nairobi City County, Kenya
(Kenyatta University, 2024-11) Njoroge, Wanjiru Stella
Shareholder's expectation is to increase wealth from their investments. Since 2010, DT-SACCOs in Kenya have been reporting dismal financial performance, impacting their capacity to consistently meet shareholder expectations. Data from the Sacco Societies Regulatory Authority (SASRA) reveals that the total Economic Value Added (EVA) of DT-SACCOs in Nairobi City County Kenya declined from a negative 362 million in 2011 to a staggering negative 3.9 billion by year 2021, indicating a significant erosion of shareholder wealth. This study aimed to investigate the effect of financial risks on the wealth of shareholders of DT-SACCOs in Nairobi City County, Kenya focusing on capital, credit, and liquidity risks. Additionally, it examined the moderating influence of SACCO asset size on the relationship between financial risk and shareholder wealth. The research employed an explanatory research design, grounded in positivism, targeting 43 DT-SACCOs in Nairobi, Kenya. The study utilized panel data from 2011 to 2021, sourced from SASRA and SACCO reports. Theoretical frameworks explored included stewardship theory, capital adequacy buffer theory, modern portfolio theory, and shiftability liquidity theory. Data analysis involved correlation and panel regression techniques, with diagnostic tests including normality, autocorrelation, homoscedasticity, stationarity, and multicollinearity. Results indicated that capital risk had a positive and significant effect on shareholders' wealth of DT-SACCOs in Nairobi City County. Credit risk was found to have no significant effect on shareholder wealth. Liquidity risk demonstrated a negative and significant effect on shareholder wealth. Firm size estimate exhibited a statistically significant moderating effect on the interaction between financial risk variables and shareholders' wealth. Based on these findings, the study recommends that DT-SACCOs implement effective capital risk management practices, including optimizing risk-return balance and diversifying capital sources. To address liquidity risk and enhance shareholder wealth, SACCOs should develop comprehensive liquidity risk management policies, closely monitor liquidity adequacy ratios and cash flow projections, and diversify funding sources. Furthermore, regulators should consider implementing regulations based on Saccos asset base to account for the moderating effect of firm size on financial risk management and shareholder wealth creation.
Lending Practices and Financial Performance of Savings and Credit Cooperatives in Kericho County, Kenya
(Kenyatta University, 2024-10) Kipngetich, Geoffrey
At the heart of financial performance of financial organizations is lending and thus lending practices signify the prudent measures that financial institutions undertake before they issue loans to their customers. Non-performing loans remain to be a key challenge likely to be threatening the performance of SACCOs in Kericho County. The primary aim of this research was to assess how lending practices impact the financial performance of SACCOs in Kericho County. The study aimed to investigate the effects of various factors, including Know Your Customer (KYC) procedures, SACCO interest rates, loan security, and collaboration with credit reference bureaus on the financial performance of SACCOs in Kericho County. The research drew insights from five key theories: performance theory, information asymmetry theory, the 5 C’s model of client appraisal, loanable funds theory, and adverse selection theory. A descriptive cross-sectional research design was deemed appropriate for this study, with a target population of 345 employees from seven different SACCOs in Kericho County. Based on the results the variable “know your customer procedures” has a strong positive relationship with the financial performance of SACCOs in Kericho County. The result suggests that as SACCOs improve their know your customer procedures, their financial performance improve as well. The correlation analysis between SACCO interest rates and financial performance shows a positive relationship exists. This suggests a positive but average relationship. It means that as SACCOs offer more attractive lending rates, their financial performance can improve. However, the relationship is not as strong as with know your customer procedures. The study also sought to determine whether there existed a significant relationship between loan security and Sacco’s financial performance. The correlation analysis shows that a positive but weak relationship exists. The weak suggests that loan security is not a major concern since SACCOs loans are primarily guaranteed by members’ shares. Finally, the correlation analysis sought to determine whether there was a significant relationship between partnership with credit reference bureau and financial performance of SACCOs. The results indicate that a positive but weak relationship exists. In summary, strong and positive correlation is only observed for know your customer procedures. Average but positive relationship is observed for SACCO interest rates. However, loan security and CRB partnership have positive but weak relationship with financial. In the context of credit reference bureau procedures, the study noted that while many respondents were aware of these procedures, there was a lack of understanding regarding their chronological application. The researcher recommended that, to support the application of KYC principles, adequate technology and information systems be implemented to monitor customer transactions based on their individual profiles. For SACCO interest rates, it was suggested that SACCO management should enhance profitability strategies to consistently achieve their interest rate goals. Regarding credit reference bureau policies, the researcher recommended raising awareness among SACCO clients about these policies and their importance in accessing credit facilities, ensuring adherence at all times.
Board Structure and Profitability of Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange, Kenya
(Kenyatta University, 2024-08) Githiomi, Purity
Kenya’s manufacturing and allied sector is vital to the country’s growth economically. For Kenya’s vision 2030 to be realized, the sector is essential. However, manufacturing industry has experienced a downturn throughout time. Manufacturing gross domestic product of Kenya has experienced declining performances from 11.16% in 2011 to 7.24% in 2022. Therefore, the survey purposely ascertained how structure of the board affects financial performances of firms in manufacturing and allied industries listed on NSE. In particular, the study evaluated the influence of board size, gender composition and independence on financial performances of manufacturing companies registered on Nairobi Securities Exchange, Kenya. Resource based, agency, stewardship, institutional and dynamic capability theories served as theoretical reviews for the study. To achieve this, an explanatory method of design was used. Census sampling was utilized to sample all eight (8) manufacturing and allied firms listed on Nairobi Securities Exchange. Secondary data was utilized for the study. Diagnostic tests encompassing homoscedasticity, autocorrelation, multicollinearity, stationarity, and specification were applied on the panel data, obtained from firms' audited financial statements and financial reports from 2015-2022, was analyzed using panel multiple regression analysis, correlation analysis, and descriptive statistics (mean, standard deviation, and frequency). 0.05 significance level was applied as threshold for hypothesis testing. All ethical morals were followed carefully. Outcomes unveiled in the study showed a significant positive effect of board independence on financial performance; board size yielded an insignificant negative effect on financial performance; board gender diversity uncovered an insignificant positive effect on financial performance; while a insignificant moderating effect of firm size on the relationship between board structure and financial performance within Kenyan manufacturing and allied firms listed on the Nairobi Securities Exchange was revealed. The study recommends that the board independence should be strengthened to enhance the financial performance of the firms as this would allow for greater independence in decision of the board as it pertains to the financial performance of the studied firms in Kenya. The study contributes to the development of a more comprehensive theoretical framework that accounts for the unique institutional and cultural factors influencing corporate governance in Kenya. The study also provides a basis for developing evidence-based policies that encourage best practices in board structure and promote the profitability of manufacturing firms. Furthermore, the study helps boards of directors understand the importance of factors such as size, independence, and diversity in enhancing their effectiveness.
Macroeconomic Determinants and Financial Performance of Real Estate Sector In Kenya
(Kenyatta University, 2024-03) Mburu, Charles
The financial success of the real estate sector has played a significant role in global economies, including Kenya, where it is used as an indicator for predicting real estate demand and overall economic performance. In Kenya, the real estate industry makes up over 9% of the country's GDP, although seeing a decline in financial performance. The average uptake of real estate properties decreased from 23.3% in 2020 to 20.9% in 2021. The decline in the sector can be attributed to adverse economic conditions related to financing, a significant increase of 48.0% in nonperforming loans (NPLs) within the same timeframe, a rise in construction costs, intensified competition, and a decrease in demand due to various macroeconomic factors. This phenomenon has resulted in the loss of employment opportunities, the relocation of investors, and deterioration in overall sector performance. The association between macroeconomic aspects and the overall success of the real estate industry has garnered significant attention from scholars, leading to varying findings across different regions worldwide. Insufficient attention has been given to the examination of the impact of macroeconomic drivers on the financial wellbeing of the real estate industry in the Kenyan market. Hence, this research aimed to assess the impact of macroeconomic determinants on the financial wellbeing of the Kenyan real estate industry. The primary aim of this research was to ascertain the bearing of exchange rates, interest rates, inflation rates, and GDP on the financial performance of the real estate industry. The research was underpinned on the theoretical frameworks of real estate cycle theory, loanable fund theory, classical theory of inflation, and balance of payments theory of exchange. The research design utilized in this research was a causal-effect design. The research focused on the population of the Kenyan real estate business. The research utilized secondary data sourced from the repository of the CBK and the Economic Survey Reports published by the KNBS for the period spanning from 2013 to 2022. The data was subjected to analysis using a VAR time series regression model. This approach enabled the computation of descriptive statistics (means and standard deviations), and inferential statistics for conducting correlational analysis and VAR time series analysis. The data that was analyzed was displayed in the form of tables and graphs. Prior to doing the actual analysis, the researcher performed diagnostic tests like normality test, multicollinearity test, heteroscedasticity test, optimum lag selection, stationarity and autocorrelation for time series regression. Ultimately, strict adherence to ethical principles was ensured. The study suggested that foreign exchange, interest rate, inflation, and GDP, when analyzed individually, each had a statistically significant bearing on the financial health of the property industry. As a result, these hypotheses were rejected. The research determined that foreign exchange rates, interest rates, inflation, and GDP do have an impact on the financial performance of the property industry. The report recommended that the property industry should assess the existing risks and identify the currencies involved with the assistance of a foreign exchange specialist. This serves as a foundation for several tactics that may be employed, including pre-purchasing the currency, using dollar-cost averaging, utilizing forward contracts, employing limit orders, and exploring other temporal alternatives. Equally, the research advises making safer investments for investors wishing to lower the risks associated with interest rates, investing in bonds and certificates with short maturities since they are the safest option. Additionally, the research advises implementing a contractionary monetary strategy and also, real estate firms have more cash so they may raise capital, enhance technology, and grow.
Investment Decisions, Corporate Governance and Financial Performance of Defined Contribution Pension Schemes in Nairobi City County, Kenya
(Kenyatta University, 2024-10) Magather, Nico Otieno
Defined contribution Pension Schemes play a very significant role in the economy of a Country. Pension schemes are auxiliary and have complementary roles with other financial institutions, in stimulating capital and financial market growth thereby contributing to Gross Domestic Product of many nations. Pension schemes provide critical retirement income for millions of people. Poor retirement yields of funds and non-payments to retirees is impeding the accomplishment of the Millennium Development Goals per World Bank reports. This study sought to establish the effect of investment decisions and corporate governance on financial performance of defined contribution pension schemes in Nairobi City County, Kenya. In particular, the sought to find out the effect of inventory, replacement and expansion investment decisions and corporate governance, as a moderating variable on the financial performance of defined contribution pension schemes in Kenya. The study was guided by Modern portfolio theory, behavioral finance theory and agency theory. Literature was reviewed on all the variables. The study was carried out using a panel data of 5 years from 2017 to 2021 using a descriptive design. The target population for the study comprised 1182 defined contribution pensions’ schemes in Nairobi City County, Kenya as per the Retirement Benefits Authority. 92 registered defined contribution pension plans were included in the sample. Stratified random sampling method was applied to collect secondary data. Quantitative data was collected and analyzed using descriptive and inferential statistics. STATA software analyzed the data. The diagnostic tests carried out included normality, heteroscedasticity, autocorrelation and hausman. The study found that there was positive and significant relationship between inventory investment, replacement investment, expansion investment decisions and financial performance. Cash and demand deposit did not have significant effect but fixed deposit had significant effect on financial performance. Conclusions from the study was that the financial success or failure of Kenya’s defined contribution pension plans were significantly impacted by decisions made on inventory, replacement and expansion investments. Cash and demand deposits did not moderate the association amongst investment decision and defined contribution pension systems' financial success. The correlation between financial performance and investment decision was mitigated by fixed deposits. For policy, the study recommended that policymakers and regulators should concentrate on creating regulations that will allow defined contribution pension plans to participate optimally in investment decisions. In practice, investment should focus on fixed deposits and ignore cash and demand deposits because fixed deposit had moderating effect while cash and demand deposit did not have. Further, it is recommended that studies be conducted in other East Africa Nations because the investigation focused on Kenya
Agency Costs and the Financial Performance of Insurance Firms Licenced by Kenya’s Insurance Regulatory Authority
(Kenyatta University, 2024-10) Mutua, Michael Mwenda
The insurance industry has a significant role in promoting economic development by supporting corporate operations, providing risk protection, and facilitating capital formation. Despite the industry's growth in gross premiums, a decline in profitability has been observed within the Kenyan market, necessitating a closer examination of agency costs which arises from inherent conflicts of interest existing between principals and agents. Consequently, this research assessed the agency costs effect on the financial performance of insurance firms in Kenya, focusing on three key aspects of agency costs such as monitoring costs, bonding costs, and residual loss. In addition, the study explores the moderating effect of board gender diversity on the association between agency costs and financial performance. The research is grounded in free cash flow theory, agency costs theory and stakeholders' theory. Adopting a positivism research philosophy and a causal research design, secondary data was collected from audited financial statements submitted to the Insurance Regulatory Authority, covering the period from 2018 to 2022. A total of 48 insurance firms were analyzed. The study used STATA software to analyze panel data through descriptive statistics, correlation analysis, and linear panel regression analysis. The study's findings are presented in tables and figures. For suitability of the data for regression analysis, diagnostic tests for multicollinearity, normality, and heteroscedasticity were conducted. The study adhered to all necessary ethical considerations, and the hypotheses were tested at a 0.05 level of significance. The results showed that monitoring costs had a negative but statistically insignificant effect on financial performance, indicating that governance improvements had a minimal effect on the financial outcomes of the firms. Conversely, bonding costs demonstrated a positive and statistically significant effect on financial performance, suggesting that aligning managerial interests with shareholders through performance-based incentives mitigates agency conflicts and enhances profitability. The findings also reveal that residual loss has a negative but insignificant effect on financial performance. Additionally, while board gender diversity was positively correlated with financial performance, it did not significantly moderate the association between agency costs and the financial performance of insurance firms in Kenya. The study recommends that insurance companies balance resource allocation for addressing agency costs through effective monitoring and control mechanisms. Strengthening relationships among shareholders, managers, and employees, is essential for enhancing financial performance while robust risk management can reduce the effect of agency costs. Additionally, policymakers should encourage and refine monitoring procedures to ensure regulatory compliance and financial stability, while enhancing supervision to detect irregularities and breaches. A follow-up study that integrates qualitative methods with quantitative analysis would offer a deeper understanding of the relationship between agency costs and financial performance
Financial Markets, Central Bank Interest Rate and the Growth of Mortgage Market in Kenya
(Kenyatta University, 2024-10) Origi, Linet Akinyi
Financial markets are important in playing the role of accessing long-term funds to help in accelerating growth of mortgage market. To improve the mortgage finance market growth, studies have been done on financial markets and growth of mortgage market. However, most of these studies focuses on other countries creating contextual gaps. Other studies, though related to the current study focused on effect on financial structure on other dependent variables, creating a conceptual gap. Some gave conflicting results while others applied weak methodologies hence the motivation for this study. Generally, the main aim of this research was to determine the effect of financial markets, central bank rate and growth of mortgage market in Kenya. Under the general objective, were specific objectives which include: to examine the effect of bonds, equities, real estate investment trusts, private credit fund markets on mortgage market growth in Kenya. The study was conducted on the basis of four different theories namely: the theory of financial intermediation, agency theory, the theory of arbitrage pricing, and Modern portfolio theory. The current study adopted Positivism Philosophy reinforced by explanatory research design. The target population of the research was the 39 Mortgage lending Institutions regulated by Central Bank of Kenya. The study had its basis from panel data generated from published and audited statements of finance of individual banks trading in financial markets, Capital Market Authority and Central Bank of Kenya for the year period running from 2018 to 2022. The panel data was collected using data abstraction tool. The methods of descriptive statistics, correlation, and the panel regression evaluation were used to evaluate the information. Tables, charts and graphs were used to portray the data after analysis. This study adhered to all ethical considerations. Results indicate that bond market makes little to no difference in the growth of mortgage market in Kenya. Results also indicate that equity market makes little to no difference in the growth of mortgage market in Kenya. Real estate investment trusts market was found to be significantly influence the growth of mortgage market in Kenya. Similarly, results further indicate that private credit market significantly influences the growth of mortgage market in Kenya. Findings show that Central Bank rate fails to substantially play a moderating role on the relationship between financial markets and growth of mortgage market in Kenya. While the bond and equity markets exhibit no significant influence, the private credit fund and real estate investment trusts markets significantly affect mortgage growth, underscoring the importance of diverse financing sources. The role of Central Bank rates as a moderator is minimal, with other factors like market segmentation, investor behavior, regulations, macroeconomic conditions, and long-term perspectives taking precedence. This highlights the need for integrated policies that encourage diversified financing, regulatory clarity, stability, and long-term investments to foster fruitful connections between these financial sectors and the mortgage market, advancing sustainable economic progress.
Working Capital Management Practices and Financial Performances of Private Hospitals in Nakuru County, Kenya
(Kenyatta University, 2024-10) Ondieki, Olgar Kemuma
Private health sector plays very fundamental role in the health sector in Kenya because it complements service delivery by the public health service providers. Besides offering health services to the general public, these providers are business entities whose primary objectives is to maximize returns on investment and other facets of profitability. As such, they face the challenge of realizing the foregoing financial objective. Since private hospitals are profit oriented besides providing alternative health care from public hospitals, falsification of financial statements, exaggeration of revenue and misstatement of expenses occur in order to meet the shareholder interests and expectation. In Kenya it is noted that small scale private health providers with small primary health care facilities face financial challenges. It is observed that the entities struggle to remain financially viable and as such the quality of their services differ. The general study objective was to assess the working capital management practices’ impact on private hospitals’ financial performance in Nakuru County. Specifically, the study sought to establish the effect of cash management, inventory management practices, and accounts receivables management practices and accounts payable period on private hospitals’ financial performance in Nakuru County. This study used the pecking order theory, transaction cost theory the Keynesian liquidity preference theory and agency theory. The unit of observation was 15 large private hospitals in Nakuru County while the unit of analysis was 52 employees from finance, store and procurement department in these hospitals. Data processing and analysis was done using SPSS software. Both descriptive statistics and inferential statistics was employed in data analysis. From the analysis the study found that taxes imposed on the purchases medicines and medical equipment’s negatively affects firms’ financial performance. The study also revealed that high salaries lowers the amount of cash to be invested which affects the firm’s financial performance. The study concluded that there was a positive and statistically significant correlation between cash management practices on financial performance of private hospitals in Nakuru County (r = 0.443; p < 0.05). The study also concluded that there was a positive and statistically significant correlation between inventory management practices on financial performance of private hospitals in Nakuru County, (r = 0.441; p < 0.05). The study further concluded that there was a strong positive correlation existed between accounts receivables management practices and financial performance of private hospitals in Nakuru County (r = 0.541; p < 0.05). The study also revealed that there was a strong positive correlation existed between accounts payable period on financial performance of private hospitals in Nakuru County (r = 0.641; p < 0.05). The study recommends that the hospital should adopt contemporary cash management practices, because proper cash management helps the business to have the required cash to run the daily activities. By generating enough cash, the hospital can meet its everyday business needs and avoid taking on debt. The study further recommended that the hospital should manage their accounts receivable effectively because, quality healthcare accounts receivable management is the primary requirement to keep the monthly cash flow of the medical practice healthy.
Financial Management Practices and Performance of Smallholder Farmers’ Tea Companies in the West Tea Block, Kenya
(Kenyatta University, 2024-10) Kariuki, John Mwangi
Smallholder tea farming in Kenya is a critical subsector since it provides a source of livelihood to over 750,000 farmers directly and indirectly to about 6.5 million Kenyans which represents 13% of Kenya’s population. Declining tea earnings by smallholder tea farmers threatens the sustainability of the tea sub-sector in Kenya. In addition, the decline in earnings by smallholder tea farmers is more pronounced in the West-Tea-Block as compared to East-Tea-Block. This had caused a great concern to the government and tea value chain stakeholders who were therefore seeking to unearth what is bedevilling the sub-sector and policy interventions necessary to reverse the decline. This study therefore investigated the effect of financial’ management’’ practices’’ on the performance of smallholder farmers’ tea factory companies in the West Tea Block, Kenya. Specifically, the study investigated the effect of; financial planning, investment appraisal, financial reporting and funding decisions on performance of smallholder farmers’ tea factory companies in the West Tea Block Kenya. In ‘addition,’ the ‘study also determined the moderating’ effect of corporate governance on the relationship’ between’ financial management’ practices’ and performance of smallholder farmers’ tea factory companies in the West Tea Block, Kenya. The theories underpinning the study were the Theory of Budgeting, Real Options Theory, Performance-Based-Budgeting-Model, Net Income Theory and Agency’ Theory. This study adopted the positivist research philosophy and explanatory research design. A census was conducted on all the 34 smallholder farmers’ tea factory companies in the West Tea Block Kenya. Data was used and collected through a semi-structured questionnaire. Content, criterion, and construct related validity were confirmed accordingly. The study had a response rate of eighty-five per cent. Descriptive statistics were applied to assess variables characteristics including standard deviation and aggregate mean scores. The multiple regression model was employed to analyze the effect financial management’ practices on performance. Content analysis was used to analyse qualitative data. The findings were that financial planning, investment appraisal, financial reporting and funding decisions had a significantly positive effect on ‘performance of smallholder farmers’ tea factory companies’ in the West’ Tea’ Block, Kenya. Additionally, the ‘study ‘revealed that corporate governance had a significant’ moderating’ effect on the relationship’ between’ financial’’ management’’ practices’’ and performance’ of smallholder farmers’ tea factory companies’ in the West’ Tea’ Block, Kenya. The study concludes that adoption and consistent application of good financial management’ practices enhances the performance of smallholder tea factory companies’ in the’ West Tea Block, Kenya. The study recommends that the management and boards of tea factory companies should ensure that clear policies on budgeting and budgetary control, investment appraisal, funding decisions and financial reporting are developed and implemented.
Financial Management Practices and Financial Performance of Commercial State Corporations in Kenya
(Kenyatta University, 2024-11) Nguyo, Stephen Mwangi
In Kenya, legislative acts by parliament establish state corporations with the aim of promoting social and economic progress. The state corporations advisory committee has identified eight distinct categories of these entities, which include financial, commercial, and industrial, regulatory, public universities, training and research, service, regional development authorities, as well as tertiary education corporations. Out of the 33 state corporations in commercial and manufacturing category, 18 fall under manufacturing while 15 are commercial oriented and therefore by their operational nature expected to make profits or operating surplus. The study focused on the fifteen (15) profit-making state corporations. Most commercial state corporations are in a state of perennial loss making. Their financial performance trend between 2016-2020, shows that out of the 15 corporations in the commercial sector, only four (26.67%) are sustainable from their operations. This leaves over 73.33% of them struggling to survive and have to depend on government funding to address their liquidity challenges. The study's goals were to examine the effect to the commercial state firms in Kenya on their performance when it comes to budgetary control, corporate finance, and financial management choices. The investigation was based on the Signalling theory, Contingency theory, the Pecking Order theory, and Baumol's cash management model. The study assumed descriptive study design. The study used census procedure since all fifteen State Corporations under the commercial category were studied. The study targeted top management of these entities but utilized a sample scope of 75 participants from a populace of 90 individuals. Raw information was collected through surveys, and auxiliary measurements were made using information gathering forms based on publicly accessible financial reports. Statistics, both descriptive and inferential, were computed on numerical data. Descriptive techniques and statistical package for social sciences software assisted in evaluating secondary data. The significant influence of each predictor coefficient correlation was examined using a regression analysis. In addition, the study did diagnostic tests limited to heteroscedasticity test, normality tests, and multi-collinearity tests. The inferential statistics results indicate that working capital management, capital budgeting, investment decisions appraisal, and financial reporting and analysis have positiveandstatistically significant effect on financial performance of commercial SOEs. Working capital management, capital budgeting, investment decision appraisal, and financial reporting and analysis have apositive and statistically effect on financial performance of SOEs with p values of 0.001, 0.045, 0.038, 0.000 respectively. The research concludes that working capital management, capital budgeting, investment decision appraisal, and financial reporting and analysis have a positive statistical and significant effect on potential of commercial SOEs to perform economically. The study commends that SOEs management need to implement effective working capital management strategies to optimize current assets and liabilities utilization. Management also needs to set clear regulations for stock management, account receivables and payable control, and cash movement forecasting. Management in SOEs need to perform sensitivity analysis and scenario planning to examine how different factors impact investment outcomes. It is important for finance, operations, and other sectors to ensure investment decisions and strategic decisions align. Organizations need to incorporate risk assessment and sensitivity analysis to enhance investment opportunities appraisal.
Financial Literacy on Investment Decisions among Selected Secondary School Teachers under Teachers Service Commission in Nairobi City County, Kenya
(Kenyatta University, 2024-10) Omwenga, Kerubo Cyprine
In today's complex financial environment, informed investment decisions are crucial for individuals and education professionals. Teachers under the TSC make up 1.67% of Kenya's workforce, highlighting the significant role education plays in employment and the importance of teachers in the Kenyan labor market. As of April 2021, TSC had 318,000 teachers in primary and secondary schools, with secondary school teachers making up a significant portion of the workforce. Teachers need strong financial literacy to make informed investment decisions, understand investment options, assess risks, and understand market trends, which directly impacts their financial security and retirement planning. Secondary school teachers exhibit a conservative trend, they tend to prioritize stability and security in investment decisions, opting for low-risk options like savings accounts, fixed deposits, and government bonds, seeking financial advisors for guidance. There has been a long connection between financial literacy and investment decisions of secondary school teachers but the findings of the research between the two variables has been inconclusive as to the extent and nature of this relationship. The general objective of the study was to determine the effect of Financial Literacy on Investment decisions among selected Secondary School teachers under TSC in Nairobi City County, Kenya. The specific objectives of the study were to determine the effect of Financial knowledge, financial skills and risk diversification on investment decisions among selected secondary school teachers under TSC in Nairobi City County, Kenya. The study utilized the Prospect Theory, Herding Behavior Theory, and Theory of Mental Accounting in supporting theoretical review. Empirical reviews and conceptual framework of the study were also included. The target population was made up of 513 secondary teachers. The study used descriptive research design. 103 secondary school teachers out of the total population were chosen using stratified random sampling. This sample consisted of 35 secondary school teachers spread across the three zones in Nairobi City County. The study’s data is gathered from primary and secondary sources. A pilot study was done on 21 secondary school teachers using open and close ended questions. To ensure validity expert judgement was used and reliability was tested using Cronbach’s Alpha coefficient. Questionnaires were used to collect primary data. All the data analysis was coded using SPSS version 26.0.0. Descriptive statistics was used to analyze quantitative data. Tables were used to display the results. The study obtained research permit from Kenyatta University and NACOSTI. It also acknowledged the sources of information, provided relevant references, and ensured that all ethical considerations were upheld. The findings of the study showed that financial knowledge, financial skills and risk diversification had a significantly positive effect on investment decisions. The study concluded that Equal gender distribution in the workforce provides equal investment opportunities. Higher disposable incomes and education levels improved personal finance understanding, influencing investment management and stock market participation. However, teachers' decision-making styles vary due to historical data on product costs. Lack of financial knowledge about interest rates and product costs introduces uncertainty in investment decisions. The study recommends that TSC should implement comprehensive financial education programs for teachers, collaborate with financial experts to create a financial literacy curriculum, and develop targeted training programs emphasizing risk diversification in investment decisions, focusing on fundamental and advanced concepts.
Sacco Societies Regulatory Authority Prudential Regulations and Financial Perfromance of Deposit Taking Saving and Credit Co-Operative Societies in Kenya
(Kenyatta University, 2024-09) Kamau, Antony Gatu
Financial performance of Deposit Taking Savings and Credit Co-operative Societies in Kenya has been a source of concern, as evidenced by declining indicators over time. According to Saccos Societies Regulatory Authority, there has been a significant decline in profitability, as evidenced by a decrease in the Return on Assets from 2.65% in 2020 to 1.59% in 2021. The general objective of this study was to investigate the effects of Saccos Societies Regulatory Authority prudential regulations on financial performance of Deposit Taking Savings and Credit Co-operative Societies in Kenya. The specific objectives of the study were to examine the effects of liquidity, capital adequacy, and asset quality regulations on the financial performance of Deposit Taking Savings and Credit Co-operatives in Kenya. The principles of public interest theory, buffer theory of capital adequacy, and agency theory served as the foundation for this study. The research used correlational research design and positivist philosophy. The population of the study was 175 licenced Deposit Taking Savings and Credit Co-operatives. Secondary data was used which was analysed using descriptive and inferential statistics. The statistical software Stata was used to conduct the analysis. A multiple linear regression model was used to forecast financial performance. Diagnostic tests were performed to ensure that the linear regression model assumptions were not violated. Liquidity has a negative correlation of (-0.0497) with Return on Assets, according to correlation analysis. Capital adequacy, on the other hand, showed a positive correlation of (0.6710) with Return on Assets. Similarly, asset quality had a positive correlation with Return on Assets of (0.5663). Panel regression results confirmed the importance of capital adequacy and asset quality in driving financial performance, as evidenced by highly significant coefficients of (0.7140 and 0.2087, respectively) with p-values of 0.0000. The liquidity coefficient, on the other hand, was found to be -0.0008 with a p-value of 0.7380, indicating that changes in liquidity have a negligible impact on Return on Assets. The study found that liquidity, capital adequacy, and asset quality explain 62.65% of the variation in financial performance (Return on Assets). According to the study, Deposit Taking Savings, and Credit Co-operative Societies should take a balanced approach to liquidity management to optimise financial resources and potentially increase returns. Furthermore, Savings and Credit Co-operatives Societies should prioritise in maintaining a strong capital base to improve financial stability and capitalise on profitable opportunities. Compliance with capital adequacy requirements, as well as collaboration with regulatory bodies, are essential for long-term growth. Furthermore, to maintain a healthy loan portfolio and minimise credit losses, effective credit risk management should be prioritised. Savings and Credit Co-operatives' long-term sustainability and financial performance will be ensured by regular reviews and updates to credit policies and risk management practises. Implementing these recommendations can significantly improve Savings and Credit Co-operatives Societies overall stability and financial performance. The variation in financial performance for this Savings and Credit Co-operatives is explained by liquidity, capital adequacy, and asset quality, which account for 62.65% of the variation. Additional factors, such as external influences and governance practises, should be investigated further. Comparative research with other financial institutions can provide useful information.

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