MST-Department of Accounting and Finance

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Financial Literacy and Growth of Medium Enterprises in Kisumu County, Kenya
(Kenyatta University, 2024-11) Ochola, Gideon Obota
Medium-sized enterprises (MEs) play a crucial role in driving economic growth and employment in Kenya and globally. However, many MEs face stagnation and slow growth due to inadequate financial management skills among owners and managers. This study investigated the effect of financial literacy on the growth of medium-sized enterprises in Kisumu County, focusing on investment literacy, working capital management literacy, accounting knowledge, and financial analysis skills. The study was guided by Dual Process Theory, Knowledge Spillover Theory, Financial Literacy and Behaviour Theory, and Greiner’s Stages of Growth Model. A descriptive research design was employed, and structured questionnaires were administered to medium enterprise managers. Data were analyzed using descriptive and correlation techniques, while ethical standards set by Kenyatta University were observed. The findings indicate that financial literacy significantly influences the growth of medium enterprises. Specifically, working capital management literacy, accounting knowledge, and financial analysis skills demonstrated positive effects on enterprise growth, while investment literacy showed no significant effect. Based on these findings, the study is recommending that managers are prioritizing strengthening working capital management literacy, accounting knowledge, and financial analysis skills. Additionally, policymakers are designing practical digital investment training programs that focus on risk assessment and cost-benefit analysis to support MEs growth. Future research is exploring additional key factors influencing the growth of medium enterprises and investigating why investment literacy is ineffective and exhibits no significant effect. It also recommends the inclusion of comparative studies across different counties and sectors to identify contextual variations affecting enterprise growth in Kenya.
Financial Leverage and Market Capitalisation of Insurance Companies Listed at the Nairobi Securities Exchange, Kenya
(Kenyatta University, 2025-10) Morang’a, Nixon Okari
The insurance industry is crucial to national prosperity, contributing 6% to Kenya's Gross Domestic Product, according to the Kenya Bureau of Statistics. It serves a crucial function in mitigating economic risks. However, listed insurance companies have experienced fluctuating market capitalization over a five-year period, with the highest recorded at 99.3 billion in 2019 and the lowest at 56.9 billion in 2023. Questions regarding the effect of financial leverage on firm valuation remain unresolved, with existing research offering conflicting conclusions. In response, this study aimed to ascertain the effect of financial leverage on market capitalization of insurance firms listed on the Nairobi Securities Exchange, focusing on short-term debts, long-term debts, debt-equity financing, and interest coverage. The research drew upon the pecking order theory, trade-off theory, Modigliani-Miller (MM) theory, and shareholders value theory. The research employed a descriptive survey approach, conducting a census of all registered insurance firms and leveraging secondary data from financial statements available in the Nairobi Securities Exchange Manual and the Kenya National Bureau of Statistics from 2019 to 2023. Quantitative data were analyzed utilizing Statistical Package for Social Sciences version 28 through descriptive statistics (mean, percentages, standard deviation, frequency distribution) and inferential statistics (linear regression and Pearson correlation). Diagnostic tests including normality, multicollinearity, autocorrelation, heteroscedasticity, and linearity were conducted to validate the assumptions of regression analysis. Feasible General Least Squares regression results demonstrated that short-term debt (p=0.044, <0.05), long-term debt (p=0.012, <0.05), and debt-equity ratio (p=0.0000, <0.05) had a statistically significant positive impact on market capitalization. Conversely, interest coverage exhibited a statistically significant negative effect (p=0.034, <0.05) on market capitalization. Correlation analysis revealed a weak positive correlation between short-term debt and debt-equity ratio with market capitalization, a strong positive correlation for long-term debt, and a strong negative correlation for interest coverage. The study concluded that increases in short-term debt, long-term debt, and debt-equity ratio tend to enhance market capitalization, whereas higher interest rates typically diminish it. Consequently, the study recommends that companies consider increasing their long-term debt, short-term debt, and debt-equity ratio, while striving to reduce interest rates.
Foreign Capital Flows and Economic Growth in Kenya.
(Kenyatta University, 2025-11) Muhdhar, Nuru Abdurahman
Economic growth of any nation is key to that economic as it contributes significantly to the development and wellbeing of that economy. These major benefits are dependent on many factors including foreign capital flows that need to be addressed through the management of the country’s fiscal policies. Ideally, a country's economic development is anticipated to enhance living standards by providing education, healthcare access, infrastructure, housing, quality food supply, improved roads, and similar amenities. However, this is not always the case. Economic growth of Kenya has recently attracted attention due to widespread erratic volatility in its growth despite huge increase in foreign capital flows. Therefore, the resolve of this research is to ascertain the effect of foreign capital flows on economic expansion in Kenya. In particular, the research explored the effect of foreign direct investment, remittances, foreign portfolio investment and foreign debt on economic expansion of Kenya. The research was underpinned on the Keynesian theory, Wagner’s Law and Solow-Swan theory. The correlational explanatory research approach was used in the study. The target audience was Kenya as a country which is also the unit of analysis. Secondary data, was acquired with the aid of documentary guides and data sheets from World Bank, CBK and KNBS. Diagnostic tests (Auto correlation, multicollinearity, heteroscedasticity, normality, co-integration and unit root test) was carried out before data analysis. Multiple linear time series regression model was adopted. Descriptive statistics, including frequencies, mean, and standard deviation, along with inferential statistics such as Pearson correlation and regression analysis, was employed in data analysis and displayed in frequency distribution tables, charts, and graphs. The research suggested that foreign direct investment, remittances, foreign portfolio investment and foreign debt, when analyzed individually, each had a statistically significant bearing on the economic growth in Kenya with p-values of 0.047, 0.028, 0.046 and 0.000 respectively. As a result, these hypotheses were rejected at 5% significance level. The report recommended that Kenya government should seek to improve the investments climate and business environment in the country to attract mode FDI which can be able to have a significant role on economic growth. Having policies that encourage FDI and marketing the country as a desirable investment destination would be a good starting point. Equally, it recommends that the government should devised a foreign policy that places great importance on the diaspora. Additionally, this article advocates for the Kenyan government to implement a holistic strategy to promote foreign investment, acknowledging its crucial role in stimulating economic growth and development. Moreover, the government ought to execute various strategic efforts aimed at optimizing and clarifying the investment process. Ultimately, it recommends that the Kenyan government aims to decrease its budget deficit to GDP ratio to an average of 4 percent prior to 2030. The fiscal policy has inadequately addressed rising debt levels, thereby jeopardizing the Government's pursuit of fiscal debt sustainability. Consequently, the National Assembly ought to enact a fiscal law establishing a maximum threshold for the fiscal deficit to GDP ratio, which the National Treasury must not surpass at any time, aligning with the long-term debt strategy to prevent the public debt to GDP ratio from escalating uncontrollably.
Digital Money Platform and Financial Inclusion among Youth Groups in Kitui County, Kenya
(Kenyatta University, 2025-12) Mwendwa, Antony
Financial inclusion across the economic sphere is fundamental as it guarantees that both people and businesses can access inexpensive and vital financial services, which are crucial for sustained expansion and prosperity. Although 80% of Kenyan adults possess mobile phones, hardly 30% have access to mobile banking, resulting in the exclusion of many young people from formal financial services. The research general objective was to determine the effect of digital money platforms on financial inclusion among youth groups in Kitui County, Kenya. The research specific objectives were; to ascertain the effect of digital payments on financial inclusion amongst youth groups in Kitui County, Kenya, to examine how digital credit affects financial inclusion amongst youth groups in Kitui County, Kenya and to determine how digital savings affects financial inclusion among youth groups in Kitui County, Kenya. To achieve this, the research was underpinned on Financial Intermediation Theory, Innovation Diffusion theory, Transactional cost theory and the Technological Acceptance Model. The study used casual research design where quantitative data was obtained. The unit of observation was 6 youth’s groups while the unit of analysis was the officials from these youth groups within the region. This study employed purposive sampling to select youth groups, ensuring that groups relevant to the research objectives are included. Hence a sample size of 92 youth. Data was gathered utilizing structured questionnaires, which was tested for validity and reliability. Multiple regression was employed to test the connection between the variables and the study hypothesis was tested using SPSS version 21. Correlation analysis and diagnostic tests were also be performed. The research findings were displayed utilizing tables, graphs and charts. The study found that digital payments, digital credit and digital savings affected financial inclusion amongst the youth groups in Kitui County, Kenya. There wasn’t multicollinearity in the predictor variables since no variable had a VIF>10. Data was normally distributed. The study concluded that there existed a substantial connection between digital payments and financial inclusion, digital credit and financial inclusion, digital savings and financial inclusion among the youth groups in Kitui County, Kenya. The p-value in all variables was below the threshold of significance level, hence rejecting all hypotheses. The study recommends that firms that own mobile money platforms should ensure that no business is discriminated in money transfer regardless of their size. Mobile money transfer should be convenient. Firms with mobile banking apps should offer more credit opportunities for youth with businesses and enable them to access top up loans through mobile banking which are flexible enough and with lower interest rates and operational cost to support their business financial needs. Youth groups should embrace mobile money platforms savings since they are faster and convenient. This will save them a lot of cost and time.
Financial Services Accessibility and Financial Performance of Small and Medium Enterprises in Kiambu County, Kenya
(Kenyatta University, 2025-09) Kuraru, Joyce Nyakanini
Small and Medium Enterprises (SMEs) is an important sub sector for the Kenyan economy like many other developing countries. The significant contribution of Small and Medium Enterprises (SMEs) in the economy has attracted the attention of many researchers. The SMEs dominate the different sectors of the Kenyan market where they provide significant revenue to the government, employment, income as well as alleviating poverty in the country. Despite their positive contribution, the operation of Small and Medium Enterprises has been confronted by various challenges such as loan repayment default, inadequate capital as well as the persistent regulations which negatively affects their performance leading to high failure rate of one for every five startups within three years. The Small and Medium Enterprises in Kiambu County have similar challenges though operating in a densely populated County. Consequently, their performance is negatively affected. The study purposed to examine the influence of financial accessibility on success of Small and Medium Enterprises in Kiambu County, Kenya. The research specifically identified the effect of access to credit, access to insurance and explore the influence of entrepreneurial training on financial performance of Small and Medium Enterprises in Kiambu County, Kenya. The research was underpinned on Credit Access Theory, Asymmetric Information Theory and Bank Lending Channel Theory. Using a causal research design, this research study targeted a population of 2750 registered SMEs in Kiambu County. The descriptive statistics included the mean and standard deviation calculation. Inferential statistics encompassed panel regression and correlation. Before employing the panel multiple regression model, a test was conducted to determine the presence of panel unit root, homoscedasticity, normality, and linearity. Additionally, clearance from the NACOSTI was necessary to accept validated published data that contains complete information. The reliability of the data was ensured through a thorough examination of the collected secondary data, and pilot testing was conducted to further validate its reliability. The results were displayed through tables, pie charts, and figures. The study findings indicate that access to credit has a positive and significant effect on SMEs financial performance with a p- value 0.025 < 0.05. On access to business insurance, the study found that in case of damages, SMES that have insurance will have improved performance. This is shown by a p- value 0.000. < 0.05. Entrepreneurial training has a positive and significant effect on SMES performance in Kiambu County. The study nevertheless recommends for enhanced entrepreneurial training, insurance and more credit to improve performance.
Technology-Driven Financial Services and Profitability of Five Star Hotels in Nairobi City County, Kenya
(Kenyatta University, 2025-11) Huria, Ann Wambui
The hotel industry was a vital component of Kenya's economy, particularly in Nairobi City County, which had the highest concentration of five-star hotels in the country. However, between 2020 and 2024, these hotels experienced a significant decline in profitability. Thus, the general objective of this study was to determine the effect of technology-driven financial services on the profitability of five-star hotels in Nairobi City County, Kenya. The specific objectives were to determine the effect of online booking platforms, mobile banking solutions, fintech-based loyalty programs, and automated invoicing systems on the profitability of five-star hotels in Nairobi City County, Kenya. The study was anchored on Transaction Cost Theory, Innovation Diffusion Theory, and Technology Acceptance Model. The research employed a descriptive research design to examine the effect of technology-driven financial services on the profitability of five-star hotels in Nairobi City County, Kenya. The target population comprised all eleven five-star hotels in Nairobi, focusing on the Finance, IT, and Customer Service departments, with a total of 62 respondents. A census was employed, along with purposive sampling to select knowledgeable participants. Data collection was conducted using structured questionnaires, designed with closed-ended questions to facilitate quantitative analysis, and the research followed a defined procedure that included obtaining necessary permissions. A pilot study was conducted from six purposively selected five-star hotels where only one participant from the customer care department in each of the six hotels was selected. The study tested context and construct validity, and reliability was tested using a Cronbach Alpha score, where a threshold of 0.7 was used. The study employed multiple regression analysis to determine how online booking platforms, mobile banking solutions, fintech-based loyalty programs, and automated invoicing systems influenced profitability. Diagnostic tests, including normality, multicollinearity, homoscedasticity, autocorrelation, linearity, and heteroscedasticity tests, were conducted to validate the regression model. Data were analyzed using Microsoft Excel and SPSS version 25.0, with findings presented through pie charts, bar graphs, and frequency tables. Ethical considerations included obtaining informed consent, ensuring confidentiality and anonymity, restricting data usage to research purposes, and upholding unbiased reporting of findings. The study found that online booking platforms (β = 0.843, p < 0.05), mobile banking solutions (β = 1.333, p < 0.05), and fintech-based loyalty programs (β = 0.802, p < 0.05) all had a statistically significant and positive effect on the profitability of five-star hotels in Nairobi City County. Mobile banking had the strongest influence, followed by loyalty programs and online booking. Automated invoicing systems had a positive but statistically insignificant relationship with profitability (β = 0.136, p = 0.382), suggesting their role is limited unless integrated with other fintech innovations. Overall, the average net profit margin of 4.67 indicated moderate profitability among the hotels, with room for improvement through adoption of digital financial technologies. The study concluded that technology-driven financial services, particularly mobile banking, online booking platforms, and loyalty programs, significantly enhance the profitability of five-star hotels. Automated invoicing systems alone do not significantly affect profitability but can support it when integrated with other fintech tools. Five-star hotels should improve their online booking platforms by enhancing usability, accessibility, and real-time reservation features. Investment in mobile banking technologies should be prioritized to streamline payments and support diverse customer needs. Loyalty programs should be personalized and integrated with other digital tools to increase customer retention and long-term profitability
Firm Characteristics and Financial Performance of Pension Funds in Kenya
(Kenyatta University, 2025-11) Muthiani, Amos Mbuvi
Pension schemes play a critical role in shaping Kenya’s economic landscape by providing a safety net for citizens during retirement. Globally, pension systems have been established to ensure income replacement for aging populations; however, empirical evidence on factors that influence the financial performance of pension schemes is limited in the Kenyan context. This gap has left policymakers and fund managers with insufficient guidance on strategies to optimize scheme outcomes. This study sought to address this gap by examining the effect of firm characteristics—fund size, fund design, portfolio mix, and membership age—on the financial performance of pension schemes in Kenya, while considering the moderating role of regulatory oversight by the Retirement Benefits Authority (RBA). Employing a descriptive research design, the study drew on Stakeholder Theory, Agency Theory, and the Theory of Constraints to explore both direct and indirect relationships between the variables. The study population comprised 1,075 pension schemes registered with the RBA, from which 39 schemes were purposively sampled. Secondary data covering 2018–2022 were extracted from annual reports and analyzed using SPSS Version 20. Descriptive statistics, including mean, median, and standard deviation, summarized the data, while inferential analysis using multiple linear regression assessed the relationships between firm characteristics and financial performance, measured by return on investment. Diagnostic tests confirmed that the dataset satisfied assumptions of normality, stationarity, and absence of multicollinearity, heteroscedasticity, and autocorrelation, indicating a robust analytical model. Results revealed that fund size, portfolio mix, and membership age had a statistically significant positive effect on financial performance, whereas fund design exhibited a statistically significant negative effect. Additionally, regulatory oversight by the RBA moderated the relationship between firm characteristics and performance, highlighting the importance of effective governance. In conclusion, the study established that larger fund sizes, diversified portfolio mixes, younger membership profiles, and appropriate fund designs are associated with improved financial performance of pension schemes in Kenya. Based on these findings, it is recommended that policymakers and fund managers prioritize consolidation strategies to expand asset bases, diversify investment portfolios to balance returns and risk, attract younger members to ensure sustainability, transition from traditional defined benefit plans to defined contribution plans where feasible, and ensure that the RBA continuously refines its regulatory framework to support compliance and strategic growth within the sector.
Working Capital Management Practices and Financial Performance of Small and Medium Enterprises in Garissa County, Kenya
(Kenyatta University, 2025-08) Abdikarim Musa Abdiaziz
Small and medium-sized enterprises (SMEs) are widely recognized as key drivers of economic growth, employment creation, and poverty reduction. Despite this significance, many SMEs in Kenya face persistent financial challenges that undermine their sustainability. In Garissa County, weak financial performance has been linked to inefficiencies in working capital management, a critical area encompassing cash management, inventory management, accounts receivable management, and accounts payable management. Guided by the Financial Advantage Theory, Cash Conversion Cycle Theory, Transaction Cost Theory, and Stakeholder Theory, this study sought to examine the effect of these working capital components on the financial performance of SMEs. The study adopted a descriptive research design, targeting a population of 1,009 SMEs registered in Garissa County. Using stratified random sampling, a representative sample of 278 SMEs was selected, and data were collected through structured questionnaires. The instrument’s reliability was confirmed through Cronbach’s Alpha values above 0.7, while validity was assured through expert review. Ethical considerations were strictly observed, including securing authorization from NACOSTI and Kenyatta University, ensuring informed consent of participants, confidentiality of responses, and appropriate acknowledgement of all secondary data sources. Both descriptive and inferential analyses were undertaken. Descriptive statistics (means, frequencies, and standard deviations) provided an overview of working capital practices, while inferential analysis employed multiple regression to test hypotheses. Diagnostic tests—including the Shapiro-Wilk test for normality, Variance Inflation Factor (VIF) for multicollinearity, and the Durbin-Watson statistic for autocorrelation—confirmed that the data met the assumptions of classical regression. The results showed that the four working capital components collectively explained 61.6% of the variation in SME financial performance (R² = 0.616; F = 87.472, p < 0.05). Inventory management emerged as the strongest predictor (β = 1.279, p < 0.05), followed by cash management (β = 0.226, p < 0.05). Conversely, accounts receivable management showed a significant negative effect in the multiple regression model (β = –0.649, p < 0.05), suggesting that poor debt collection practices and weak credit enforcement erode liquidity. Accounts payable management had a positive but statistically insignificant influence (β = 0.043, p > 0.05). The study concludes that working capital management—particularly inventory and cash management—is decisive for SME profitability, while inefficiencies in receivables and payables remain key vulnerabilities. It recommends that SME managers adopt structured budgeting, robust stock control systems, and effective debt recovery frameworks, while policymakers should strengthen SME financial literacy and provide enabling financing mechanisms. The study contributes both theoretically and practically by affirming the relevance of working capital theories
Firm Characteristics and Profitability of Savings and Credit Cooperative Societies in Laikipia County, Kenya
(Kenyatta University, 2025-10) Gitumbi, Juliet Njoki
The profitability of Savings and Credit Cooperative Societies (SACCOs) in Kenya has shown inconsistent trends despite their critical role in promoting financial inclusion and economic empowerment. In Laikipia County, some SACCOs have experienced declining profits or ceased operations due to competition, financial constraints, and poor management practices. The literature review stated that there was plenty study that had been completed on diverse entities to assess the connection between company attributes and profitability. Despite previous studies, there were still unanswered questions regarding the impact of company characteristics on profitability, highlighting the need for further research in distinct contexts and settings. This study's primary goal was to investigate how a firm's features (firm age, liquidity, capital structure and firm size) affected profitability in Laikipia County SACCOs. The study’s theoretical foundation was based on the pecking order, agency and information signalling theories. The research employed a cross-sectional study design that incorporated both descriptive and analytical research methods. The anticipated information from the SACCOs financial reports for the years 2018, 2019, 2020, 2021, and 2022 was obtained via filling in a secondary data collection tool. The study adopted selected and stratified sampling designs to get a sample size of 43 out of the 150 SACCOs as listed in Department of Trade, Tourism and Co-operatives, County Government of Laikipia for the period 2018 to 2022. The study adopted causal research design and utilized secondary data which involved time series and cross-sectional attributes; data was analysed using descriptive analysis. A variety of diagnostic tests, including multicollinearity, heteroskedasticity, and random effect tests, were performed on the statistical analysis using data panel regression and independent t-tests. The regression model explained 71.8% of the variation in profitability (R² = 0.718). Firm size (p = 0.004), liquidity (p = 0.011), capital structure (p = 0.037), and firm age (p = 0.026) were all found to have significant effects on profitability. The findings suggest that larger and older SACCOs benefit from economies of scale and institutional experience, while effective liquidity management and balanced capital structures enhance performance. The study’s findings were shown through tabular presentation. The findings revealed that firm size, liquidity, capital structure, and age significantly influenced the profitability of Savings and Credit Cooperative Societies (SACCOs) in Laikipia County, Kenya. Regression results showed these factors together accounted for 71.8% of the variability in profitability. Larger and older SACCOs outperformed smaller and younger ones. The study recommends updating of the existing SACCOs assessment policies to include firm size and firm age as basis of SACCOs evaluation. The study further recommends encouraging strategic asset expansion, adopting sound liquidity frameworks, maintaining optimal debt-equity balances, and utilizing organizational knowledge for improved outcomes. In conclusion, the research underscores the importance of effectively managing firm-specific characteristics to ensure the long-term financial health and growth of SACCOs.
Applicability of Blockchain Technology in Cryptocurrency and Return on Investment for Online Companies Operating In Kenya
(Kenyatta University, 2025-06) Kaunga, Kamathi Fridah
When it comes to the use of blockchain technology and cryptocurrencies, Kenya is one of the world's leading nations. Numerous businesses have integrated blockchain technology as a result of the growing acceptance and awareness of cryptocurrencies. However, it is unclear from the literature how blockchain technology in cryptocurrencies and return on investment are related. Therefore, this study assessed the impact of blockchain technology on cryptocurrencies and ROI for Kenyan internet businesses. The independent variables of the study are blockchain digital ledger, blockchain smart contracts, and permissioned block chains, while the return on investment is the dependent variable. The study was premised on the resource-based view theory, the disruptive innovation theory and the diffusion of innovation theory. The study used a correlational design. The study include1664 online companies operating in Kenya. The sampling frame was 322 companies which had used blockchain technology for at least three years. The sample size was 178 online companies, and the unit of analysis was the top managers of the companies. Stratified sampling was employed to select the participants. Questionnaires were used to gather data. The SPSS version 21 was applied for inferential and descriptive statistical analysis. Regression and correlation analyses were done to exhume the relations between variables. The researcher adhered to the necessary ethical guidelines. The findings showed that blockchain technology adoption was positively and significantly correlated with return on investment of online companies operating in Kenya. Each of the three independent variables was discovered to have a statistically significant effect on return on investment. Blockchain digital ledger was found to have the biggest impact (0.065 units) on return on investment while permissioned block chains were found to have the least impact (0.056 units). The outcomes were significant at p˂0.05. The findings underscored the need to online companies to prioritize blockchain technology adoption to maximize return on investment. The research concluded that blockchain digital ledger, block chain smart contracts, and permissioned block chains significantly influenced return on investment of online companies operating in Kenya. The study exhorted future studies on the effects of blockchain adoption on return on investment while considering the indirect mediating roles of blockchain project’s purpose and company characteristics. The study recommends top leadership or proprietors of online companies operating in Kenya to expedite the integration of blockchain digital ledger in their systems. The study also recommends companies to integrate permissioned block chains to strengthen data security and integrity levels, improve the levels of transparency in transacting, detect and prevent vulnerabilities and fraud.
Digital Finance and Profitability of Small and Medium Enterprises in Siaya County, Kenya
(Kenyatta University, 2025-06) Oduor, Domnic Ochieng
Small and medium-sized enterprises are vital in creating jobs and promoting economic development. They contribute to at least 30% of Kenya’s gross domestic output. Despite their significance, these enterprises encounter formidable challenges such as funding constraints, limited access to modern technology, restricted market expansion, regulatory burdens, and poor resource management, all of which curtail their profitability and socioeconomic effect. These challenges lead to Small and medium-sized enterprises recording lower profitability levels that limit their societal effects. The shift towards a more digital economy, facilitating remote transactions, holds promise in overcoming these obstacles through digital finance. Credible research indicates that digital financial tools can boost business profitability by at least 30%. Kenya stands out as a pioneering hub of financial technology innovation in Africa, with digital finance emerging around 2007-2010, yet there remains a notable scarcity of studies demonstrating the link between digital finance and financial success of business enterprises. This particular study aimed to evaluate the link between the profitability of small and medium enterprises and their adoption of digital finance. Specifically, it investigated the effect of digital credit, digital savings, digital payments, digital financial literacy, and digital platform ecosystems on Small and medium-sized enterprises profitability in Siaya County. The research framework drew on the Diffusion of Innovation, Davis Technology Acceptance, and Resource Based theories. Longitudinal and cross-sectional research methodologies were adopted. The study was also grounded in a pragmatic research philosophy and exploratory research design. The study sampled 375 respondents from a population of 15,045 Small and medium-sized enterprises in Siaya County using systematic and stratified random sampling techniques. The study covered the period between 2018-2022. A semi-structured self-administered questionnaire was used in data collection by dropping at respondents’ premises and collecting once they have filled. Statistical analysis using Statistical Package for the Social Sciences version 23 enabled the calculation of inferential statistics, revealing significant relationships between study variables. The results demonstrated significant relationships between digital finance and Small and medium-sized enterprises profitability. Specifically, hypotheses asserting no significant relationships between digital credit, digital savings, digital payment, digital platform ecosystems, and Small and medium-sized enterprises profitability were all rejected (P-values < 0.05) with study findings suggesting a positive relationship. Additionally, the hypothesis that digital financial literacy does not moderate the relationship between digital finance and Small and medium-sized enterprises profitability was also dismissed (P-value < 0.05), indicating that digital financial literacy indeed moderates this relationship. This study is significant as it provides empirical evidence that various aspects of digital finance, including digital credit, savings, payment, and platform ecosystems, significantly enhance the profitability of Small and medium-sized enterprises in Siaya County, with digital financial literacy further strengthening these relationships. The findings can benefit Small and medium-sized enterprises by highlighting effective digital financial strategies, assist the government appreciate the need to promote digital financial inclusion, and guide policymakers in developing supportive regulations and initiatives geared at bolstering the profitability and economic growth of Small and medium-sized enterprises. Suggestions for further studies include examining the evolving role of government policies in fostering an inclusive digital financial ecosystem for Small and medium-sized enterprises. The study advocates for further research that evaluates the scalability and sustainability of policies enhancing digital financial services for Small and medium-sized enterprises, focusing on best practices and regulatory compliance.
Anti-Money Laundering Practices and Profitability of Commercial Banks in Kenya
(Kenyatta University, 2025-05) Terer, Obed Kipkirui
Commercial bank performance is vital to economic stability, given their central role in providing financial products and services. However, this exposes banks to various risks that can adversely affect profitability. Profitability is a key indicator of a bank's financial stability and potential for growth. In June 2018, five banks in Kenya were fined a combined Kshs. 392 million by the Central Bank of Kenya for violating anti-money laundering (AML) regulations. In response, banks were compelled to allocate significant resources to strengthen their anti-money laundering practices, thereby increasing operational and compliance costs. The general objective of this study was to examine the effect of anti-money laundering practices on the profitability of commercial banks in Kenya. The specific objectives were to determine the effects of customer due diligence, transaction monitoring, anti-money laundering audits, and anti-money laundering training on the profitability of commercial banks in Kenya. Additionally, the study aimed to determine the moderating effect of corporate governance on the relationship between anti-money laundering practices and profitability. The study was guided by the theory of crying wolf, transparency-stability theory, agency theory, and regulatory dialectic theory. A positivist philosophy was adopted, utilizing an explanatory research design. The target population comprised all thirty-nine (39) commercial banks in Kenya, with purposive sampling yielding 105 respondents, of whom 77 provided the data. Primary data were collected via structured questionnaires, and secondary data were obtained from the Central Bank of Kenya’s annual banking supervision reports. Data were analyzed using SPSS. The findings revealed that customer due diligence, transaction monitoring, AML training, and AML audits all had a positive and statistically significant impact on bank profitability. Furthermore, corporate governance was found to significantly moderate the relationship between AML practices and profitability. Based on these findings, the study recommends that commercial banks adopt comprehensive AML strategies, including robust customer identity verification, risk assessments, transaction monitoring, regulatory reporting, regular staff training, and internal audits. Strengthening corporate governance structures particularly through a competent and accountable board is also essential for effective oversight of AML efforts. Lastly, the study suggests further research to examine the broader impact of AML practices on Kenya’s financial sector and to explore other potential moderating variables in the relationship between AML practices and bank profitability.
Financing Options and Liquidity of Public Universities in Kenya
(Kenyatta University, 2025-05) Ngugi, Mbugua Hillary
Financial challenges being faced by public universities is a worldwide problem. Recent studies have shown how public universities cannot meet their liabilities when due. This has led to many universities facing insolvency due to many liabilities and fewer assets to cover them. The study on liquidity is key to understanding how well our universities are equipped to perform better. Financing options available to public universities are a key concern to stakeholders eager to solve the financial difficulties faced by public universities. The study had a general objective, which was to assess the effects of financing options on the liquidity of public universities in Kenya. The study specific objectives were to: examine the effect of government capitation on the liquidity of public universities in Kenya, examine the effect of income-generating activities on liquidity of public universities in Kenya, examine the effect of tuition and other fees on liquidity of public universities in Kenya, examine the effect of donor funding on liquidity of public universities in Kenya and to establish the moderating effect of government policy on liquidity of public universities in Kenya. This study was concerned with the effects of financing options available to public universities on their liquidity. The study was advised by four theories: Agency theory, Resource dependency theory, Keynesian economics theory, and General systems theory. The study used a positivist philosophy. The study used a Causal research design. The study's population consisted of 31 Chartered public universities in Kenya, and it covered a period of five years, from 2015/2016 to 2019/2020. A census of all public universities was undertaken due to the small population size. The data was analysed using descriptive analysis that included calculation of means and standard deviation, and inferential analysis using a panel data regression model. The study used both primary and secondary data, which were quantitative in nature and collected from the financial Managers of all Public Universities and the Office of the Auditor-General. The study carried out diagnostic tests to better understand the relationships between the variables. The study obtained permits for research from the National Commission for Science, Technology and Innovation (NACOSTI) and ensured that all data collected was only used for the study. The study unveils intricate insights into university liquidity. Government capitation, tuition fees, income-generating activities and donor funds exhibit weak correlations with liquidity, meaning that they do not statistically influence liquidity levels in public universities in Kenya. The study unveils the importance of the government regulatory role as it has proved to have an influence on the liquidity of public universities. These findings underscore the financial complexities within universities, highlighting the necessity for strategic financial planning and resource allocation to ensure stability and resilience amidst shifting regulatory and economic landscapes. The study recommends that universities establish robust cash management practices, improve financial planning and budgeting, develop strong donor relationships, and prioritise the optimisation of income generation strategies to address the significant inverse relationship with liquidity. Policymakers are urged to review funding allocation policies, advocate for enhanced transparency in managing donor funds, and establish financial resilience policies for public universities while promoting collaborative funding initiatives.
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.

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