RP-Accounting and Finance Department

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Business Risk, Profitability, Asset Structure and Firm Value of Non-Financial Firms Listed in the Nairobi Securities Exchange, Kenya
(International Academic Journal of Economics and Finance, 2025-04) Musyimi, Anthony M.; Gatauwa, James M.; Kimutai, Carolyne J.
Financial Technology and Profitability of Small and Medium Enterprises in Trans Nzoia County, Kenya
(International Journal of Innovative Research and Advanced Studies, 2025) Mutai, Mirriam Chepchirchir; Mutwiri, Nathan Mwenda
SMEs have continued to face various challenges despite its vital role in the economy. Most African countries depends heavily on SMEs for economic development and industrialization. The government of Kenya has identified the creation of SMEs as a strategy of achieving vision 2030. However, Republic of Kenya Baseline Survey (2019) found out that 65% of SMEs’ fail within the first three years of their operations despite the provision of interventions. The thriving economy of Trans Nzoia County is comprised largely of SMEs which are the main income earners in the region. However, the income generation of these SMEs has been dwindling and consequently, their ability to spur economic growth in the growing metropolis may be affected. The recent report from the county government of Trans Nzoia indicates that net profit margin of SMEs in the county declined from 11.3% in 2018 to 4.4% in 2022. This trend resulted directly in unemployment which then heightens social inequities and rate of crime. As such, this study sought to explore the influence online banking services on financial performance of SMEs in Trans Nzoia, County, Kenya. This study adopted and based its findings on a descriptive research design whose target population constituted of 3610 SMEs registered by ministry of trade, commerce and industry of Trans Nzoia County, Kenya. By using the Cochran, (1977) criterion, the researcher selected a sample frame of 347 SME. Stratified sampling technique was applied to group SMEs while purposive sampling technique was adopted to select respondents. The main research instrument used was the semi-structured questionnaire and included information for both dependent and independent variables .The study was anchored on Technology Acceptance Model. The researcher utilized Likert scale to gather information from questionnaires. Data collected for the research was edited, evaluated and analysed using descriptive statistics and inferential statistics with the help of statistical package for social sciences (SPSS) 24. The results indicated that online banking services significantly affects profitability of SMEs in Trans Nzoia County, Kenya. According to the study's findings, financial institutions should develop more banking agents in rural areas, because they are the most favored and used by SMEs.
Vendor Managed Inventory on Financial Performance of Flour Processing SMEs in Nairobi City County, Kenya
(International Academic Journal of Economics and Finance, 2025-04) Ng’ang’a, Charles Njoroge; Mbuva, Geoffrey
Small and Medium Sized manufacturing firms involved in processing flour play a key role in mitigating food insecurity issues in most of the economies. Be it developed or emerging ones. However, the Nairobi City County based flour processing Small Medium Enterprises (SME) has not been exempted from declining financial performance in addition to other small firms over the years. Therefore, this inquiry aimed at determining the influence of vendor managed inventory on financial performance of flour processing SMEs in Nairobi County, Kenya; To underpin this investigation, the researcher considered twofold theoretical viewpoints, namely; lean inventory theory and economic order quantity theory. This inquiry incorporated descriptive survey research design to develop the research problem. The 18- Nairobi City County based flour processing Small Medium Enterprises (SME) is the size of the populace selected for the purposes of achieving the study’s main objective with the corresponding 18 top officials of the aforementioned SMEs being used as the unit of observation. Further, it should be noted that since the populace was dismal, the researcher planned to rely on survey methodology for data collect purposes. The whole process of collection of the data aforementioned was based on a drop and pick approach whereby structured questionnaires were used as the tool for that purpose. The research findings portrayed that vendor managed inventory had statistically significant influence on the financial performance of flour processing SMEs in Nairobi City County, Kenya. Majority of the respondents were of the opinion that firms should direct their efforts toward adopting advanced forecasting tools and data analytics, leveraging these technologies to gain better insights into customer demand patterns, ultimately reducing the risks associated with shortages or excessive inventory. The study recommendations were as follows; comprehensive inventory management studies that explore the combined impact of various strategies, including JIT, EOQ, and lean inventory, on financial performance should be conducted. The studies would provide insights into the synergies and trade-offs between these practices. Comparative studies would assess the effectiveness of different inventory management strategies, taking into account their combined application. These studies can help businesses identify the most effective combinations of strategies for their specific contexts.
Financial Management Practices and Financial Performance of Insurance Companies Listed at Nairobi Securities Exchangein Kenya
(Journal of Finance and Accounting, 2025-03) Kihara, Christine; Macharia, James
The financial performance of Listed Insurance Companies in Kenya's insurance industry has fluctuated significantly. This study looked into the relationship between Kenyan insurance businesses that are listed on public markets' financial performance and their financial management practices. The specific objectives included examining the impact of working capital management, capital budgeting, and capital structure on the financial performance of listed insurance companies as well as the extent to which inflation affected the relationship between financial management practices and listed insurance companies' financial performance. An explanatory research design was used. Six listed insurance companies made up the target population. In this analysis, all six listed insurance firms were considered. Because there were so few companies, a census was undertaken. Panel secondary data for the years 2015–2022 was used. Both descriptive and inferential statistics were used to analyze the data. Results indicated that high and positive association was shown between successful financial management and working capital management. High and negative correlation between capital structure and financial performance is revealed by random effects regression analysis. Capital budgeting and financial success had a positive and significant correlation. The study also discovered that the association between financial performance and financial management techniques is negatively moderated by inflation. According to the study's findings, capital structure has a detrimental effect on financial performance whereas working capital management and capital budgeting have a positive one. This study suggested that insurance companies listed at NSE should seek to maintain adequate current assets that would be enough to cater to all short-term liabilities that may arise in the course of the business operations. Insurance firms should also seek to balance the use of debt financing and equity financing to ensure the negative effect of high debts is neutralized. This study hence recommended that insurance firms should seek to adopt practices that will reduce the cost of investment but also increase the return on the investment. This study also made suggestions that insurance firms listed at NSE should be able to understand the economic situations in terms of inflation and make the right financial decisions that would not negatively impact their performance. The study also recommends that the IAA should provide regulations that will protect insurance firms against the effect of inflation.
The Effect of Board Size on Financial Distress in Listed Commercial and Services Firms in Kenya
(International Academic Journal of Economics and Finance, 2025-03) Murigi, Peter Njogu
Financial distress has been a great concern to managers, investors and practitioners since time immemorial. This is because it can easily lead to insolvency and business failure and in worst cases financial distress leads to liquidation of the firm. In Kenya, companies such as Nakumatt Holdings, Uchumi Supermarkets, Tuskys Supermarkets, Karuturi Ltd, Mumias Sugar Company and Eveready East Africa have faced numerous challenges leading to financial distress and ultimately collapsing. The problem has also affected listed companies where corporate governance principles such as separation of ownership is lacking. Listed firms have exhibited high leverage level that averaged 25.8% oscillating between 22.64 % and 76.2 % between 2011 and 2022. These high levels of debt level suggest high chances of financial distress. Although previous scholars have explored the influence of corporate board structure on financial distress, there seems to be emphasis on board independence and diversity, leaving out the critical aspect of board size. Further previous scholars generalised all listed firms ignoring the fact that they are heterogenous. The objective of this study was therefore to determine the effect of board size on financial distress of listed commercial and services companies in Kenya. To achieve the objectives the study was anchored on agency theory and adopted an explanatory research design targeting 9 listed commercial and services companies in Kenya. Secondary data collected via secondary data collection sheet was utilized. The analysis of quantitative data involved the application of descriptive and inferential statistics which encompass frequencies, means, and standard deviations, whereas inferential statistics encompass regression and correlation analysis. Panel regression model was utilized to test the relationship between board size and financial distress in listed commercial and services companies in Kenya. Findings revealed that board size has a significant negative effect on financial distress (β = -0.6145, p = 0.005), suggesting that larger boards reduce the likelihood of financial distress. It indicates the importance of diverse perspectives in mitigating financial distress. The study thus concluded that optimally structuring the size of the board can significantly reduce financial distress. It is recommended that firms strengthen their governance structures by expanding board size to expand expertise and skills scope in the board.
Impact of Prudential Regulations on the Profitability of Commercial Banks Listed at the Nairobi Securities Exchange in Kenya
(AJEFM, 2025) Mwangi Lawrence Njoroge; Omagwa Job
This study examines the impact of prudential regulations on the profitability of commercial banks listed on the Nairobi Stock Exchange (NSE), addressing the persistent challenge of unstable profitability in the sector. Existing literature largely focuses on general banking regulations but lacks insights into their specific effects on bank performance in Kenya. The study explores how capital adequacy, liquidity, and credit risk regulations influence profitability and whether bank size moderates this relationship. Guided by stakeholder, capital buffer, liquidity preference, efficiency structure, and resource-based theories, the study employs an explanatory research design, analyzing panel data from 2013 to 2021 for all 11 publicly traded banks in Kenya. Robust statistical analyses were conducted to ensure result validity. Findings indicate that liquidity and credit risk regulations significantly and negatively impact profitability when measured by Return on Assets (ROA) and Return on Equity (ROE). Stricter liquidity requirements reduce banks' ability to meet short-term financial obligations, thereby lowering profitability. Similarly, stringent credit risk regulations limit banks’ flexibility in lending, increasing the likelihood of non-performing loans and reducing earnings. However, capital adequacy regulations showed little effect on profitability, suggesting that Kenyan banks maintain sufficient capital reserves without directly influencing earnings. Additionally, the study found that bank size does not significantly moderate the relationship between prudential regulations and profitability. The study recommends that the Central Bank of Kenya review liquidity regulations to balance financial stability with profitability. Commercial banks should collaborate with regulators to refine credit risk policies, ensuring efficient loan utilization and improved loan recovery rates. Management should also optimize liquid asset holdings to enhance profitability while maintaining financial obligations. Credit managers should implement stricter approval processes to minimize non-performing loans, ultimately improving bank performance and stability
Internal Controls and Operational Efficiency of Human Rights Organizations in Nairobi City County, Kenya
(AJEFM, 2025-04) Njange,Carolyn Wanjiru; Thuo, CPA Anthony
The study aimed to determine the connection between internal controls and operational efficiency of Human Rights Organizations in Nairobi, Kenya. Specifically, the study sought to: evaluate the impact of reporting controls on the accuracy and timeliness of financial information, assess the level of compliance with local, international and internal regulations and policies, assess the effectiveness of communication and information controls, examine the effectiveness of monitoring and evaluation controls in ensuring optimum implementation and ascertain the moderating effect of Board resolutions on the relationship between internal controls and operational efficiency of Human Rights Organizations in Nairobi, Kenya. The following theories guided the study: Agency theory; Stewardship theory as well as Contingency theory. The researcher utilized a descriptive research...
Itax System Role in Tax Compliance for Residential Landlords inKiambu County, Kenya
(AJEFM, 2025-04) Njuguna,Thuku Joseph; Warui,Fredrick
The Kenyan government relies on taxes as a major source of revenue, yet compliance remains a challenge, particularly in the real estate sector. Despite the significant growth of Kenya’s real estate market, tax revenue has not increased proportionally due to widespread non-compliance among landlords. This study examined the role of the iTax system in improving tax compliance among residential landlords in Kiambu Town, focusing on tax rates, cost acceptance, tax literacy, and tax awareness. The research was grounded in fiscal exchange, ability to pay, institutional anomie, and economic deterrence theories. A descriptive research design was used to survey 1,004 rental property owners, with a sample of 286 selected using Yamane’s formula. Data was collected via structured questionnaires with a five-point rating scale, achieving a Cronbach’s alpha of 0.7 for reliability. The study employed SPSS for data analysis, using both descriptive statistics...
Liquidity and Financial Performance in SACCOs: Evidence from Kiambu County, Kenya
(AJEFM, 2025) Chahira Anne Wanjiru; Waweru,Fredrick Warui
The study examined the relationship between liquidity and financial performance in Savings and Credit Cooperative Organizations (SACCOs) in Kiambu County, Kenya, a crucial sector for financial inclusion and community welfare. With the rising need for effective financial practices, the research assessed how liquidity ratios—current, quick, and cash—impact SACCO performance, particularly their financial stability and operational efficiency. The study analyzed secondary financial data obtained from financial statements of 13 SACCOs registered under the SACCO Societies Regulatory Authority (SASRA) from 2019 to 2023, employing a census sampling technique to eliminate sampling errors. Using a descriptive and causal research design, data analysis was conducted through Stata 14.0, applying descriptive statistics to summarize liquidity ratios and inferential statistics to examine their effect on SACCO performance. Findings revealed a strong correlation between liquidity ratios and SACCO financial stability, where high liquidity improved trust and operational resilience. The study emphasized the necessity for SACCOs to implement sound liquidity management policies to meet short-term obligations while ensuring long-term growth. Key recommendations included adopting policies to maintain optimal cash and quick ratios, strengthening liquidity governance, and conducting regular liquidity assessments to manage financial fluctuations. The research also suggested expanding future studies to other counties such as Nairobi, Murang’a, Nakuru, and Kisumu while incorporating additional financial solvency determinants like capital adequacy. These insights provide valuable guidance for SACCO managers, policymakers, and stakeholders in enhancing financial resilience within Kenya’s cooperative sector.
Debt Financing and Profitability of Listed Manufacturing Firms at the Nairobi Securities Exchange, Kenya: An Empirical Analysis
(AESS Publications, 2025-05) Amugada, Ballerine Shunza; Mwangi, Lucy Wamugo
Declining profitability in NSE-listed manufacturing firms like Mumias Sugar and Eveready East Africa has discouraged investment and hampered Kenya's economic growth. Despite extensive research on capital structure, a gap remains in understanding how debt financing specifically influences profitability, particularly return on assets (ROA), among NSE-listed manufacturing firms. This study examined the impact of debt financing on ROA, focusing on long-term debt, short-term debt, and the debt tax shield. The research was anchored on trade-off theory, agency theory, and Modigliani and Miller’s capital structure irrelevance theory. An explanatory research approach was employed, analyzing financial data from nine listed manufacturing firms from 2010 to 2022. A census sampling technique included all nine firms, and data was analyzed using Stata version 17 with panel regression analysis. Diagnostic tests conducted included multicollinearity, Hausman, heteroskedasticity, and normality tests. Findings revealed that both short-term and long-term debt had a statistically significant negative impact on ROA, indicating that higher debt levels reduced profitability. Conversely, the debt tax shield had an inverse but statistically insignificant effect, suggesting that tax benefits from debt financing did not significantly enhance profitability. The study recommends that financial managers explore alternative financing strategies such as equity financing or internal capital generation rather than broadly reducing debt. Additionally, firms should strategically balance their short-term and long-term debt to optimize financial performance while mitigating financial risks.
Impact of Inflation on Stock Market Returns: An Evidence from Banking Stocks of Nairobi Securities Exchange, Kenya
(AESS Publications, 2025-04) Mwiwa, Judith Kanini; Jagongo, Ambrose
Inflation significantly influences economic stability and investor confidence, potentially impacting stock market returns. Understanding this relationship is crucial for investors and policymakers, particularly in emerging markets like Kenya, where economic fluctuations are common. This study aimed to investigate the complex interplay between various inflation types and stock market performance within the Kenyan banking sector. Specifically, the study sought to determine the effects of imported inflation, demand-pull, cost-push, and inflation targeting on the stock market returns of commercial banks listed on the Nairobi Securities Exchange (NSE) from 2017 to 2022. The research was guided by the Fisher Hypothesis, Inflation Illusion Hypothesis, Proxy Hypothesis, and Interest Rate Parity Theory. A descriptive study design was employed, utilizing a census survey to collect data from all 11 banking sector firms listed on the NSE. Secondary data on stock market returns were sourced from the NSE and CBK, while inflation data was obtained from the KNBS. Quarterly data over five years were analyzed using SPSS version 21. Findings revealed that hyper-inflation, imported, cost-push, and demand-pull inflations had significant positive effects on stock market returns, while inflation targeting had a moderating effect. The study concluded that demand-pull inflation could lead to higher corporate earnings, while cost-push inflation could increase interest rates as the CBK attempts to control inflation. Imported inflation raised costs for firms relying on imported inputs, reducing profitability. Hyperinflation led to rising stock prices as investors sought to protect their wealth. Successful inflation targeting by central banks resulted in lower interest rates, boosting stock returns. The study recommended that the CBK could use interest rate adjustments to control inflationary pressures. Companies listed on the NSE could implement cost-control measures to mitigate cost-push inflation, while the government could impose tariffs to limit imported inflation. Additionally, diversification was suggested as a strategy for managing hyperinflation's impact on stock returns. The CBK was advised to use monetary policy tools such as interest rates and reserve requirements to regulate inflation and enhance financial stability.
Prudential Regulations and Profitability of Microfinance Banks in Kenya
(AESS Publications, 2025-04) Odhiambo, Willis Omondi; Ndede, Fredrick (; Wamugo, Lucy
Microfinance banks significantly add to the reduction of Kenya’s youth unemployment and poverty, which boosts the nation's economic development. Despite the implementation of prudential regulations aimed at enhancing financial stability and performance, many microfinance banks continue to struggle, as evidenced by a record decline in profitability over recent years. Therefore, this investigation examined prudential regulations effect on the Kenyan microfinance banks’ profitability. The effect of capital regulation on Kenyan microfinance banks’ profitability, liquidity regulation effect on Kenyan microfinance banks’ profitability and credit regulation effect on Kenyan microfinance banks’ profitability were examined. The study utilized fourteen microfinance finance banks which served as the target population. Census sampling was employed owing to the few microfinance banks in Kenya; hence, all the fourteen microfinance banks were utilized. Descriptive, correlation and panel regression technique was used as methods of data analysis. Findings uncovered that liquidity regulation insignificantly and positively affect the banks’ profitability; credit regulation possess inverse and insignificant effect on the banks profitability; capital regulation disclose a positive and significant effect on the banks profitability. The survey recommends that central bank should assess the current liquidity requirements and consider streamlining them to reduce unnecessary burdens on microfinance banks. This can involve revisiting reserve requirements, liquidity ratios, or other liquidity-related regulations to strike a balance between prudential safeguards and fostering profitability.
Credit Management Practices and Bad Debt Levels of Microfinance Institutions in Nairobi City County, Kenya
(Stratford, 2025-02) Choda,Linus James Odongo; Koori,Jeremiah; Makori,Daniel
Between the years 2018 to 2021, the bad debt levels of MFIs in Nairobi City County, Kenya have been increasing by 18% annually. The increasing bad debt levels have negatively affected MFIs’ operations and their profits to the extent of some being declared bankrupt. The general objective of the study is to establish the effect of credit management practices on bad debt levels of microfinance institutions in Nairobi City County, Kenya. The specific objectives of the study include to evaluate the effect of credit risk identification on bad debt levels of microfinance institutions in Nairobi City County, Kenya, to assess the effect of credit risk monitoring on bad debt levels of microfinance institutions in Nairobi City County, Kenya, to assess the effect of collection policies on the bad debt levels of microfinance institutions in Kenya, to establish the effects of credit appraisal policies on the bad debt levels of microfinance institutions in Nairobi City County, Kenya, and to determine the effect of CBK regulations on bad debt levels of microfinance institutions in Nairobi City County, Kenya. The theories underpinning this study include; modern portfolio theory (MPT), capital asset pricing model (CAPM), credit risk theory and PRISM model of credit risk management. The study employed a descriptive research design, targeting 54 active microfinance institutions in Nairobi City County, Kenya, with a sample size of 15 selected through stratified random sampling. Primary data (credit management practices) and secondary data (bad debt levels) were collected using data collection sheets and questionnaires. These were administered to credit managers, finance analysts, accountants, and debt portfolio assistants via the drop and pick technique. Data was analyzed using SPSS version 29, incorporating descriptive statistics, diagnostic tests (normality, multicollinearity, heteroscedasticity, Hausman test), correlation analysis, regression analysis, and hypothesis testing. The study found that despite implementing credit management practices, microfinance institutions struggled to curb rising bad debt levels due to lenient loan issuance and collection policies. It concluded that instant loans, straightforward application processes, and weak credit monitoring have contributed to high default rates. The study recommends that microfinance institutions adopt AI and big data analytics for improved credit management and establish a shared credit identification system to reduce multiple borrowing and defaults.
Nexus between Financial Technology and Investment Decisions among Youths Involved in Sports Betting in Nairobi City County, Kenya
(EdinBurg, 2024-12) Kipkirui, Nahashion; Musau, Salome
AbstractPurpose:Increased access to technology and the widespread use of technology devices in Africa have created new opportunities for sports betting that were not previously available.Sport betting has taken off among Kenya’s youth population, who are mostly sports lovers. Poor investment decisions among the youths have led to these youths suffering huge losses.This study aimed to ascertain how financial technology influences the investment choices made by young people in Nairobi City County, Kenya who bet on sports. This study aimed to specifically investigate how data-based services, mobile services,anddigital platforms affect the decisions of young people who bet on sports. Methods:Prospect theory, technological acceptance theory, and heuristic theory applications were used to support this study. The study employed a descriptive research designand target population was 302,540 young people who wager on sports. In this study, 384 young people were sampled using a basic random sampling technique. Primary data was collected using a questionnaire and analyzed using correlation and regression analysis. Results:The study foundthat among young people who bet on sports, data-based services, mobile services, and digital platforms had a positiveand significant impact on investment decisions. Conclusion:The study concluded that financial technology has a significantly positive effect on investment decisions among youths involved in sports betting in Nairobi City County, Kenya. It is imperative for policymakers overseeing sports betting organizations to establish laws that facilitate the establishment of social media accounts by betting companies that effectively and efficiently disseminate information about sports bets.The government needsto lower the data subscription charges to allow the youths to place their bets.The management of sports betting organizations should keep funding mobile money technologies.
Risk Management Practices and Financial Performance of Commercial Banks in Kenya
(International Journal of Scientific and Research Publications, 2024-12) Kithandi, Charles Katua; Kithandi, Dennis Katisya
In the contemporary world risk management and financial performance in financial institutions especially commercial banks has gained momentum. Using KCB, this study investigated the effects of risk management techniques on the financial performance of commercial banks. The study was informed by network theory, expectation theory, and enterprise risk management theory. The study employed descriptive research design. The study's population consisted of 460 management personnel from KCB Headquarters and its Nairobi County branches. The target group consisted of 46 middle and upper-level managers from KCB in Nairobi County. Since the study's target population was so small, a census technique was employed. The study employed a semi structured questionnaire to collect data. The data collection tool's validity and reliability were assessed. Both descriptive and inferential statistics were computed using SPSS Version 27.0. The moral implications were considered. The results showed a strong positive relationship between organizational effectiveness and risk transfer. Furthermore, it was shown that risk avoidance contributed very little to the success of the company. Nevertheless, it was found that risk control had very little negative effect on the functioning of the company. Furthermore, it was discovered that risk retention considerably increased organizational performance. Lastly, government regulations had no impact because the association between the predictors and response variable remained same. The report recommended that KCB should put in place robust risk transfer and retention policies in order to enhance organizational financial performance. In order to safeguard banks from risks related to the banking sector, the report also recommended that the Central Bank of Kenya offer policy interventions in the form of strategic risk management technique.
Capital Structure and Profitability of Commercial State Corporations in Kenya
(AJSSE Journals, 2024-12) Nyongesa, Edrine Mwajuma; Jagongo, Ambroseo
Commercial state corporations play a crucial role in national growth and in building the state’s technical capabilities and capacities. In Kenya, many commercial state corporations have raised capital through debt financing and equity capital. However, despite obtaining funds from these sources, their performance has been suboptimal, as evidenced by decreasing profitability over the past five years. The general objective of this study was to investigate the effect of capital structure on the profitability of commercial state corporations in Kenya. The study was anchored in trade-off theory, agency theory, and the pecking order theory. Secondary data covering 10 years (2011-2021) was gathered from the Office of the Auditor General’s website and individual companies' annual reports, and past studies in the area were also reviewed. The study established that equity capital has a positive and significant effect on profitability (β = 0.904, p < 0.05) of commercial state corporations in Kenya. Additionally, short-term debt was found to have a significant negative influence on profitability (β = -0.737, p < 0.05), while long-term debt showed a significant positive effect on profitability (β = 0.402, p < 0.05). The study concludes that equity capital and long-term debt positively impact the profitability of commercial state corporations, while short-term debt negatively affects profitability. Based on these findings, the study recommends that management utilize equity capital to fund operations, as equity owners can consistently monitor and influence managerial decisions, ensuring the proper allocation and utilization of resources. Furthermore, commercial state corporations should avoid short-term debt due to its high-interest rates and should instead use long-term debt to fund investments with longer repayment periods.
Type of Venture Capital Investment, Venture Capital Control and Financial Growth of Funded Small and Medium Enterprises in Nairobi City County, Kenya
(IAJEF, 2024-11) Maragia, Dancan S.; Gatauwa, James M.
Global venture capital industry expansion has boosted entrepreneurship and innovation, leading to the generation of wealth and jobs in a number of countries. SMEs play a crucial role in socioeconomic development by promoting wealth generation, economic growth, and job creation in their individual economies. These SMEs nevertheless have uneven and restricted access to sustainable finance, which is essential to their survival and expansion, despite their prominence and importance in developing countries such as Kenya. This study aimed to examine how type of venture capital investment and venture capital control affect the financial growth of selected SMEs in Nairobi County, Kenya. Both a descriptive research design and quantitative research methods were applied. The target population for the analysis consisted of 139 SMEs that have received venture capital funding. Data was analyzed using descriptive and inferential statistics. Results indicated that type of venture capital investment had a positive and significant effect on SMEs’ financial growth. SMEs' financial growth was positively, but not significantly, impacted by venture capital control. The study concluded that venture capital control had a positive but insignificant effect on SMEs’ financial growth. The study recommended that entrepreneurs should consider a diverse syndicate of venture capitalists. This is key for improved risk management, survival rate, access to more strategic collaboration and attraction to resources and expertise. In addition, the study recommended that entrepreneurs should review the venture capitalists’ level of control in the business. This would help to mitigate negative impact resulting from venture capital-imposed restrictions on managerial autonomy.
Camel Financial Indicators and Performance of Tier Three Commercial Banks in Kenya
(Stratford Peer Reviewed Journals and Book Publishing Journal of Finance and Accounting, 2024-11) Ngatia, James; Makori, Daniel; Theuri, Joseph
Tier three banks are vital to the Kenyan economy by promoting competition and ensuring efficiency in the banking sector. Despite their importance, recent statistics indicate poor performance among these banks, possibly due to their financial practices. However, limited research exists on how the CAMEL approach affects their financial performance. This study addressed this gap by analyzing the financial performance of Kenya’s tier three commercial banks through CAMEL factors, namely; capital adequacy, asset quality, management, earning ability, and liquidity. The study was guided by the Free Banking Theory, Agency Theory, Capital Buffer Theory, and Transactional Cost Theory. An explanatory research design was adopted, with a focus on 18 tier three commercial banks. Secondary panel data were collected from the banks' records over a period of ten years (2014-2021). The regression results revealed a coefficient of determination (R-squared) of 0.6918, indicating that 69.18% of the variance in financial performance (ROA) is explained by the CAMEL variables. The analysis identified that Capital Adequacy, Asset Quality, Management Quality, and Liquidity significantly affect the financial performance of tier-three commercial banks, while Earnings Ability did not show a statistically significant effect. The study further examined the moderating effect of Ownership Identity on the CAMEL-ROA relationship, but the findings indicated that it does not enhance the predictive power of the model. Consequently, Ownership Identity was ruled out as a significant moderator. The study concludes that the CAMEL framework is essential for assessing the financial health of tier-three commercial banks in Kenya, emphasizing the importance of strong capital adequacy, liquidity, and management quality for profitability. The study recommends that bank management prioritize these CAMEL components while policymakers should create supportive regulatory frameworks and further research should explore additional performance indicators and potential moderators affecting financial performance.
Firm Characteristics, Interest Rate and Financial Performance of Microfinance Banks in Kenya
(International Academic Journal of Economics and Finance, 2024-10) Ouma, Cavine Onyango; Makori, Daniel; Aluoch, Moses Odhiambo
Microfinance Banks gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's Banks financial performance in Kenya has declined over time. The objective of this study is to investigate firm characteristics, interest rate and financial performance of microfinance banks in Kenya. The study was grounded on buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was analysed using descriptive and inferential statistics. The study used multiple regressions and Pearson’s Product Moment Correlation analysis. All ethical considerations were appropriately observed. Findings indicated that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research revealed that efficiency of management has an insignificant direct influence on financial performance of Microfinance banks. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacitybuilding initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on financial performance. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes and financial outcomes for microfinance institutions in Kenya does not appear to be subject to a substantial moderating influence from interest rate movements. Therefore, the survey recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations
Mobile Payment Services and Financial Performance of Local Businesses in Kiambu County – Kenya
(International Journals of Academics & Research (IJARKE Business & Management Journal), 2024) Mbugua, Eric Kimani; Suva, Mark
Mobile payments are a critical emerging mode of financial transactions in the business environment. Local business owners in Kiambu County have faced marginalization from traditional banking, with businesses in these regions lacking access to formal financial services due to factors such as low cash flow levels, lack of collateral and low incomes. Customers have lacked the convenience of transacting with their money in the traditional banks or incurring more costs in accessing their money. Local business owners, customers, and other stakeholder have encountered rigidity in making payments in their daily business operations. Money is transferred to their bank accounts or registered institutions, which is wired to the seller accordingly. Therefore, the current study investigated the effect of mobile payment services on the financial performance of local businesses in Kiambu County, Kenya. The specific objectives of the study investigated the effect of mobile money transfers, online transactions, and mobile payments on the financial performance of local businesses in Kiambu County, Kenya. The study was anchored on agency theory, contingency, the technological acceptance model, and innovation diffusion theory. The study employed a descriptive research study design to explore the sub-variables. A sample size of 157 respondents from the local businesses in Kiambu was targeted. Validity and reliability of the research instruments was considered during the pilot study for 20 respondents that were not involved in the parent study. The reliability analysis showed that all the study variables met the threshold Cronbach value of 0.70. Quantitative data were examined using descriptive and inferential statistical methods and presented in tables and figures, while qualitative data were examined through content analysis. The analysis of demographic information demonstrated a fair representation of both genders, designations to various positions in the local businesses, and various levels of experience dealing with local businesses in Kiambu County, Kenya. The findings indicate a meaningful positive and significant relationship between financial performance and mobile money transfers, online transactions, and mobile payments. Regression analysis suggests that mobile money transfers, online transactions, and mobile payments together account for 52.8 percent of all the variations in the financial performance of local businesses in Kiambu County, Kenya. The study concluded that mobile payment services significantly impacted the financial performance of local businesses in Kiambu County, Kenya.

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