RP-Department of Accounting and Finance Department

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Assessment of the Relationship Between Retained Earnings and Shareholder Value Creation: Perspectives from Listed Manufacturing Firms in Kenya
(African Journal of Emerging Issues (AJOEI), 2026-04) Florence, Teresa Wanjeri; Omagwa, Job; Musau, Salome
Purpose of Study: This study sought to analyze the effect of retained earnings on shareholder value in listed manufacturing firms in Kenya. Problem Statement: Generating shareholder value remains a fundamental objective within the global corporate sphere, closely linked to corporate profitability. The manufacturing sector in Kenya contributes approximately 18% to the country’s GDP and creates employment to over 2.3 million individuals across both formal and informal sectors. However, these firms consistently struggles to create and maintain shareholder value over the past decade. Despite a reported increase in shareholder wealth on the NSE in 2019, much of this growth was concentrated within a few companies, with East Africa Breweries PLC being the only manufacturing firm among them. Methodology: The study adopted a positivist philosophy and a causal research design. The target population included 21 listed manufacturing firms on the Nairobi Securities Exchange (NSE). Secondary panel data for the period 2012–2023 was extracted from published financial statements and analyzed using Stata software, employing both descriptive and inferential statistical techniques. Descriptive statistics, Pearson’s correlation, panel regression, multiple regression analysis were employed to analyze the data. Result: Retained earnings had positive and significant on shareholder value creation (β = 0.229617, p = 0.018 < 0.05), showing that reinvesting internal funds supports shareholder value. Recommendation: Retained earnings should remain the primary source of funding for listed manufacturing firms, given their strong positive relationship with shareholder value. In addition, firms should adopt dividend policies that balance investor expectations with the need for reinvestment in core operations.
Short-Term Debt Financing and Shareholder Value: Evidence from Listed Manufacturing Firms in Kenya
(StratfordPeer Reviewed Journals and Book Publishing, 2026-04) Florence, Teresa Wanjeri; Omagwa, Job; Musau, Salome
Listed manufacturing firms in Kenya play a critical role in driving economic growth, contributing approximately 18% to the country's Gross Domestic Product (GDP) and creating over 2.3 million jobs in both formal and informal sectors. However, these firms have faced challenges in consistently generating shareholder value over the past decade, raising concerns about their ability to sustain value creation. While shareholder value has increased among listed firms in general, the performance of listed manufacturing firms remains notably weak. Previous studies investigating shareholder value have produced inconsistent findings, leaving uncertainty about how financial structure influences shareholder value in these firms. This study addresses this gap by examining how short-term debt financing affect shareholder value among listed manufacturing firms in Kenya. Anchored on the Modigliani and Miller Theory and the Trade-off Theory, the research adopts a positivist philosophy and a causal research design. The target population included 21 listed manufacturing firms on the Nairobi Securities Exchange (NSE). Secondary panel data for the period 2012–2023 was extracted from published financial statements and analyzed using Stata software, employing both descriptive and inferential statistical techniques.The study found that short term debt had a positive and significant effect on shareholder value (β = 0.284519, p = 0.015 < 0.05), suggesting that efficient use of short term borrowing to support liquidity and operations enhances value.In view of the findings, the study recommends that managers and regulators should focus less on altering ownership structures and more on limiting costly long term borrowing, supportingworking capital discipline, and deliberately growing and redeploying retained earnings to drive shareholder value. In addition, policymakers, especially the National Treasury,Capital Markets Authority, and Nairobi Securities Exchange, should consider formulating financial policies that encourage manufacturing firms toadopt balanced financingapproaches.
Financial Practices and Program Efficiency of Non-Governmental Organizations in Nairobi City County, Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2026-03) Mutua, Martin N.; Jagongo, Ambrose O.
The increasing demand for accountability and efficient utilization of donor funds has intensified pressure on non-governmental organizations (NGOs) to enhance program performance. In Kenya, particularly in Nairobi City County, NGOs continue to face challenges related to financial management practices, which undermine program efficiency in resource-constrained and donor-dependent environments. Program inefficiencies have been linked to weak financial systems, poor resource allocation, and limited organizational capacity. While external funding uncertainties persist, financial practices remain a critical internal mechanism that NGOs can leverage to improve program outcomes. This study aimed to investigate the effect of financial practices on program efficiency among NGOs operating in Nairobi, Kenya. The specific objectives were to examine the effects of liquidity management, budgeting practices, financial reporting quality, and financial sustainability on program efficiency, as well as to assess the mediating role of resource allocation efficiency and the moderating role of organizational capacity in this relationship. The study was anchored on Agency Theory, Pecking Order Theory, and Financial Accountability Theory
Tax Reforms and Compliance among Small and Medium Enterprises in Bungoma County, Kenya
(Asian Journal of Economics, Finance and Management, 2026-04) Kabisa, Kevin Namaswa; Musau, Salome
This study critically examined the conceptual and theoretical frameworks underpinning tax reforms and their influence on tax compliance among Small and Medium Enterprises (SMEs) in Bungoma County, Kenya. SMEs are vital to economic development through employment creation, innovation, and contributions to government revenue; however, tax compliance among SMEs remains low, particularly in rural areas. A systematic literature review was conducted using peer-reviewed journals, government reports, and policy documents published between 2018 and 2025. The study adopted Economic Deterrence Theory, Institutional Theory, and the Slippery Slope Framework to analyze how enforcement mechanisms, institutional trust, and policy reforms affect SME compliance. Data extraction focused on technological, administrative, policy, and educational reforms affecting SMEs in Bungoma County. Findings indicate that technological reforms enhance efficiency in tax administration but are constrained by poor digital infrastructure and low digital literacy among SME owners. Policy reforms simplify compliance processes and promote voluntary adherence, while administrative reforms improve transparency and accountability. Educational reforms strengthen taxpayer knowledge, recordkeeping, and overall compliance. The study concludes that tax reforms significantly influence SME compliance, but their effectiveness depends on proper implementation, accessibility, and stakeholder support. Future research should empirically evaluate the impact of these reforms on SME behavior using quantitative methods, explore longitudinal compliance trends, and investigate the moderating effects of trust in tax authorities.
Asset Allocation and Profitability of Fund Managers Registered by Retirement Benefits Authority Kenya
(international Academic Journal of Economics and Finance (IAJEF), 2026-01) Odhiambo, Linda A; Kosgei,Margaret; Gitagia,Francis K.
Over the past decade, fund managers registered with Kenya’s Retirement Benefits Authority (RBA) have experienced declining and highly volatile profitability and returns on investment, raising concerns among financial practitioners and scholars. Persistent reductions in returns undermine investor confidence, erode value creation, and heighten systemic investment risk, underscoring the need to enhance profitability to ensure sustainable growth and stable investor returns. Despite professional expertise, Kenyan fund managers have struggled to optimize performance amid fluctuating market conditions. Since asset allocation decisions are widely recognized as critical determinants of profitability, this study examined the effect of asset allocation on the profitability of RBA-registered fund managers in Kenya. Specifically, the study assessed the influence of allocations to fixed income securities, equities, and real estate investments on profitability, while also evaluating the moderating role of market fluctuations. The analysis was grounded in established financial theories, including the Capital Asset Pricing Model (CAPM), the Fama–French Three-Factor Model, and the Arbitrage Pricing Theory (APT). A census of all 35 RBA-registered fund managers was undertaken, using secondary data drawn from audited financial statements covering the period 2015–2024. Panel regression analysis, Pearson correlation coefficients, and descriptive statistics were employed. Results revealed weak but positive correlations between asset allocation and profitability, with fixed income assets showing the strongest association. FGLS regression findings indicated that real estate investments had a strong and statistically significant positive effect on profitability, while fixed income securities exhibited a marginally significant positive influence. In contrast, equity investments had a significant negative effect on profitability. Furthermore, market volatility was found to positively moderate the relationship between asset allocation and profitability. The study concludes that increasing allocations to fixed income and real estate enhances profitability, whereas excessive exposure to equities diminishes financial performance.
Mediating Effect of Strategic Optimal Portfolio Mix on the Influence of Portfolio Diversification and Financial Performance of Private Voluntary Pension Schemes in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2026-03) Njogu, Daniel Ngugi; Simiyu, Eddie; Mwenda, Nathan
Private voluntary pension schemes in Kenya are instrumental in providing supplementary retirement income and fostering long-term savings for members beyond mandatory public systems. However, these schemes continue to face substantial challenges in achieving consistent positive real returns therefore the study sought to assess the mediating effect of strategic optimal portfolio mix on the influence of portfolio diversification and financial performance of private voluntary pension schemes in Kenya. The study was anchored on Black-Litterman Theory, which blends investor views with market equilibrium returns to produce stable, intuitive, and diversified portfolios suitable for pension funds. A descriptive research design was adopted. The unit of analysis was 22 voluntary pension schemes and 28 registered umbrella retirement benefits schemes. The unit of observation was 50 finance managers, 50 investments officers and 50 fund managers. Since the study population is manageable the study adopted census technique to incorporate all the 150 respondents. Primary data were collected via self-administered semi-structured questionnaires, while secondary data on return on investment were sourced from annual financial statements covering 2019–2023. Instrument reliability and validity were established through a pilot test involving 15 respondents from five selected schemes, with Cronbach’s Alpha values above 0.7 confirming internal consistency. Data analysis utilized descriptive statistics and inferential statistics, with diagnostic tests (normality, multicollinearity, homoscedasticity, linearity) confirming model assumptions. From the findings the P-values were less than 0.05 confidence level therefore the study rejected the null hypothesis and based on the rule of significance, the study concluded that strategic optimal mix has a significant mediating effect on the relationship between portfolio diversification and financial performance of private voluntary pension schemes in Kenya. Accordingly, it is recommended that pension schemes invest in continuous professional development of finance officers on portfolio optimization and adopt formal policies encouraging diversification across asset classes to balance risk and return while safeguarding member interests
Financial Practices and Program Efficiency of Non-Govermental Organizations in Nairobi City County, Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2026-03) Mutua, Martin N.; Jagongo, Ambrose O.
The increasing demand for accountability and efficient utilization of donor funds has intensified pressure on non-governmental organizations (NGOs) to enhance program performance. In Kenya, particularly in Nairobi City County, NGOs continue to face challenges related to financial management practices, which undermine program efficiency in resource-constrained and donor-dependent environments. Program inefficiencies have been linked to weak financial systems, poor resource allocation, and limited organizational capacity. While external funding uncertainties persist, financial practices remain a critical internal mechanism that NGOs can leverage to improve program outcomes. This study aimed to investigate the effect of financial practices on program efficiency among NGOs operating in Nairobi, Kenya. The specific objectives were to examine the effects of liquidity management, budgeting practices, financial reporting quality, and financial sustainability on program efficiency, as well as to assess the mediating role of resource allocation efficiency and the moderating role of organizational capacity in this relationship. The study was anchored on Agency Theory, Pecking Order Theory, and Financial Accountability Theory.
Revenue Diversification and Sustainability of Commercial State Corporations in Kenya
(IJCAB, 2026-04) Nyangaresi,Richard Bisera; Jagongo, Ambrose
In the face of globalization and rising economic pressures, the sustainability of commercial state corporations (CSCs) has become a critical concern, particularly in developing countries like Kenya. Many of these entities continue to rely heavily on government subsidies, leading to persistent financial instability, operational inefficiencies, and reduced service delivery. This study explores the role of revenue diversification in enhancing the financial sustainability of Kenyan CSCs, with a specific focus on the moderating effect of corporate governance. Drawing on global and regional experiences, the study examines four core diversification strategies—product/service expansion, market penetration, public-private partnerships, and non-core revenue streams. It also investigates how governance structures influence the effectiveness of these strategies in achieving long-term financial viability. Despite efforts by the Kenyan government to implement reforms and encourage alternative revenue generation, challenges such as weak oversight, political interference, and financial mismanagement continue to hinder progress. Through a panel regression approach incorporating moderation analysis, this study aims to provide empirical insights into the complex dynamics between diversification strategies and sustainability, offering practical recommendations for policy-makers and corporate leaders seeking to strengthen the resilience and independence of CSCs in Kenya. Keywords: Revenue diversification, sustainability, commercial state corporations, Kenya
Big vs. Small Insurers; Does Size Matter? Moderating Effects of Firm Size on Liquidity Risk and Credit Risk on the Profitability of Insurance Firms in Kenya
(IJARKE, 2026-01) Gitau, Kimacia; Wamugo, Lucy; Omagwa, Job
The insurance sector represents a major component of the broader non-bank financial system and plays a pivotal role in supporting economic activity across both developing and advanced economies. In the Kenyan context, declining profitability has been a prominent challenge, contributing to the financial distress and eventual collapse of at least nine insurance companies over the past decade. This study sought to evaluate whether firm size moderates the relationship between liquidity risk & Credit risk and the profitability of insurance firms operating in Kenya. The conceptual foundation of the research drew on several theoretical perspectives, including Modern Portfolio Theory, Agency Theory and Institutional Theory. A positivist philosophical stance and an explanatory research design guided the methodological approach. The study covered all 55 licensed insurance firms listed by the Insurance Regulatory Authority (IRA) as at 31 December 2022. Secondary data were obtained from audited financial statements available through the IRA and the Association of Kenya Insurers (AKI) digital repositories for the period 2014–2022, supplemented by additional information from the Central Bank of Kenya and the Kenya National Bureau of Statistics. Data analysis employed descriptive statistics, panel regression techniques, and Pearson’s product–moment correlation to assess the relationships among the study variables. Firm size was found not to be a significant moderator in this study, since it did not significantly change the decision rule in the model, indicating that the effects of liquidity and credit risks on ROE and ROA were consistent across insurance firms regardless of their asset scale.
From Arrears to Earnings: Examining the Impact of Credit Risk on Kenyan Insurers
(IJARKE, 2026-01) Gitau, Kimacia; Wamugo, Lucy; Omagwa, Job
The insurance industry is one of the non-bank financial industry with important roles in the economic sector of a country and contributes critically and uniquely both in developing and developed countries. However, in Kenya, poor profitability was a primary factor in the deterioration and eventual closing down of at least 9 insurance companies over the past decade. This investigation aimed to ascertain the effect of credit risk on profitability of Insurance firms in Kenya. The theoretical framework incorporated modern portfolio theory, extreme value theory and institutional theory. The study employed positivist philosophical approach and explanatory research methodology. The research encompassed a comprehensive examination of all 55 insurance entities registered with the Insurance Regulatory Authority in Kenya through 31st December 2022. Audited financial reports accessible through the Insurance Regulatory Authority and Association of Kenya Insurers digital platforms provided secondary data spanning 2014 through 2022. The Central Bank of Kenya and Kenya National Bureau of Standards supplied supplementary information. Analytical procedures encompassed descriptive statistics, panel regression methodology and Pearson's Product-Moment Correlation technique. Credit risk was found to have a negative and statistically significant effect on ROE, and a negative but insignificant effect on ROA. This suggests that an increase in unpaid or delayed premiums erodes firm profitability, especially from a shareholder value perspective. As a result, the study recommends that Insurance firms in Kenya should enhance their credit risk evaluation processes and underwriting standards, particularly for policyholders, corporate clients, and investment portfolios, to minimize defaults and claim-related financial losses.
From Solvency to Success: How Liquidity Risk Shapes Profitability in Kenyan Insurers
(IJARKE, 2026-01) Gitau, Kimacia; Wamugo, Lucy; Omagwa, Job
Despite the Kenya insurance industry recording consistent growth in premium income, over the period 2014 to 2022, performance data documented by the Insurance Regulatory Authority and the Association of Kenya Insurers indicates that profitability, quantified by Return on Assets and Return on Equity, has been on the decline over the period, though experiencing a spike in 2019. In June 2013 the Insurance Regulatory Authority established a comprehensive set of prudential risk management guidelines for the insurance industry in response to the failure and eventual liquidation of at least 9 insurance firms prior to 2013, primarily due to poor profitability. Nevertheless, despite insurance organizations adopting these regulatory measures, profitability continues demonstrating a downward trajectory throughout the specified period. Consequently, the empirical relationship between Liquidity risk exposure and insurance firm profitability remains theoretically un-established. This investigation aimed to ascertain the effect of liquidity risk on the profitability of insurance companies operating in Kenya. The theoretical framework incorporated modern portfolio theory, extreme value theory, agency theory, institutional theory and stakeholder theory. The study employed positivist philosophical approach and explanatory research methodology. The research encompassed a comprehensive examination of all 55 insurance entities registered with the Insurance Regulatory Authority in Kenya through 31st December 2022. Audited financial reports accessible through the Insurance Regulatory Authority and Association of Kenya Insurers digital platforms provided secondary data spanning 2014 through 2022. The Central Bank of Kenya and Kenya National Bureau of Standards supplied supplementary information. Analytical procedures encompassed descriptive statistics, panel regression methodology and Pearson's Product-Moment Correlation technique. The study found that liquidity risk exhibits positive and statistically significant effect on profitability. Consequently, the study recommends that since higher liquidity risk is associated with higher profitability, insurance firms can explore more aggressive investment strategies, such as investing in long-term, higher-return assets so as to leverage liquidity risk enhancing returns, while ensuring adequate risk buffers. Insurance Regulatory bodies in Kenya should also create policies that allow insurance firms to optimize their liquidity management strategies while ensuring financial stability.
Corporate Governance and Profitability of Agricultural Firms Listed at the Nairobi Securities Exchange, Kenya
(International Academic Journal of Economics and Finance (IAJEF), 2026-03) Kieti, Winfred M.; Jagongo, Ambrose O.
The growing dissatisfaction among most stakeholders with the need for improved value in firms in which they have invested is a phenomenon that extends beyond individual firms and becomes a global issue. Most organizations have been forced to close due to prolonged periods of declining profitability, ultimately resulting in management losing control. Listed agricultural firms at the Nairobi Securities Exchange have experienced fluctuating profitability between 2015 and 2024. This volatility was attributed to multiple factors including commodity price fluctuations, exchange rate movements, climatic variability, operational inefficiencies and government structures. While external factors are unavoidable, corporate governance remains an internal mechanism that firms can control to enhance profitability. This study's main goal was to investigate the effect of corporate governance on profitability of agricultural firms listed at the Nairobi Securities Exchange. Analysing the effects of board committees, remuneration, independence, and size on these companies' profitability, as well as examining the moderating effect of firm size in this relationship, were the specific objectives. The study was grounded on agency, stewardship, stakeholder, and resource dependence theories.
Understanding Performance of Small and Medium-Sized Enterprises in Nairobi City County, Kenya: The Influence of Financial Accessibility Practices
(Journal of Business Management & Innovation, 2026-03) Alata, Vincent; Aluoch, Moses Odhiambo
In any business or organization’s endeavors, performance is the critical vision for management, growth, and improvement. Besides, in the unpredictable and competitive business environment, the availability of financial resources plays a significant role a sound financial accessibility practice leads to better business opportunities and innovative processes. Small and Medium Enterprises are part of the vast informal economy, which significantly contributes to job creation and poverty alleviation. In Kenya, however, within a few months of operation, about half of these businesses close, while most that remain perform poorly. The dismal performance has been linked to challenges in credit access in the banking sector, as these financial institutions play a key role in serving this segment. The study examined the influence of financial accessibility practices on the performance of small and medium-sized enterprises in Nairobi County, Kenya. Specifically, the study aimed to investigate the impact of entrepreneurial orientation, interest rate, collateral requirements, and credit rationing on access to credit and performance of Small and Medium Enterprises. This research was anchored in three theories: the asymmetric information theory, the adverse selection theory, and the Credit Rationing Theory. A descriptive survey research design was employed in the study to target 3,000 Small and medium enterprises registered in Nairobi County. The sample size was determined using Taro Yamane's formula, selecting 97 respondents as the unit of observation. Proportionate stratified and random sampling was used as the sampling technique. The data collection instrument was a pilot-tested questionnaire for accurate measurement examination. Descriptive statistical methods, such as the mean, standard deviation, frequencies, and percentages, were used to analyze the data. In addition, inferential statistical techniques, such as Pearson's correlation and multiple regression, were used to assess relationships among the variables. The data were presented through tables and charts. The empirical results indicate that the four independent variables had a significant impact on the performance of Small and Medium Enterprises in Nairobi County, Kenya (Adj R2 = 0.743, F-stat = 54.485, p < 0.005). The study concluded that financial accessibility practices improve the affordability, profitability, growth, and cost efficiency of firms' financial services. The study's findings contribute to the body of knowledge, thereby enriching the formulation of policies and best practices for firms to access credit and loans. Management and directors of Small and Medium Enterprises should entrench credit access activities and practices to optimize organizational outcomes.
Financial Management Practices and Financial Performance of Commercial and Manufacturing State Corporations in Kenya
(IPRJB, 2026-03-24) Njoroge, Peter; Jagongo, Ambrose
Purpose: This independent study in finance attempts to investigate effect of Financial Management Practices on Financial Performance of Commercial and Manufacturing State Corporations in Kenya. Methodology: Researcher intends to adopt a positivist philosophy that demands researcher to be independent of the study. Explanatory non-experimental research design will be employed in the study. For the purposes of this study, a census of all Commercial and Manufacturing Corporations will be used in study. The study will use Secondary data from financial statements of Commercial and Manufacturing State Corporations for period 2020- 2025. Data will be obtained from office of auditor general and Kenya Parliament Library. Researcher proposes to use a panel multiple linear regression model in the analysis and Baron & Kenny (1986) methodology to test for mediation and moderation effects. Findings: The study anticipates that effective financial management practices will significantly enhance Financial performance with internal cashflows mediating this effect, particularly moderated by firm size in Commercial and Manufacturing State Corporations in Kenya. The study will determine whether the financial management practices significantly affect Financial Performance of Commercial and Manufacturing State Corporations In Kenya and give advise to Management and those charged with governance of these corporations on management practices of serious concerns for improvement. Findings will guide management to prioritize risk management practices, advising governance bodies on reforms to improve financial health and reduce bailout dependencies. Unique Contribution to Theory, Practice and Policy: Management of Commercial and Manufacturing State Corporations will be able to tell how financial management practices affect their financial performance. The study intends to ennriches literature by testing mediation and moderation in an African SOEs context, potentially refining Resource based Theory for resourceconstrained environments. The study informs turnaround strategies for Kenyan SOEs, such as optimizing capital structure to boost performance amid economic volatility. Finally, the study will provide evidence for policymakers (e.g., Treasury) to enforce better financial practices, supporting sustainable development goals.
Strategic Human Resource Outsourcing Motivators and their Effect on Outsourced Employee Retention among Oil and Gas Companies in Kenya
(StratfordPeerReviewedJournalsandBookPublishing, 2026-03) Amisi, Faith; Keino, Dinah; Omagwa, Job
Employee retention among outsourced workers remains a significant organizational challenge, owing to the fact that these employees frequently perform comparable roles to permanent employees while receiving unequal benefits. Such disparities erode perceptions of fairness, job security, and organizational belonging, lowering motivation and increasing turnover intentions, particularly in skill-intensive industries such as oil and gas. In response, this study looked at how strategic motivators affect employee retention in Kenyan oil and gas companies. The study used Resource Dependency Theory and a pragmatist philosophy to guide the research, which used a mixed-methods approach. The study targeted 219 oiland gas firms and drew a sample of 125, collecting responses from 211 Heads of Human Resources and Procurement, resulting in an 84.4% response rate. Semi-structured questionnaires were used to collect quantitative and qualitative data, and their validityand reliability were confirmed via expert review and Cronbach's Alpha. Descriptive statistics, correlation, and multiple regression analyses were used to test hypotheses and determine statistical significance. The independent variables accounted for 52.9%of the increase in employee retention. Strategic human resource motivators had a positive and statistically significant effect on retention (β = 0.207; p = 0.011). Based on these findings, the study recommends that the Ministry of Labor and Social Protection create sector-specific outsourcing frameworks that mandate annual vendor compliance reporting on outsourced employee retention indicators. Policy frameworks should address disparities between permanent and outsourced employees by mandating inclusion in training, career development, remuneration reviews, and welfare initiatives in the oil and gas industry. Firms are also encouraged to improve HR governance by using standardized contracts, risk management systems, and strategic alignment of outsourcing decisions to increase outsourced employee retention. Lastly, organizations should assess which HR functions generate the most value when outsourced to improve employee support and satisfaction.
Technology-Driven Financial Services and the Profitability of Five-Star Hotels in Nairobi City County, Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2025-10) Huria, Ann Wambui; Irungu,Anthony Mugetha
he hotel industry is a critical component of Kenya’s economy, with Nairobi City County hosting the highest concentration of five-star hotels. Between 2020 and 2024, these hotels experienced a marked decline in profitability. This study examined the effect of technology-driven financial services on the profitability of five-star hotels in Nairobi. Specifically, it investigated the impact of online booking platforms, mobile banking solutions, fintech-based loyalty programs, and automated invoicing systems. Anchored on Transaction Cost Theory, Innovation Diffusion Theory, and the Technology Acceptance Model, the study employed a descriptive research design targeting Finance, IT, and Customer Service departments across all eleven five-star hotels in Nairobi, yielding 62 respondents. Data were collected via structured questionnaires and analyzed using multiple regression techniques. Findings revealed 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) significantly and positively influenced profitability, with mobile banking showing the strongest effect. Automated invoicing systems had a positive but statistically insignificant effect (β = 0.136, p = 0.382). The study concluded that integrating digital financial technologies, particularly mobile banking, online booking platforms, and loyalty programs, enhances hotel profitability. Recommendations include improving booking platforms, prioritizing mobile banking investments, and developing personalized loyalty programs integrated with other fintech tools to boost customer retention and long-term financial performance.
Digital Financial Services and Profitability of Microfinance Banks in Kenya: A Theoretical Review
(Globeedu Group, 2026-02) Omwenga, Kerubo Cyprine; Jagongo, Ambrose
Microfinance banks play a crucial role in promoting financial inclusion in Kenya by serving low-income households and informal sector businesses. The profitability of microfinance banks in Kenya has fluctuated over the past few years, raising concerns about the sector’s financial sustainability. Return on assets increased slightly from 1.2% in 2021 to 1.4% in 2022, and further rose to 3.7% in 2023, indicating a gradual recovery in profitability. In 2024, the sector recorded a significant decline in return on assets, reporting a negative return of 6.1%, reflecting losses. The general objective of the study is to investigate the effect of digital financial services on the profitability of microfinance banks in Kenya. The specific objectives of this study are to determine the effect of mobile banking, internet banking, and agency banking services on the profitability of Kenyan microfinance banks. The research study also aims to establish the moderating effect of the regulatory framework on the relationship between digital financial services and the profitability of Kenyan microfinance banks. The study was anchored on the technology acceptance theory and supported by financial intermediation theory, financial innovation theory, and institutional theory. An empirical literature study was also incorporated.
Moderating Effect of Environmental Regulatory Framework on the Relationship Between Green Investment Initiatives and Profitability of Manufacturing Firms in Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2026-03) Karanja, Teresiah Wairimu; Warui,Fredrick Waweru; Aluoch, Moses Odhiambo
Despite their importance, manufacturing companies continue to encounter ongoing profitability challenges. Over the past decade, listed manufacturing firms in Kenya have experienced a consistent decline in return on assets (ROA), which reflects diminishing efficiency in asset utilization. This study aimed to assess how green investment practices influence the profitability of manufacturing companies in Kenya, while also examining the moderating influence of environmental regulations on this relationship. The research was underpinned by five theoretical perspectives: the Porter Hypothesis, Sustainable Finance Theory, Transaction Cost Economics Theory, Dynamic Capability Theory, and Institutional Theory. The study focused on ten manufacturing companies registered and publicly traded on the Nairobi Securities Exchange (NSE). Findings from correlation and regression analyses indicated that all four categories of green investment were positively and significantly associated with profitability. Among these, energy efficiency investments demonstrated the most substantial positive impact (r = 0.641, B = 0.821, p = 0.000), followed by investments in green supply chain management (r = 0.241, B = 0.447, p = 0.013) and renewable energy initiatives (r = 0.182, B = 0.314, p = 0.039). Sustainable waste management practices also showed a positive relationship with profitability, though the contribution was relatively modest (r = 0.094, B = 0.192, p = 0.233). Collectively, the green investment variables accounted for 38.6% of the variance in firm profitability (R² = 0.386), indicating considerable explanatory power. When the environmental regulatory framework was incorporated as a moderating variable, the explanatory strength of the model increased to 45.7% (R² change = 0.071, F change = 4.189, p = 0.006). This suggests that regulatory support amplifies the financial benefits derived from green investments. The study concludes that green investment initiatives significantly contribute to enhanced profitability in manufacturing firms, with regulatory policies providing a supportive, albeit limited, moderating effect. It recommends that policymakers reinforce environmental regulations and introduce incentives that encourage sustainable industrial investment. Manufacturing companies are also encouraged to embed green practices into their core operations as a strategy to boost competitiveness and profitability
Moderating Effect of Capital Inflows on the Relationship Between Systematic Risks and Stock Market Return Volatility Among Firms Listed at the Nairobi Securities Exchange, Kenya
(Stratford Peer Reviewed Journals and Book Publishing, 2026-02) Kinuthia,David Ngugi; Warui, Fredrick; mithi, Festus
The study assessed the moderating effects of capital inflows on the relationship between systematic risks and stock market return volatility among firms listed at the NSE, Kenya. Volatility in the stock market in Kenya has been on the rise in the recent years. Capital inflows can impact stock market volatility by affecting overall market liquidity and investor sentiment. Sudden changes in capital flows, such as large-scale foreign selling or buying, can exacerbate market volatility as prices adjust to accommodate the influx or outflow of funds. Empirical studies found conflicting findings and displayed research gaps that this study sought to fill. The study was anchored on positivism philosophy and correlational research design. The target population was all 62 NSE listed firms listed between 2014 and 2024. Secondary data was collected from NSE, KNBS, CMA and world bank reports using data collection sheet. The data was analyzed through descriptive statistics and multiple regression. The study found that individual interaction terms were insignificant, including inflation (β = -0.0172, p = 0.428), exchange rate (β = 0.0368, p = 0.306), and interest rate (β = -0.0215, p = 0.389). Hence, capital inflows had no significant moderating effect on the relationship between systematic risks and stock market return volatility. The study concludes that capital inflows have no significant moderating effect on the relationship between systematic risks and stock market return volatility of firms listed at the NSE Kenya. The study recommends that regulatory bodies such as the CMA and CBK develop policies that encourage productive and long-term capital inflows. The CMA and CBK should establish early warning mechanisms that monitor capital flow volatility and its potential spillover effects on equity market stability. Market regulators should also enhance investor education initiatives so that market participants are better equipped to respond rationally to changes in capital flow patterns, thereby reducing sentimentdriven volatility in the Kenyan stock market
Does Size Shield? Examining the Moderating Role of Firm Size on Market Risk–Profitability Nexus among Kenyan Insurers
(INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH, 2025) Gitau, Kimacia; Wamugo, Lucy; Omagwa, Job
The insurance industry constitutes a critical pillar of the non-bank financial sector and remains integral to sustaining economic development in both emerging and advanced markets. In Kenya, persistent pressures on profitability have been evident, with at least nine insurers experiencing severe financial distress leading to collapse over the past ten years. This study examined whether firm size moderates the relationship between liquidity risk and credit risk in shaping the profitability of insurance companies in Kenya. The inquiry was anchored on key theoretical frameworks, namely Modern Portfolio Theory, Agency Theory and Institutional Theory. A positivist philosophical orientation and an explanatory research design informed the methodological choices. The target population comprised all 55 insurers licensed by the Insurance Regulatory Authority (IRA) as at 31 December 2022. The study utilized secondary data derived from audited financial statements accessed through IRA and the Association of Kenya Insurers (AKI) repositories for the period 2014–2022, complemented by data from the Central Bank of Kenya and the Kenya National Bureau of Statistics. Analytical procedures included descriptive statistics, panel regression modelling, and Pearson’s correlation analysis to evaluate the associations among the study variables. The findings revealed that firm size did not exert a statistically significant moderating effect, as it did not materially alter the model’s decision rule. This suggests that the influence of interest rate, inflation and foreign exchange risks on return on equity (ROE) and return on assets (ROA) remained relatively uniform across insurers irrespective of their asset base. The study recommends that insurance companies in Kenya should implement comprehensive and standardized risk management practices irrespective of organisational size.

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