Credit Risk Management Strategies and Loan Performance of Government Enterprise Development Funds in Nakuru County, Kenya

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dc.contributor.advisorDaniel Makorien_US
dc.contributor.advisorJoseph M. Theurien_US
dc.contributor.authorNdung’u, Kiarie Clement
dc.date.accessioned2023-01-16T06:15:01Z
dc.date.available2023-01-16T06:15:01Z
dc.date.issued2022
dc.descriptionA Research Thesis Submitted to the School of Business in Partial Fulfillment of the Requirements for the Award of Degree of Master of Science (Finance) of Kenyatta University, October 2022en_US
dc.description.abstractThe concept of Government Enterprise Development Funds were to fight poverty, create employment and empower youth, women and people with disabilities. However, the funds are facing a challenge of default from borrowers and it is threatening the existence of the funds. This study therefore sought to evaluate the effectiveness of credit risk management strategies on loan performance of Government Enterprise Development Funds in Nakuru County, Kenya. The specific objectives were to evaluate the effect of credit appraisal techniques, credit terms, credit collection policies, credit control measures on loan performance of Government Enterprise Development Funds in Nakuru County, Kenya. The study also sought to evaluate keenly the moderating effect of information asymmetry on the relationship between credit risk management strategies and loan performance of Government Enterprise Development Funds in Nakuru County, Kenya. The time scope covered a period from which the fund has existed. The theories that supported the study were agency theory, contract theory, information asymmetry theory, credit risk theory, account receivable policy theory and liquidity theory. To undertake this study, the descriptive design was adopted. The target population of the study was government enterprise development (revolving) funds. The sample size was drawn using purposive sampling, two funds with structured management systems for the purposes of this study was obtained and the respondents were fund managers and credit officers. The primary data was collected using semi-structured questionnaire and was distributed using drop and pick model. Piloting was done to test the reliability of the instrument. Diagnostic tests to check for Multicollinearity, Heteroscedasticity and Normality were done to check whether Ordinary Least Squares assumptions are violated. Descriptive statistics namely the Mean, frequency and standard deviation was conducted to summarize the data and determine the trends and the extent of deviation of data distribution. The study further conducted inferential analysis namely correlation and regression analysis to define the nature of relationships and the cause-effect relations among the hypothesized variables respectively. Data was analyzed using Statistical Package for the Social Sciences and results presented in tables. The findings revealed that credit appraisal techniques have a positive significant effect on loan performance. The findings further indicated that credit terms have a positive significant effect on loan performance. The findings also revealed that credit collection policies have a positive significant effect on loan performance. The findings further revealed that credit risk control measures have a positive significant effect on loan performance. The findings also revealed that there is a significant moderating effect of information asymmetry on the relationship between credit management strategies and loan performance. The study concludes from the findings that credit risk management strategies has significance effect on loan performance of Government Enterprise Development Funds in Nakuru County. The study recommends proper and sound appraisal techniques utilization to guarantee loaning to the correct beneficiaries and reduces chances of default, the updating of contract terms and condition on a regular basis, proper collection policies and enforcement procedures to enable the funds collect loans on time and within the contract period. The study further recommends establishment of independent internal control system for assessment and focuses on risk environment, the regulatory frame work on Information asymmetry to arrest and neutralize credit risks and help improve collections and lower the default risk. Areas for further studies should be to assess the effect of credit reference bureaus recording and the effects it has on loans performance.en_US
dc.description.sponsorshipKenyatta Universityen_US
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/24431
dc.language.isoenen_US
dc.publisherKenyatta Universityen_US
dc.subjectCredit Risk Managementen_US
dc.subjectStrategiesen_US
dc.subjectLoan Performanceen_US
dc.subjectGovernment Enterprise Development Fundsen_US
dc.subjectNakuru Countyen_US
dc.subjectKenyaen_US
dc.titleCredit Risk Management Strategies and Loan Performance of Government Enterprise Development Funds in Nakuru County, Kenyaen_US
dc.typeThesisen_US
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