Financial Leverage and Performance of Insurance Firms Listed at the Nairobi Securities Exchange, Kenya

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dc.contributor.advisorFrancis K. Gitagiaen_US
dc.contributor.authorNduru, Mummylace
dc.date.accessioned2023-08-07T11:53:43Z
dc.date.available2023-08-07T11:53:43Z
dc.date.issued2023
dc.descriptionA Research Project Submitted in the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of Masters of Business Adminstration (Finance) of Kenyatta Universityen_US
dc.description.abstractFinancial leverage has long been linked with financial performance of insurance industry; however empirical evidence remains unclear on the nature of such relationship. The connection between financial leverage and financial performance has remained unclear. Insurance industry plays a critical role in development of economy in mitigation of risk; however, financial performance has remained a challenge among listed insurance firms in Kenya. For instance, financial performance of the listed insurance firms has been fluctuating across the 5 year period. It is against this background that the research project intended to establish the relationship between financial leverage and financial performance of insurance firms listed on the Nairobi Securities Exchange, Kenya. More the specific objectives of the study was; to establish relationship between short term debts, and financial performance of insurance firms listed on the Nairobi Securities Exchange, Kenya, to establish relationship between long term debts and financial performance of insurance firms listed on the Nairobi Securities Exchange, Kenya, to establish relationship between debt-equity financing and financial performance of insurance firms listed on the Nairobi Securities Exchange, Kenya and to establish relationship between interest coverage and financial performance of insurance firms listed on the Nairobi Securities Exchange, Kenya. The study was guided by pecking order theory, trade off theory and the agency theory. The research used descriptive survey design. The target population was the 6 insurance companies listed on the Nairobi Securities exchange. A census of all the 6 listed insurance companies was used. Secondary data from financial reports as published in the Nairobi Securities Exchange handbook and Kenya National Bureau of Statistics for the period between 2017 and 2021. Various diagnostic tests were carried out including; Normality, Multicollinearity, Heteroskedasticity. Panel regressions analysis and Pearson’s product moment correlation analysis were used for inferential analysis while means and standard deviations were utilized for purposes of descriptive analysis. The findings were that while short term debt, long term and debt equity financing all negative and significant regression beta coefficients, the one for interest coverage was positive but insignificant. The study concluded that financial leverage is a significant predictor of financial performance. The study recommended that finance managers of the listed insurance firms in Kenya should establish optimal debt-equity mix that maximizes the financial performance of their firms. The marketing managers as part of the senior management team should develop and implement relevant revenue generating strategies to improve the earnings of the listed insurance firms in order for them to to meet their debt obligations without hurting the financial position. The investors and shareholders through the board of directors of the listed insurance firms in Kenya should be more active and demand for prudent utilization of the short and long term debts by the management. The policy makers at Insurance Regulatory Authority should develop policies and regulations that can guide debt management among insurance firms.en_US
dc.description.sponsorshipkenyatta universityen_US
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/26587
dc.language.isoenen_US
dc.publisherkenyatta universityen_US
dc.subjectInsurance Firmsen_US
dc.subjectNairobi Securities Exchangeen_US
dc.subjectKenyaen_US
dc.titleFinancial Leverage and Performance of Insurance Firms Listed at the Nairobi Securities Exchange, Kenyaen_US
dc.typeThesisen_US
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