The Effects of Working Capital Management Practices on the Financial Performance of Insurance Companies in Kenya
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Date
2020
Authors
Wambia, Wilson Ochieng
Jagongo, Ambrose
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journals
Abstract
Working capital management affects the
financial performance of organizations and
therefore requires sound management to
balance off the performance and risk of not
meeting financial obligations as they fall
due. This study sought to explore the effect
of working capital management practices on
the financial performance of insurance
companies in Kenya. Its objectives were to
establish the working capital management
practices adopted by insurance companies,
assess the relationship between working
capital management practices and the
financial performance of insurance
companies, establish the impact of raising
the minimum working capital on financial
performance of insurance companies and
establish the challenges faced by insurance
companies in Kenya in working capital
management. The study used the descriptive
research design. It targeted 47 underwriting
managers, chief accountants and finance
managers from all the 47 insurance
companies in Kenya. Purposively sampling
technique was used to select a sample size of
141 respondents. Data was collected using
the questionnaire and analyzed using
Statistical Package for Social Sciences. This
study established that insurance companies
used all the three working capital
management approaches which are
conservative, matching and aggressive
practices. Further, it established that the
choice of working capital management
technique affected the performance of
insurance companies. This study concluded
that working capital management had
positive effect on financial performance of
insurance companies. It recommended that a
review and adherence to proper recruitment
principles to ensure recruitment of
competent staff as a long-term strategy of
ensuring employee efficiency in task
execution.
Description
A research article published in International Academic Journal of Economics and Finance
Keywords
working capital management practices, financial performance, insurance companies, Kenya
Citation
The effects of working capital management practices on the financial performance of insurance companies in Kenya. International Academic Journal of Economics and Finance, 3(5), 103-120