School of Business
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Item Effect of Internal Control Practices on Financial Performance of Supermarket Chains in Nairobi Central Business District(KCA University, 2018) Gitau,Roselyn N.The globalization of the economy has led to retail supermarket opportunities in emerging markets. However, the Kenyan supermarket retailers face a dynamic retail environment highly challenging their financial performance. The survival of Kenyan supermarket retailers depends on the successful and proficient utilization of their financial resources. For the supermarket retailers to meet their financial performance target level, they should initiate internal control practices that keep them on a path toward achieving their financial objectives and the achievement of their missions Even though internal control practices have been implemented in most organizations, financial crimes have continued to rise among supermarket retailers. In Kenya several supermarket retail chains have been experiencing declining financial performance leading to the stores being placed under receivership in the last decade The empirical studies show that only limited studies focused on internal control practice and financial performance among supermarket retail chains in Nairobi central business district, depicting the existence of a knowledge gap. As noted above, there is need for supermarket retailers in Kenya to progress their financial performance by advancing on their internal control practices hence, the present study. The present study suggests that internal control practices help increase financial performance among supermarket retail chains in Nairobi central business district. The current study used a descriptive survey having the 54 main retail supermarkets in Nairobi central business district as its target population and obtained a sample size of 54 through census since the target operation was less than one hundred (100). Data collection involved the use of a questionnaire of which the primary source of data was tested for validly and reliability. Data was analyzed using Quantitative analysis and thereafter descriptive analysis. The study revealed that the average financial performance of supermarket chains in Nairobi central business district is moderate. It established that; there is a moderate positive effect of credit risk assessment practice on the financial performance of supermarket chains in Nairobi central business district, effective procurement control practice highly affects financial performance of supermarket chains in Nairobi central business district, adoption of proper internal checks practices highly affect the financial performance of supermarket chains in Nairobi central business district positively, and practice of segregation of duties has a major positive effect on the financial performance of supermarket chains in Nairobi central business district. The study revealed a 5% level of significance. 49.17% of change in financial performance of supermarket chains in Nairobi central business district is explained by; credit risk assessment practice, procurement control practice, internal checks practice and practice of segregation of duties. The study recommends that the supermarket chains in Nairobi central business district should; review their credit risk assessment practice in the dynamic retail environment, develop and implement a reviewed procurement policy, evaluate and employ the internal checks practices, and lastly the practice of segregation of duties should be actively employed by supermarket chains in Nairobi central business district.Item Financial Risk Management As A Tool For Improving Financial Performance In Real Estate Investment In Nairobi County(KCA University, 2013) Murunga, Patrick M.The study is an assessment of the financial risk management as a tool for improving financial performance in real estate investment in Nairobi County. The study intended to use descriptive survey design. The population of the study was all 151 real estate firms. The unit of analysis is the real estate managers of Nairobi Count. A sample of 110 firms was taken. The study used primary data which was collected through use of a questionnaire. Data analysis was conducted using descriptive and inferential statistics. The specific descriptive statistics used were mean scores and frequencies. The particular inferential statistics used was regression analysis. The data was then analysed using STATA. This research set out to find out whether financial management can be as a tool for improving Financial Risk Management in real estate in Kenya. The study has found out that financial risks are present in real estate and the same pose serious challenges to real estate managers and investors. The study has also found out that the risk management measures that the managers in the industry are using are not adequate given the significant losses that are suffered by the real estate managers and investors conducting business within this market. The study has found out that players within the industry are in agreement that effective risk management in real estate can increase profitability, increase operational efficiency and effectiveness and enlarge market share all of which can lead to financial performance. There is therefore need to consider adopting other risk management measures such as operational hedging and financial hedging that could assist managers in real estate minimize the losses suffered attributable to risks. There is need to carry out an in depth analysis that will help real estate managers identify all the risk facing them in real estate. There may be a need therefore to have further researchers investigate this variance and investigate how prepared real estate managers are in managing foreign exchange risk in the real estate market. Future researchers could also investigate the reasons behind real estate investment and the fundamentals that guide such investment. With a moderate risk attitude attributed to Kenyan property investors and their managers, it would be interesting to know what fundamentals drives real investment in Kenya given that risk is of little concernItem Effects Of Micro Factors On The Financial Performance Of Listed Insurance Companies In Kenya(KCA University, 2018) Kinyua, Beatrice M.Insurance Companies in Kenya have been in the process of significance gradual change, however, they are several challenges faced, and this study establishes factors affecting financial performance of insurance industry in Kenya. The micro factors tend to be emphasized in the insurance companies. The objective of this study is to find out whether there exists relationship between micro factors and insurance profitability. The main aim of this study is to find out the effects of micro factors on financial performance of insurance companies in Kenya. The study will use descriptive research. The research design will take the form of a census that covers the insurance companies licensed to operate. The population of the study was 6 listed insurance companies. The study used fixed regression analysis to find the relationship between the micro factors in terms of the company size, liquidity, retention ratio, insurance claims and financial performance of listed insurance companies. STATA was used to analyze the data. Results of the study revealed positive and no significant effect of liquidity on financial performance of listed insurance companies in Kenya. Secondly, company size had inverse and significant effect on financial performance of listed insurance companies in Kenya. Moreover, retention ratio and claims ratio had inverse and non-significant effect on financial performance of listed insurance companies in Kenya. It was concluded that there is need for insurance companies to continuously evaluate their working capital management strategies, asset accumulation strategies, market penetration strategies and claims evaluation strategies.Item Effect Of Loan Policies On Financial Performance Of Church Based Savings And Credit Co-operative Societies In Kenya(Kca University, 2017) Maithya, Matthew K.Savings and Credit Co-operatives Societies sector in Kenya has been very vibrant. It has grown to touch every part of our society and sector, but in all these sectors SACCOs are required to adhere to certain loan policies and regulations set by management internally and by SACCO Societies act (2008) for them to be financially sustainable. Therefore the objective of this study was to provide an understanding of how loan policies affect the financial performance of church based SACCO’s and bridge the knowledge gap that exists. This study was geared to provide an understanding on how specific loan policies affect the financial performance of SACCO’s established and run by churches in Kenya in order to bond the knowledge gap that may have existed. The study adopted descriptive research design study in which secondary data from SASRA reports and the published audited financial statements. The data was gathered between the period 2011 to 2015 for 33 church based SACCOs both registered by SASRA and those regulated by county cooperative commissioner. The study made use of regression analysis to analyze the data by equating dependent variables to the independent variable. All the hypotheses were tested by the researcher in the study and the findings were presented using tables. STATA was utilized to analyze the data collected in this research, as the researcher deems it to be the most appropriate, given its versatility and considering the nature of the data collected. The study found that, loan policies have insignificant effect on ROA of church based SACCOs according to the evidences gathered since the p-values where more than the acceptable significance level therefore there is a weak negative relationship between loans lending policies and ROA. There is also weak positive relationship between non performing loan and ROA as well as loan insurance cover policy with ROA. The study recommends that this SACCOs should review their loan policies regularly in order for them to remain competitive against changing financial environment.Item Effect Of Asset Allocation Strategies On Financial Performance Of Insurance Companies In Kenya(KCA University, 2019) Gathage, Robert K.Asset allocation is an important aspect in financial planning and if ignored it can prove fatal to an investment portfolio. Asset allocation strategies tend to balance returns and risks in an organization by making adjustments in the mix between cash, equities and bonds. In the insurance industry, the process of asset allocation is complicated given that the core business of insurers is settlement of claims to policyholders and yet at the same time, maximization of investment returns is crucial as investment income acts as a buffer from underwriting losses characteristic of the industry. Therefore, this study sought to determine the relationship between asset allocation and financial performance. A descriptive research design was used for the study. The study‟s target population was all 165 heads of finance, investment and risk departments in the 55 insurance companies in Kenya. Stratified random sampling technique was used to select 50% of the target population. The study‟s sample therefore was 83 respondents. The research primary data was collected by use of semi-structured questionnaires. Both quantitative and qualitative data was generated from the collected questionnaires. Thematic analysis was used to analyze the quantitative data and the result communicated in prose form. Analysis of quantitative data was based on descriptive and inferential statistics through the help of statistical package known as STATA 12. Descriptive statistics included percentages, frequencies, mean and standard deviation. The results were provided in terms of figures and tables. Inferential statistics entails regression and correlation analysis. The study also used correlation analysis and multiple regression analysis to determine the relationship existing between the independent variables and dependent variable. The study found that integrated asset allocation strategy positively influences the Kenyan insurance companies‟ financial performance. The study also found that strategic asset allocation strategy has a positive influence on financial performance of Kenyan insurance companies. Further, the study established that tactical asset allocation strategy influences financial performance of insurance companies in Kenya. The study further revealed that dynamic asset allocation strategy influences financial performance of insurance companies. According to the findings, there was a positive relationship between integrated asset allocation strategy and financial performance (r=0.6492, p=0.000). The results indicated a positive relationship between strategic asset allocation strategy and performance (r=0.6574, p-0.000). In addition, there was a positive association between tactical asset allocation strategy and financial performance (r=0.6455, p=0.000). Further, there was a positive relationship between dynamic asset allocation strategy and financial performance (r=0.5602, r-0.000). The F-calculated (26.82) was greater than the F-critical (2.46), which showed that the model can be used in predicting the influence of the independent variables on the dependent variable. This study recommends that insurance companies should only use integrated asset allocation strategy when they have enough resources. In addition, insurance companies should only use strategic allocation strategy in the achievement of long-term goals. Tactical asset allocation strategy should be used in achieving the short-term goals is an organization. It should be avoided in volatile markets as changes in the allocation of assets can underperform the averages of the market.Item Effect Of Islamic Financing On Financial Performance Of Businesses In Eastleigh Business Community, Nairobi County(KCA University, 2016) Billow, Hassan I.This study examines the effect of Islamic finance on the Eastleigh Business Community, Nairobi, Kenya, by analyzing the financial performance of the businesses that accesses the Islamic Financing overall period of 3years (2011-2013). The study particularly examines the effect of short term financing, long term financing and equity financing on the financial performance of Muslim owned businesses. The study employs the use of information on the type of financing accessed and more specifically return on Asset to measure the performance of the sampled firms that had access to Islamic financing. The 155 firms in textile industry was undertaken for this study however, the businesses also needed to have been in operation for at least 3 years as at December 2013. Out of the 155 firms the study was able to find 95 firms out of which only 55 firms had been in existence for over three years as at December 2013. Therefore our target population was these 55 firms. Primary data was collected using questionnaires. Stratified Sampling was used to come up with 43 firms that fully responded to questionnaires and formed the study. Descriptive statistics, regression and correlation analysis was used to analyze the variables. The relationship between short term financing and firm’s performance was positive and more specifically, cost plus sales was the most significant of all the types of short term. Long term and Equity financing was insignificant to the study. The findings are important to policy or law makers and Authorities such as capital markets authorities to construct and enact policies that would foster business growth without disregarding the Islamic Religion. The study may also be used for further research on related topic. The study recommended review and development of legal framework to fully incorporate Islamic financing to mainstream finance options in Kenya, need for promotion and awareness of the services and also recommended further research on Manufacturing and Construction industries to understand effect on long term financing.Item Effect Of Macroeconomic Variables On Average Financial Performance Of Deposit Taking Savings And Credit Cooperative Societies In Nairobi, Kenya(KCA University, 2018) Mwaniki, Scholastica.The purpose of the study was to examine the effect of macroeconomic variables on average financial performance of Deposit Taking Savings and Credit Cooperatives in Nairobi Kenya. The study sought to establish the effect of interest rate, inflation rate and money supply on the average financial performance of Deposit Taking SACCOs (DTSs) in Nairobi, Kenya. The study was based on the international Fisher effect theory, classical theory of inflation and Baumol-Tobin Approach to transaction demand for money. The study used a descriptive design. Target population was 35 DTS registered by SASRA to operate up to December 2017 in Kenya. The sample size for this study comprised of 15 DTS operating in Nairobi Kenya, which were licenced to operate FOSA by SASRA. These are the DTSs whose data was available for the period of study. Quarterly data was collected for 20 years (1997 – 2016). Analysis was conducted using the vector error correction time series model. The results show that there was no statistically significant relationship between return on assets and lagged values of either themselves or of other variables at the 5% level of significance. The effect of lagged values of money supply on return on assets was however significant at the 10% level. On money supply, there was a statistically significant relationship between this variable’s lagged values and itself (p value = 0.013). The lags of all other variables did not have a significant relationship with money supply. Pertaining the interest rates, it is evident that only the error correction term (p value = 0.000) impacted current interest rate significantly. Finally, Inflation rates had a statistically significant relationship with the error correction term (p value = 0.001), lagged values of itself (p value = 0.041), and lagged interest rates (p value = 0.017). Since the influence of money supply on returns on assets is significant at the 10% level, the conclusion is that the fluctuations in money supply have the highest prediction ability for variability in the financial performance of deposit taking SACCOs. It is therefore recommended that money supply targeting interventions should be incorporated in monetary policies of the Central Bank due to their ability to influence performance of financial services firms.Item Effects Of Risk-based Audit On Financial Performance Of State Owned Corporations In The Ministry Of East African Community, Labour And Social Protection In Kenya(KCA University, 2016) Ng'ang'a, Irene M.Risk-based auditing guides a firm’s usage of its own internal audit function so as to enhance risk management and controls. It enhances accountability and accuracy of financial statements thereby improving financial performance of institutions. The general objective of this study was to establish the effect of risk based audit on performance of state owned corporations in the Ministry of East African Community, Labour and Social Protection in Kenya. The research design used was descriptive research design. The population of the study comprised 160 senior managers of State corporations in the ministry. The study was a census. The study used primary data that was collected through self-administered questionnaires. The data was analyzed by the use of descriptive statistics which included inferential statistics such as regression and bivariate correlation. The study established that risk assessment, internal audit standards, control environment and information system positively affected the financial performance of state owned corporations in Kenya. The study recommends that the Management of state corporations should implement effective risk based audit practices to enhance performance. It also recommends that the management of the commercial state corporations in Kenya should bear the responsibility of equipping their firms’ internal audit functions with adequate resources so as to enable them to develop effective annual risk based audit plans. The study also recommends that in order to improve the financial reporting of state corporations in Kenya, the management of state corporations must embrace International Auditing Standards (ISAs),which guide ethical practices of internal audit personnel. The main limitation of the study was that it was based on data collected from one government ministry only. A study of additional ministries may have provided greater insights to the study topic. Similarly, future research could focus on the private sector for the purpose of making comparisons.Item Effect of Licensing Requirement on the Financial Performance of Deposit Taking Savings and Credit Cooperatives Societies in Kenya: A Case Of Selected Saccos In Nairobi(KCA University, 2015) Thomi, Richard N.SACCOs in Kenya are required to adhere to regulations set in SACCO’s regulation authority (SASRA). The management has to present the capital adequacy return reports, liquidity statement report, Statement of financial position and Statement of deposit return as well as Return on investments report which compares land, building, and financial assets to the SACCO’s total assets and its core capital. This study sought to fill the existing knowledge gap to determine the effect of SASRA regulation on Sacco’s financial performance and to answer the questions what the effect of SASRA regulations on SACCO’s financial performance in Kenya is. The objective of the study is to assess the effect of SASRA regulations on financial performance of SACCO societies in Kenya. The descriptive survey design was adopted in this study. The research targeted all the 41 SASRA licensed deposit-taking SACCOS in Nairobi. The study used secondary data that was obtained from the financial statements of the SACCOs. Computer software (STATA) aided the analysis process where a statistical hypothesis test (Hausman specification test) was used to evaluate which model between random effects or fixed model corresponds to the data. A regression model was developed based on the outcome of the Hausman test. The results were analysed in form of tables and figures. Finally, conclusion and recommendation was provided. Presentation was done by use of tables for easy understanding. The study used panel regression (random effect) to investigate the relationship. The study results indicated that capital adequacy, liquidity and asset quality were significant predictors of ROE for the deposit taking SACCOs. Based on the study findings discussed above three recommendations are provided based on the objectives of the study. First given that all the independent variables had a positive effect on return of assets and return on equity, the study therefore recommends that deposit taking SACCOS in Kenya need to focus on how their performance relates to returns to equity. This is due to the fact that capital adequacy was observed to have a significant effect on return on asset and return on equity. Secondly, deposit taking SACCOS should observe their liquidity levels to ensure that they are liquid enough to perform their activities. Poor liquidity levels in SACCOS point to high riskiness and the inability of the SACCO to perform their short-term obligations competently. Further, though asset quality had a relatively low significance on return on asset as compared to return on equity, it is important for deposit taking SACCOS to observe efficiency and effectiveness in dealing with delinquencies since the greatest asset of a given SACCO is in terms of performing loans. A high non-performing loan affects the SACCOS operations and has a trickledown effect on the SACCOS financial performance. The study further recommends research using different ratios.Item Effect Of Corporate Governance On Sustainability Of Family Owned Businesses: A Case Of Listed Family Owned Firms In Kenya(KCA University, 2015) Thairu, Francis M.In as much as family businesses make up more than two thirds of all businesses in the world, their sustainability has been questioned since most of the family-owned businesses do not live to see their third generation. This could be attributed to the fact that family-owned businesses are fundamentally distinct from public firms, especially in issues pertinent to corporate governance. When a business is family owned, it is likely to have concentrated control and less stringent corporate governance procedures. This study therefore sought to investigate the effect of corporate governance on the sustainability of Kenyan family-owned businesses. The objectives of the study were to establish the effects of ownership structure on the sustainability of family owned enterprises, to determine the effects of board composition on the sustainability of family owned enterprises, and to assess the effects of board functioning on the sustainability of family owned enterprises in Kenya. This study used a sample of listed family-owned businesses since such firms have overcome all early-stage challenges and have gone ahead to get listed although their founding families still hold a substantial stake in them. The study adopted a descriptive research design and the target population was senior level managers of the fourteen firms. Five managers from each of the firms resulted in a sample of seventy respondents. The study used primary data for empirical analysis. All the independent variables yielded a positive and significant relationship with the dependent variable, confirming a causal relationship between sustainability and the regressors.