School of Business
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Item 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 Determinants Of Dividend Payout In Kenya; Evidence From Manufacturing Firms Listed In The Nairobi Security Exchange(Kca University, 2017) Malietso, Oscar M.iii ABSTRACT The study investigated determinants of dividend pay-out among manufacturing firms listed in Nairobi Security Exchange that covered duration of 10 years effective from 2007 to 2016. Secondary data which comprised of audited financial statements was obtained from the website of the Capital Market Authority. Purposive sampling technique was applied to select 7 firms out of the 10 listed manufacturing firms. Dividend Pay-out measured by dividend per share over earnings per share is the dependent variable while Profitability, Liquidity and Leverage were predictor variables being investigated while Firm size was applied as a Moderating variable. Random Effect Tobit Model is applied in regression due to its suitability to accommodate zero censored values constituted among dependent variable. In addition, Descriptive Statistics is used for analytical purposes on data sampled in aspect of mean, mode and variance. Findings of the research reveals that Liquidity whose p-value is 0.097 hence greater than 0.05 (p > 0.05) insignificantly influences dividend pay-out. However, Leverage and Profitability do have p-values of 0.002 and 0.003 respectively which is less than 0.05, implying they significantly determine how manufacturing firms pay dividend to investors. Moderating variable Firm size increases precision of significance of the model from 0.15 to 0.02 hence considered as significant determinants of dividend pay-out. Based on this outcome, management ought to not only exercise due diligence when borrowing to prevent an entity from liquidation but also invest in noble projects that are geared towards profit maximization as empirically proven by the study. Future research in this context should consider inclusion of more independent variables like Earnings per share, like business risk, earnings per share, taxation, ownership in so doing accuracy is enhanced on proportionality of influence per variable on dividend pay-out. However, component of entity in terms of sector and economic empowerment of a region is paramount since it has a bearing on the end results of the entity which obvious play a vital role on how dividend is issued as alluded by Amarjit et al., (2010). Finally, the outcome of this study will enable potential investors understand the parameters to consider while making decision to invest in Kenya’s manufacturing firms not forgetting insight to management on impact of dividend pay-out to entity reputation as proclaimed in signalling theory.Item Effect Of Financial factors on Financial Distress Of Tier Two Commercial Banks In Kenya(KCA University, 2019) Munguti, Hellen M.Kenyan banking sector is a fast growing industry playing a critical role in the economy of the country by significantly contributing to the GDP. Despite this growth, the banking sector still faces a number of obstacles that threaten its performance. There are a number of challenges that exist in this sector and among the most notorious challenges is financial distress which is a phenomenon that has steered the closure of several tier two commercial banks thus crippling the financial sector, frustrating investors and creating a major setback in the economy. This study sought to establish the effect of financial factors on the financial distress of tier two commercial banks in Kenya. The variables under this research were leverage, liquidity, organizational size and foreign ownership. The general objective of the study was to establish the effect of financial factors on financial distress of tier two Commercial Banks in Kenya while the specific objectives were to determine the effect of leverage and liquidity, establish the effect of firm size and evaluate the effect of foreign ownership on financial distress of tier two commercial banks in Kenya. The study considered the Trade Off theory, Liquidity Preference theory and Wreckers theory of financial distress. Causal research design was used in the study with a target population of 13 tier two commercial banks in Kenya and covered a ten-year period between 2009 and 2018. 11 out of the possible 13 banks were used in the study since two of the banks were under receivership at the time the study was carried out. The study used secondary data which is quantitative in nature collected from the banks’ financial statements. Beneficiaries of the findings of this study included investors, policy makers, management and other researchers. Various diagnostic tests were conducted; these included the Hausman test, Normality test, Multicollinearity test, Linearity and Homoscedasticity test. Panel Regression model was used to predict the effect of financial distress of tier two commercial banks in Kenya using STATA statistical software version 14. Analyzed data was presented in tables and graphs. The study revealed a significant relationship between leverage as a financial factor on financial distress of tier two commercial banks in Kenya. The study recommends that commercial banks should strike a balance between debt and equity in their capital structure and that they should not place much emphasis on debt as too much of it would result to financial distressItem Determinants Of Dividend Payout For Firms Listed At Nairobi Securities Exchange(Kca University, 2022) Njiraini, Casto N.Over the years, dozens of theories have attempted to explain the dividends phenomenon with no consensus reached. Many of the theories view agents as rational and dividends either serve as an efficient way to resolve agency problems or as a signaling device to mitigate information asymmetry problems. This study sought to establish the determinants of dividend payout ratio for companies listed at the Nairobi Securities Exchange. The specific objectives of the study were to determine the influence of profitability, liquidity, leverage and firm size on dividend payout ratio for companies listed at the Nairobi Securities Exchange. The target population of the study were all the 64 firms listed at the NSE as at 31st December 2021. However, one of the firms was listed after 2017 while 5 were suspended remaining with 58 listed firms at NSE. Thus, a census of all the 58 NSE listed firms was conducted. The study employed descriptive research design and secondary data was collected for a period of 5 years, from 2017 to 2021. Data was analyzed using descriptive statistics and panel data regression. Descriptive statistics involved determining the mean, the standard deviation, skewness and kurtosis for each variable under study. Panel data regression analysis established the nature and significance of the relationship between the study variables. Stata version 16 was employed to analyze the data. The analyzed data was presented using tables and charts. The findings of the study indicated that firm size, liquidity and profitability of the companies listed at the Nairobi securities exchange had a positive and statistically significant relationship with dividend payout. However, financial leverage was found to have a positive but insignificant effect on the dividend payout of the listed firms under study. The study recommended that the listed firms under study should focus on making their operations cost efficient and effective to maximize profits and should invest some resources in fixed assets but have more investments in liquid assets. The firms relying on loans to finance its operations should not focus on paying dividends to its shareholders but the immediate focus of these firms and finally the firms should focus on investing the profits accrued from the operations of the company back to the company to grow the company and make it stable.Item Firm Characteristics And Financial Intermediation Efficiency Of Commercial Banks Listed At The Nairobi Stock Exchange In Kenya(KCA University, 2022) Njuguna, Eunice W.Commercial banks play an integral role in the financial intermediation. Financial intermediation is defined as the process through which commercial banks connect savers and borrowers. The efficiency and stability of commercial banks are regarded integral in the stability and eventual growth of the economy. Firm characteristics of commercial banks refer to those attributes that are largely determined by the management and the other organizational stakeholders including the employees. These variables are integral in the determination of the financial stability of commercial banks. However, there are various instances that have depicted the Kenyan banking sector sometimes unstable as well as inefficient especially following recent collapse of the Imperial bank and Chase bank. This study focused on the firm characteristics and their influence on the financial intermediation efficiency of commercial banks listed at the Nairobi stock exchange. A descriptive research design was adopted. Data was collected from consolidated reports for years 2017 to 2021. Data analysis was done through descriptive statistics and inferential statistical analysis including correlation and regression analysis. STATA and E-Views were used to incorporate the data forming the pooled model. Output from the data analysis were presented through tables, figures, and graphs. There was positive and not significant effect of capital adequacy on financial intermediation efficiency of listed commercial banks in Kenya. Further, operating efficiency and asset quality has inverse and not significant effect on financial intermediation of listed commercial banks. Moreover, there was an inverse and significant effect of liquidity on financial intermediation efficiency of listed commercial banks in Kenya. Based on the findings it can be concluded that increase in capital adequacy increases financial intermediation efficiency of listed commercial banks in Kenya. An inverse contribution of asset quality on financial intermediation efficiency we can conclude that an increased level of non-performing loans decreases financial intermediation efficiency. Further, there is a negative co-movement between liquidity and financial intermediation of listed commercial banks in Kenya. Moreover, an increase in outcomes with increase in level of financial intermediation efficiency of respective listed commercial banks in Kenya. From the findings it was recommended that the management approach ought to have vale chain design by incorporating the value benefit from respective firm characteristics. Financial services provision should be anchored on measures aim at precipitating demand for financial services in the target market niche. Moreover, commercial banks should stimulate demand for deposit and credit through linking deficit and surplus saving customers. Furthermore, banks should adopt data mining approaches so as to eradicate spillage of resources and optimize intermediation efficiency.Item Effects Of Firm Characteristics On Operational Efficiency Of Commercial Banks In Kenya(KCA University, 2022) Wangu, Evalyne N.The role played by Commercial banks in any economy in the world cannot be over-emphasized. Commercial banks in Kenya have contributed to savings which interprets to 78.55% of the total savings in the economy. The efficiency of commercial banks is of big importance in order to ensure that the financial sector is stable. There has been an increased cost of running a banking business that has led to increased cost of loans and customer dissatisfaction in commercial banks in Kenya. This study sought to examine the effect of firm characteristics on operational efficiency of commercial banks in Kenya by evaluating the effect of capital adequacy, asset quality and bank liquidity and on operational efficiency of commercial banks in Kenya. The study also assessed the moderating effect of bank size in the relationship between firm characteristics and operational efficiency of commercial banks in Kenya. The study stands to benefit researchers, policymakers and commercial banks. The study may face the limitation of non-response. The study was anchored on the liquidity preference theory, credit creation theory and buffer capital theory. The study is descriptive research design and targeted a population of 40 commercial banks licensed and operating in Kenya. Secondary data will be used which will be obtained public annual financial statements from the various commercial banks’ website and Central bank of Kenya website. The data collected was analyzed for descriptive and inferential statistics using Statistical Package for Social Sciences Version 26.0 and presented using graphs tables, charts and a linear regression equation. From the analysed data, there is weak relationship between capital adequacy and operational efficiency of commercial banks in Kenya as shown by a coefficient value was 0.15. Secondly, the assets quality is key in determining the operational efficiency of the commercial banks in Kenya as shown by a correlation coefficient of 0.717. Liquidity was established to be statistically correlating with operational efficiency in commercial banks in Kenya and this was shown in correlation value of 0.602. Bank size evaluated based on the total assets owned by the commercial banks revealed a strong positive relationship with banks operational efficiency as shown by a correlation value of 0.813. form these findings, the study recommended that banks should strategize to increase their core capital as this will avail more funds for lending which is the key banking function. Lending will earn the bank interest hence improve their operational efficiency. Finally, the Treasury and the bank managers should establish a should framework to ensure the commercial banks have enough assets to sail through the unstable economic conditions in the financial sector. The assets will able banks meet their operational cash needs, invest adequately and make profits.Item Effect Of Financial Performance On Treasury Funding Of Public Institutions In Kenya(KCA University, 2015) Ngui, Josephine N.Recent studies have observed that government institutions are burdened with financial management risks that comprise the acquisition, allocation and investment of funds in the various budgetary considerations. This study will be to examine the effects of financial performance of public institutions on treasury funding. The study will used correlation design. The study was based on secondary data that was obtained from the annual financial reports on the 12 public institutions under study. The target population was all the fully owned public companies by the government. There were 81 fully owned entities by the government. A sample of 12 public entities was considered for this study. Secondary data was gathered from the financial reports of the institutions over the ten year period, Year 2004 to Year 2013.We considered these methods because it was the most economical way of data collection compared to others. Panel data analysis was used for analysis since it involves the funding and financial performance of the twelve institutions over the ten-year period. Regression and Correlation analysis was used to establish the relationship between the government funding and financial performance of public institutions. Results of the study revealed a positive insignificant relationship with treasury funding. There was a positive significant relationship between liquidity and treasury funding while leverage had a negative and significant relationship with treasury funding. There is need to improve financial planning and forecasting to increase liquidity levels in public institutions.Item Determinants Of Financial Performance of General Insurance Companies in Kenya(KCA University, 2023) Kimani, Peter G.Stability and good performance of insurance companies is paramount. Kenyan insurance companies have, for the last decade, faced a turbulent business environment. This study evaluated determinants of financial performance for the insurers. It focused on five specific objectives namely: to establish the effect of underwriting risk on financial performance of general insurance companies in Kenya, to evaluate the effect of liquidity on financial performance of general insurance companies in Kenya, to find out the effect of solvency on financial performance of general insurance companies in Kenya, to assess the effect of firm size on financial performance of general insurance companies in Kenya to establish the effect of capital adequacy on financial performance of general insurance companies in Kenya. The basic theory for this study is theory of asymmetrical information while others for specific variables were liquidity preference theory, resource based view and pecking order theory. The study targeted thirty one general underwriters. Data was sourced for a period of seven years from 2014 to 2020. A panel data set was collated from the seven-year observations. Data analysis was done using panel estimation method. The study concluded that the most significant determinants of financial performance of insurance companies in Kenya are underwriting risk and solvency. Underwriting risk had a negative and significant influence on return on assets. Also, solvency was found to better financial performance of insurance companies significantly. Moreover, the study concluded that liquidity and capital adequacy negatively and insignificantly affected financial performance of insurance companies in Kenya. Lastly, firm size positively and insignificantly affected financial performance of insurance companies in Kenya. It is recommended that insurance companies in Kenya need to diversify underwriting business in order to mitigate risks associated with underwriting risk as it hampers financial performance. Also, insurance firms should maintain high solvency ratios as solvency was found to boost financial performance. This study is valuable because it provides empirical evidence that can be used by regulators to form policies that may stabilise the sector. At the same time, it contributes to firm performance literature in Kenya and beyond. The study too is useful to scholars in the field of insurance as it adds to insurance literature from Sub-Saharan Africa.