School of Business
Permanent URI for this collectionhttp://192.168.8.146:4000/handle/123456789/16
Browse
2 results
Search Results
Item Corporate Governance and Financial Distress in Commercial Banks in Kenya(KCA University, 2017) Michire, Simon M.Kenya is among countries in Africa where the financial system by regional standardsis relatively well developed, although there are fundamental impediments that hinder full exploitation of its potential. Financial distress is considered as one of the most significant threats for commercial banks in both developed and emerging economies despite their size and nature. The study sought to establish the relationship between corporate governance and financial distress in commercial banks in Kenya. The study’s specific objectives were to establish the relationship between government ownership, board size, independence of the board and auditing by the big four auditing firms and financial distress in commercial banks in Kenya. The study was based on the agency theory and the theory of inspired confidence. The study applied the descriptive research design. The study population was the commercial banks in Kenya that were operational and duly registered as at 31st December 2015. The study was a census of the commercial banks. The study utilized secondary data. The data was collected for five years. The data was collected from the published financial statements of the banks, the websites of the banks, CBK bank supervision reports, CMA and the NSE. The panel data collected was analyzed using the panel data model. After the analysis, the results were presented in tables and figures.The results indicated that board size, government ownership and auditing by the big 4 did not have any effect on the financial distress of commercial banks in Kenya. The results also indicated that independence of the boardwas a significant positive influencer of the Z score. This indicates that having a high proportion of independent directors was expected to strengthen the banks’ Altman Z score this reducing its chances of distress. Following the findings from the study, the following recommendations are made. Commercial banks should be very observant of the composition of the board to ensure that the proportion of independent directors in the board is high so that the board can be more independent and able to monitor the bank. Secondly, corporate governance is a key factor in stewardship of the banks. Even though the board size and auditing by the big four indicated to have no effect on financial distress, there are other indirect advantages that can emanate from having a board of optimal size and being audited by a top firm. These include efficiency, provision of other support services and credibility.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 distress