School of Business
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Item Factors Influencing Financial Performance Of Animal Feeds Manufacturing Companies In Selected Counties In Kenya.(KCA University, 2017) Nyambura, Timothy N.The financial performance of some animal feeds manufacturing companies have been questioned because of the way they are closing their operations and some companies have been declared under receivership for various reasons. The main objective of the study was to determine the factors influencing the financial performance of animal feeds manufacturing companies’ in Kiambu and Nairobi Counties. The specific objectives were to determine how the Manufacturing expenses, loan management, working capital, and demand influence the financial performance of the animal feeds manufacturing companies Kiambu and Nairobi Counties. The aim of this Study was to help to determine those factors which were influencing the financial performance of animal feeds manufacturing companies and leading some companies to close the operations. The target population consisted of Sixty-one companies and census method was used to collect the data for five years from secondary sources. The Association for the animal feeds manufacturers in Kenya (AKEFEMA) and Kenya National bureau of statistics (KNBS) assisted in providing the secondary data which assisted in providing the final results. The data was analyzed through panel data analysis and STATA software was used to get the results, and the interpretations are provided. The data is presented through the use of tables, graphs and figures. The study evaluated the dependent variable and the independent variables in order to find if there is any relationship which exist or not using the STATA software results. The findings from this study indicated that there is a significant relationship between the demand for animal feeds and the financial performance. The findings from this study also indicated that there is no significant relationship between the manufacturing expenses, loan management, working capital for animal feeds manufacturing companies and the financial performance.Item Effect Of Financial Innovation On Financial Performance Of Commercial Banks In Kenya(KCA University, 2019) Katutu, Felix M.The Kenyan commercial banking sector is experiencing unprecedented changes attributable to technological adoption. Currently, tremendous and significant changes are being witnessed in the commercial which have resulted and continues to shock the financial market with diversified, customer oriented financial products. All these changes are wholly or partially driven by the urge of being on top of the market and outdo the wits of their competitors. These technological disruptions have not only been embraced by the institution to increase its profit books but to ensure the dynamic market is well utilized. These changes have made the commercial banks to revitalize their profit driven motive amidst the competitive globalized financial market. The main goal of this study was to determine the effect of financial innovations on the financial performance of commercial banks in Kenya. This research was guided by the following hypotheses which informed the study; Mobile banking, Agency banking, Self-service banking and internet banking have no significant effect on commercial banks performance. The target population comprised all the eight (8) tier one commercial banks in Kenya. Data on their performance with the respective independent variables was sourced from the Central Bank of Kenya (CBK) database. Panel data regression analysis was employed as the methodological tool for analysis. The analysed data was presented using tables, graphs and pie charts. The correlation analysis showed that mobile banking, internet banking, agency banking and self-service banking had a positive relationship with return on assets. The study concluded that mobile banking, internet banking, agency banking and self-service banking have a positive effect on financial performance of tier 1 commercial banks in Kenya. The study recommends that commercial banks adopt other financial innovations in order to increase their financial performance.Item Impact Of International Financial Reporting Standard 9 (Ifrs 9) Implementation On Financial Performance Of Commercial Banks In Kenya(Kca University, 2020) Omukhulu, Beatrice A.The purpose of this study was to do a comparative analysis of the effect of IFRS 9 on performance of Kenyan commercial banks. The study compared the financial performance before and after the implementation of IFRS 9 reporting standard. The specific objectives were to determine the effect of fair value adjustment on performance of commercial banks in Kenya following the implementation of IFRS 9; to establish the effect of expected credit loss impairment review method on financial performance of commercial banks in Kenya following the implementation of IFRS 9; and to establish the effect of loan amortization approach on performance of commercial banks in Kenya following the implementation of IFRS 9. The study used descriptive research design and targeted all commercial banks in Kenya for the period of 2017 to 2018. All the 42 commercial banks licensed by the Central Bank of Kenya were selected for the study. Secondary data was obtained from audited financial statements. A total of 26 commercial banks had completed financial data for the computation of fair value adjustment, expected credit loss and loan amortization variables. STATA software was used for descriptive and inferential statistical analyses. Descriptive analysis was used to compute means and standard deviations, while inferential analyses, specifically paired sample t tests and panel data regression, was used to determine the relationship between the implementation of IFRS 9 and financial performance of commercial banks in Kenya. The findings were presented using tables. Findings show that fair value adjustments were higher in 2017 than 2018; however, there was differences in means was not statistically significant. Panel regressions showed that fair value adjustments had a positive but statistically insignificant influence on financial performance. Expected credit loss impairments were higher in 2018 than 2017, with paired sample t tests indicating a statistically significant difference in reported expected credit loss impairments before and after the implementation of IFRS 9. Expected credit loss impairments had a negative effect on ROA; the influence was not significant. Loan amortization costs remained stagnant in 2017 and 2018, and the differences in means was not statistically significant. Panel regressions demonstrated that loan amortization approach had a negative effect on the financial performance of commercial banks. These findings indicate that considerations for the changes in classification and calculation of credit losses need to be taken into account in strategies for profitability growth and financial stability.Item Influence Of Corporate Governance On Performance Of Commercial Banks In Kenya(Kca University, 2020) Gitau, Emmah W.Corporate governance comprises of policies, practices and rules that guide decisions and operations in an organization to ensure that the interests of shareholders and other stakeholders are served responsibly and effectively. Emerging issues in corporate governance continue to fuel new debate on its effect on firm performance. The general objective of this study was to establish the influence of corporate governance on performance of commercial banks in Kenya. The specific objectives of the study were to establish the effect of board competence, board accountability, compensation decision-making and risk management on the performance of commercial banks in Kenya. This study was anchored on agency theory, stewardship theory and performance theory. The study adopted descriptive research design and the target population was 40 commercial banks that were licensed by central bank of Kenya by December 2019. The study will used structured questionnaire to collect primary data. Data was analysed using descriptive statistics, correlation analysis and multiple regression analysis with the aid of statistical package for social sciences. The study established that board competence had a statistically and significant positive effect on performance of the commercial banks (β = 0.264, t = 2.308, p = 0.027). Board accountability did not have a significant effect on performance of commercial banks (β = -0.128, t = -1.105, p = 0.277) while compensation decision-making had a significant positive influence on performance of commercial banks in Kenya (β = 0.454, t = 4.778, p < 0.05). Besides, risk management had a statistically significant and positive effect on performance of commercial banks in Kenya (β = 0.404, t = 3.211, p = 0.003). Based on the conclusions from the study, the following recommendations are made. First, shareholders of commercial banks should ensure that the board members they elect to oversee running of the commercial banks are competent. The critical factors that these shareholders should consider when electing board members include professional and education qualifications, technical capabilities and experience in the banking industry. On board accountability, regulatory authorities such as NSE and CMA should ensure that boards of commercial banks adhere to honest, clear and open reporting on issues touching on the banks. The study recommends to shareholders to ensure that the elected board put in place effective compensation philosophy that is performance and risk based. Lastly, the study recommends to regulatory authorities to ensure that boards play oversight roles towards operational, market and financial risks that the commercial banks face.Item Effect Of Corporate Governance On Financial Performance Of Savings And Credit Cooperatives In Nairobi County(Kca University, 2020) Musau, Faith M.An organization’s economic success does not only depend on quality management, innovation and efficiency, but also on the capacity of the organization to observe corporate governance principles. The purpose of this study was to establish the influence of corporate governance on financial performance of SACCOs in Nairobi County. The specific objectives where to establish the influence of board meetings attendance, board committees, board diversity and board size on financial performance of SACCOs in Nairobi County. This study is anchored on stewardship theory, resource dependence theory and agency theory. Descriptive research design was applied in the study and the target population was all the 41-deposit taking SACCOs in Nairobi County that were licensed by Sasra study utilized secondary data that was collected from the deposit taking SACCOs. Five years (2015 – 2019) data from the 41-deposit taking SACCOs was analysed using panel data regression analysis. Housman test was conducted to establish which among the panel regression models (random effects model and fixed effects model) was suitable for the data. Other diagnostic tests were conducted to test for multi-collinearity, heteroscedasticity, serial correlation and normality of residuals. The results of the model for the study was presented in tabular form. The study findings showed that board size and board committees had a significant positive effect on ROA. However, board gender diversity and board meeting attendance did not have a significant effect on ROA. Based on the study findings, the study makes the following recommendations. First, SACCOs with fewer board members should consider increasing the number of board members to be sufficient enough to provide the requisite oversight and governance of the SACCO. Besides, SACCO boards of directors should form several committees to oversee critical functional areas of the SACCOs.Item Influence Of Contract Fixed Prices On The Financial Performance Of French Beans Farmers In Kirinyaga County(Kca University, 2020) Muturi, Roseline N.In the recent past, contract farming has been on the rise. This is because famers have the fear of the unknown and somehow want to be certain about their future returns. Contract farming therefore, has become the preference for many farmers. Many studies have emerged in regard to this field with little focus on the influence of contract fixed prices on the performance of French Beans farmers in Kirinyaga Couty. This study was carried out in Kirinyaga County in Kenya. The first objective of the study was to establish the effects of training on the financial performance of French beans farmers in Kirinyaga County. The second objective was to determine the effects of contract transaction costs on the financial performance of French beans farmers in Kirinyaga County. Third was to determine the effects of regulatory framework on the financial performance of French beans farmers in Kirinyaga County. Finally, the fourth objective was to find out the effects technical assistance on the financial performance of French beans farmers in Kirinyaga County. The study used a descriptive design and the target population was a total of 635 French beans farmers who are in contract farming arrangement. Yamane formula was used to determine the sample size. Using the Yamane formula therefore, 245 farmers were used as a sample. Primary data was collected by self-administering of questionnaires by the research assistant. The questions incorporated both open and closed ended questions. The reliability of the research instrument was determined by the use of Cronbach coefficient. Data was collected with the help of a research assistant. Data analysis was done by the use of stata software. The goodness of fit was determined by use of diagnostic test on randomness of errors heteroscedasticity, normality, multicollinearity and the test for outliers. Mean, Standard deviation, and Regression analysis were calculated. The data collected was analyzed by use of percentages and frequencies and data was presented in form of graphs, tables, charts and figures so as to establish the relationship between the dependent and the independent variables. The dependent variable was the financial performance of French beans farmers whereas the independent variables are; training, transaction costs, regulatory framework and technical assistance. The study found that training French beans farmers on health and hygiene, safety standards such as International Food Safety Standards, proper harvesting and post harvesting produce handling techniques, pest and disease control including chemical use and handling and farm records improve financial performance of French bean farmers in Kirinyaga County. The study also established that technical assistance through proving farmers with seeds, chemicals, seeds, spraying services and credit facility improves financial performance of French bean farmers in Kirinyaga County. The study depicted that training and technical assistance were statistically significant in explaining variation in financial performance of French bean farmers in Kirinyaga County. Transaction cost and regulatory framework awareness were not statistically significant in explaining the variation of financial performance of farmers in Kirinyaga County. Therefore, the study concluded that increased training and technical assistance to farmers increase their financial performance. The study recommended that French beans farmers engaged in fixed price contracts should be trained in addition to being given technical assistance so as to increase their financial performance.Item Effect Of Information Communication Technology On Financial Performance Of Hospitality Firms In Kenya(KCA University, 2020) Mwakiremba, James M.Competition among the hospitality firms has intensified and the players in this industry are struggling to attract customers. As a result, they have been forced to initiate innovative ways of surviving. One of the strategies they have adopted is information technology. Investment in technology can help improve the performance of the hospitality industry. This study aimed to establish the effect of information communication technology on the financial performance of hospitality firms in Kenya. The specific focus was to establish the effect of e-marketing, transactions platforms, customer relationship management systems and financial management systems on the financial performance of hospitality firms in Kenya. The study adopted the Technology Acceptance Model, Transaction Cost Theory and the Resource-Based Theory in providing a theoretical anchor to the study. An explanatory research design was adopted and the target population of the study was 79 hotels classified as level 4- and 5-star hotels in Kenya. A census was conducted on the 79 hotels. The target respondents were finance and Information Technology managers from the hotels. A questionnaire containing closed ended questions was adopted for this study. The quantitative data collected was analyzed through descriptive and inferential statistics. The study established that adoption of information communication technology, that is Financial Management Systems, E-Customer Relationship Management, E-transactions and E-marketing has a positive and significant effect on financial performance of level 4- and 5-star hotels in Kenya. This led to the recommendations that the management of hotels in Kenya, both level 4, 5 and others to aggressively invest in eMarketing practices such as Facebook, Instagram, twitter, LinkedIn, mobile apps and websites if they intend to significantly improve their financial performance; aggressively invest in adoption of e-transactions practices such as credit cards, debit cards, pay pal, mobile payment services and master cards in order to significantly boost their financial performance ; invest in adoption of e-customer relationship management practices such as online call centers to handle complains, social platforms to handle complains, online room bookings, online book confirmation in order to realize a significant improvement in their financial performance and also invest in adoption of financial management systems such as electronic forensic analysis, accounting packages to manage accounts, internal control systems so as to have a significant improvement in their financial performance.Item Relationship Between Asset Structure And Financial Performance Of Commercial Banks In Kenya(KCA University, 2019) Wandai, James M.Commercial banks are very important components of any economy globally. When the bank management are making decision must bear in mind the effect that the decision will have on the financial performance of the bank. A proper asset allocation and distribution should be undertaken to ensure optimum and efficient utilization of these assets. Efficient utilization of assets translates to high income to the banks. This study sought to determine the relationship that commercial banks assets structure have on the on their financial performance in Kenya. The study had sought to attain the following specific objectives; examine the relationship of investments in government securities, loans to customers and investment in fixed assets on financial performance of commercial banks in Kenya. The theory is based on balance portfolio theory, efficient structure hypothesis and the black litter man theory. Descriptive study design was applied in this study. The population target for this study is 42 commercial banks in Kenya and after census, the result of the study covered 32 commercial banks. The study used secondary data from each banks published financial statements. The study applied descriptive statistics analysis, correlation statistical analysis and regression statistical analysis to analyze the balanced panel data collected during the period 2008 to 2017. STATA was used to conduct the analysis. Results were presented in graphs and tables. The study used random effect model which was found to be appropriate after carrying out Hausman test. Various diagnostic test were done for the study. From the study, correlation analysis results showed that loans to customer had a positive relationship with financial performance with a coefficient estimate of .0631. There was negative relationship between investment in government securities and fixed assets as correlation results gave coefficient estimates of -.443 and -.0238 respectively. Various diagnostic tests were carried out including multicollinearity test, autocorrelation, stationarity test and heteroscedasticity. The regression model indicated that 18.56% of financial performance of commercial banks in Kenya is explained by the variables in the study leaving 81.44% as unexplained. The study findings indicated an intercept of .62 for the period under review which meant that the performance of commercial banks holding all other factors constant, that is, loans to customers, investments in government securities and fixed assets at zero, was .62 units. The results found coefficients of the variables where loans to customer had .28, investment in government securities had -.28 and the fixed asset had a coefficient of -.89. The study found significant relationship between investment in government securities and fixed assets and the commercial banks financial performance while the relationship with loans to customers were inconclusive. The study recommends that managers and decision makers in banking industry should ensure the assets are properly distributed and efficiently utilized to ensure they generate revenue to the banks.Item Relationship Between Financial Risk Management And The Financial Performance Of Microfinance Institutions In Kenya(KCA University, 2022) Masavu, Nicholas M.The Kenyan Microfinance Institutions are wrestling with multiple challenges originating from the inherent risks within the environment, they are operating in both internal and external. Financial risk management is one of the main hurdles threatening the sustainability and viability of the microfinance institutions in Kenya, therefore, this study aimed to establish the relationship between financial risk management and the financial performance of the Microfinance Institutions in Kenya. A descriptive research design was employed on this study to test how operational risk, market risk, liquidity risk and credit risk posed a major threat to the financial performance of the Kenyan Microfinance Institutions. The study incorporated a target population of 58 microfinance institutions in Kenya as of 31st December 2020 with an aggregate loss of 2 billion. Secondary Panel data was analyzed as obtained from the available financial statements of the 58 Microfinance Institutions over a period of 5 years running from January 2016 to December 2020.The data was collected from CBK (Central Bank of Kenya) and AMFI (Association of Microfinance Institutions) because CBK requires that all regulated Microfinance banks to publish their audited financial statements to the public every year. To minimize potential endogeneity challenges the study utilized financial ratio analysis and panel data methods of random effects and fixed effects estimation. The study also determined the correlations between the variables and used Wald and F- tests to determine the significance of the regression whereas the overall, within and between R2 of the coefficient of determination, were utilized to establish how much dependent variable’s variations were explained by the independent variables. Tests such as Breusch and Pagan Lagrange multiplier (LM) were adapted to test between the fixed effects model and the appropriateness of the random effects model respectively. The study findings depicted that there exists a significant negative relationship between Operational risk, Market risk, Liquidity risk, Credit risk and financial performance of Kenyan MFIs. The study concluded that financial risk management and the financial performance of the Microfinance Institutions of Kenya are inversely related. Therefore, the microfinance Institutions should establish an efficient and salient financial risk management framework in order to overturn their loss-making position.Item Effect Of Dynamic Capabilities On Financial Performance Of Oil Marketing Firms In Kenya(KCA University, 2022) Said, Mairim M.The main objective of this study is to establish the effect of effect of dynamic capabilities on financial performance of the oil marketing firms in Kenya. More specifically, the study seeks to determine the effect of sensing capabilities, seizing capabilities, learning capabilities and reconfiguration capabilities on financial performance of the oil marketing firms in Kenya. The study was guided by the dynamic capability theory, the resource based view and the knowledge based view. Relevant empirical studies are reviewed to inform the conceptual framework of the study. Descriptive survey was undertaken covering quantitative methods. The study targeted 105 oil marketing firms as the unit of analysis and the Human Resource Managers, finance managers, operations manager and corporate affairs managers from each of these firms adding to 440 respondents as the unit of observation. Multi-stage sampling approach was used starting with stratification of the firms before selecting 210 respondents through stratified random sampling technique as the sample size. The study collected primary data supported by the questionnaire and secondary data supported by data collection sheet over a period of 2020-2021. The study tested for content validity with the aid of the supervisor and one expert in the field of strategic management while reliability of the questionnaire was determined through computation of the Cronbach Alpha Coefficient values. The analysis of the gathered information was supported by Statistical Package of Social Sciences tool version 24. The values of means and standard deviations were utilized as the descriptive statistics. Inferential statistics covered correlation and regression analysis. Table and figures helped to present the findings. The study established that sensing capabilities (β=0.009, p<0.05), seizing capability (β=0.005, p<0.05), organizational learning capability (β=0.003, p>0.05) and reconfiguration capabilities (β=0.004, p>0.05) all had significant effect on financial performance. The study concludes that dynamic capabilities are significant predictors of financial performance of oil marketing firms in Kenya. The study recommends that the marketing managers working in the oil marketing firms in Kenya should continuously invest in market research to gather intelligence for improved competitive advantage. The human resource managers working in the oil marketing firms should invest in new methods and systems of creating new knowledge through the recruitment practices.