Master of Business Administration

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Effect of Agency Banking on Financial Performance of Commercial Banks in Isiolo County, Kenya
(KeMU, 2025-01) Dulacha, Amina Abdi
Commercial banks authorized for commercial purpose are the super focal empowering the economy. Therefore, the performance of agency banking stabilizes the commitment of banks to the country's economic development. However, the financial performance of commercials banks in Kenya was noted to decline in 2023 partly caused by decreased agency banking transactions from Kshs 158.4 million to Kshs 145.3 million in 2022 and 2023 respectively. The purpose of the study was therefore to examine the effect of agency banking on the financial performance of commercial banks in Isiolo County, Kenya. The specific objectives were to explore the effect of agency convenience, agency cost, quality of agent services, and agency compliance on financial performance of commercial banks in Isiolo County, Kenya. The study was guided by diffusion of innovation theory, transaction cost economics theory, network effects theory and principal-agent theory. A mixed designs comprising descriptive, qualitative and quantitative were used, targeting Cooperative Bank, KCB, and Equity Bank, which control over 90% of authorized banking agents in the region. The target population included 102 staff in Equity bank, 123 staff in Cooperative bank, and 80 staff in KCB bank, which was a total of 305 banks. The study adopted the Yamane’s formula (1967) to result to a sample size of 58 staff in Equity bank, 70 staff in Cooperative bank, and 45 staff in KCB bank, which was a total of 173 staff. Stratified sampling was applied to select respondents from the finance and accounts departments of these banks. Data were collected via structured questionnaires and supplemented with secondary financial data. The pilot research used a sample size of 10% for this investigation, with 17 respondents randomly selected to fill out the survey in Meru County. To ensure the data was reliable, Cronbach's alpha was applied, which measures internal consistency. The questionnaires included in this study underwent a validation process to guarantee their content and face validity, as well as to gauge their overall quality. The results were presented using Tables and explanations. The study found out that the correlation for agency cost was r = 0.751, p < 0.01; correlation for agency cost was r = 0.702, p < 0.01; correlation for quality of agent services was r = 0.655, p < 0.01; and correlation for agency compliance was r = 0.774, p < 0.01 with financial performance. Therefore, the conclusion on agency convenience some of the agency banking services were noted not to be user friendly which hampered a lot of the clients from subscribing to them. On the agency costs, the operational costs associated to installation and maintenance of IT, compliance with banking regulations and staffing the agencies to suit the needs of the bank were high. On the quality of agent services, the study noted that most of agency banking had average standards to low standards as compared to what the branch banking was offering. On regulatory compliance, conclude that it stood out as the most critical factor influencing financial performance. The study’s recommendations on agency convenience are that bank managers should prioritize the convenience of agency services. This can be achieved by expanding the network of agents to ensure that services are accessible anywhere. On agency cost are that operations supervisors should consider focusing on implementing more efficient operational processes. On quality of agent services are that the senior management should develop a policy structure that ensures ongoing training programs for agents to equip them with exceptional service skills. On adherence to agency compliance are that the branch managers should foster a culture of compliance within the organization, emphasizing the importance of ethical practices and regular training on regulatory updates.
Effect of Budgetary Control Process on Financial performance of Public Universities in Mount Kenya Region, Kenya
(KeMU, 2023-09) Kaithia, Lilian Kawira
Managers use budgetary control to match financial performance objectives with budgets, compare budgets with the actual outcomes and implement essential modifications. Attaining robust financial performance stands as a fundamental goal for any prosperous organization. Nonetheless, public universities in Kenya persist in encountering obstacles in their financial performance. The key intent of the research was to establish the effect of budgetary control on the financial performance of public universities located in the Mount Kenya Region. The specific objectives were; to establish the effect of budget planning, implementation, monitoring and participation on financial performance of the public universities in Mount Kenya region. This research majorly used the hypothesis of budgeting, the agency hypothesis and the stakeholder’s hypothesis. The design used in the investigation was descriptive. The target population was 7 universities located in Mount Kenya Region. The specific respondents were the 284 heads of departments in both Academic and Administration divisions of the universities. Since the target population was small, all the 284 respondents were used in the study. Structured questionnaires were used to seek opinions from the 284 respondents. The researcher used drop and pick method to issue and collect filled in questionnaires after 2 weeks. Data analysis was performed to establish a link between theory and reality by examining the research hypothesis and addressing the study objectives. The clean data were entered in the SPSS for further analysis. These data were analyzed using descriptive techniques, correlations and regressions. The data was presented using charts and tables. The study results showed that budgetary planning, budget participation, monitoring and implementation had a positive and significant effect on financial performance of public universities. The study concluded that most public universities were not able to fully involve their employees in the budgetary process. Further most public universities employees are not committed to ensuring an effective budget process. The study concluded that though the public universities had budgetary committees the committees were not able to periodically meet and review the budget performance. In addition, most public universities budget policies were not able to help in monitoring budget spending limits. The study concluded that most public universities were not always able to audit their report. Further, the evaluation process of the budgets in most universities was not transparent. Further, budget auditing enhanced the performance of the institutions. Further, effective communication and transparency during the budgetary process enhanced the financial performance of the universities. Universities are urged to embrace budgetary control techniques since they play a key role in improving the financial performance of universities. Therefore, the research recommends university management to pay attention to proper planning, monitoring, and implementation of the budgets as well as allowing participation of employees in the budget process
Effects of Working Capital Management on Financial Performance of Level Three and Four Public Hospitals in Meru County
(KeMU, 2024-09) Kanana, Kimathi Doreen
Financial performance of Kenya's public hospitals is essential for the nation's economic development. The notion of hospital quality improvement is centered on measuring public hospital performance. A description of what hospitals actually accomplish can be made possible by measuring hospital financial performance. Level three and four hospitals in Kenya focus on the provision of health care activities and develop individual spending plans and budgetary needs based on recommendations from headquarters distributed throughout the counties. In addition to other issues, the MOH health care delivery system was plagued by diminishing resources, ineffective use of those that were still available, and unfair resource distribution by 2015. Public health institutions now have to manage their own internal resources more effectively as the government's power to save failing institutions of higher learning was severely undermined. The purpose of this study was to ascertain how working capital management techniques affected the level three and level four hospitals in Meru County in terms of their financial performance. The particular objectives were to determine the effect of cash management, inventory management, accounts receivable, and accounts payable on the financial performance of Meru County's Level three and Four Hospitals. The study was grounded on the theoretical premise of contingency, resource-based theory, liquidity preference theory and cash conversion cycle theory. The study's research design was descriptive survey, which allowed the researcher to explain the elements of interest with regard to their attributes. The study used a questionnaire for data collection purposes. The target population consisted of fifty-three senior managers from all the fifty-three public Level three and Four Hospitals in Meru County. These managers included Hospital administrator or finance manager where applicable. The investigation was conducted in Kenya's eastern Provence, in the county of Meru. Data analysis was conducted using SPSS version 27. Utilizing both descriptive and inferential statistics, the examined data was displayed. Regressions, both linear and multilinear, were utilized to determine the association between the variables. The investigation's findings showed that the majority of respondents were female, Additionally, most of the participants were between 31-40 years of age. According to the data, undergraduates made up the majority of respondents with the highest level of education. The investigation concluded that working capital management techniques, which include inventory control, cash management, and cash payables and receivables management, significantly impact financial performance. The accounts payable results ultimately show a statistically significant correlation coefficients, thereby supporting the rejection of the all the null hypotheses. The study thus recommended that the head of finance in these hospitals should continuously communicate payment terms to the clients in a timely manner as this would ensure the payment terms adherence. Further, the study recommends that credit officers of these hospitals should time to time review accounts receivables age so as to facilitate continuous follow up on unpaid dues.
Influence of Micro Determinants on Financial Performance of Microfinance Institutions in Nairobi County, Kenya
(KeMU, 2023-08) James, Margaret Wanja
MFIs have a goal of accepting client’s deposit and act as financial lenders such that they operate within the laid down policy structure. This structure should be developed by highly experienced board members whose decisions influence positively the general direction of the operations. The general objective of the study was to determine the influence of micro determinants on financial performance of microfinance institutions in Nairobi County, Kenya. The specific objectives were to assess the influence of capital structure, product diversification, credit risk management and board members’ composition on financial performance of microfinance institutions in Nairobi County, Kenya. The study was guided by three theories whereby pecking order theory guided capital structure, resource-based view theory guided product diversification and composition of board members; and credit risk theory guided credit risk management variable. Notably, the study applied descriptive research design during the collection of data. The study’s target population was 14 microfinance banks registered and regulated by the CBK. Further, the respondents were 19 operations managers, 34 tellers, 40 credit officers, and 28 customer care officers. The study collected primary and secondary data whereby close-ended questionnaires and secondary data collection form was used respectively. The study conducted a pre-test study of the questionnaires in Cooperative bank and I&M banks in Nairobi County. Further, the study tested reliability through the Cronbach Alpha coefficients. Notably, the study assessed criterion, construct and face types of validity. Further, quantitative data was analyzed using SPSS software version 25 to generate descriptive and inferential statistics. The various descriptive analysis was frequencies, percentage and mean, while linear and multiple regression analysis was done as part of inferential statistics analysis. The conclusion made on capital structure was that MFIs’ management had failed to balance between raising their capital from the share capital and other forms of funding. On product diversification, the management failed to incorporate various improvement suggestions made on the different implemented products. On credit management, there were poor debt recovery methods in the branches leading to numerous default rates. On board members, they lacked a policy framework on the frequency and range of timelines when decision should be made and if they did, they did not put it into practice. The study recommends on capital structure that the MFIs’ board of management should provide a reliable policy framework on payment structure. On product diversification, the management of MFIs should commission a special committee of expert to review the requirement of each and every product being offered. On credit management, there should be a thorough audit of the ICT financial systems used by the MFI to ensure that it works seamlessly. On board members composition, there should be a clear framework developed through a consensus meeting with shareholders’ representative
Effect of Innovation on Financial Performance of Deposit Taking Saving and Credit Cooperative Societies in Laikipia County, Kenya
(KeMU, 2023-08) Jillo, Safia Abdi
Saccos are beneficial since they inject capital to the economy through various individuals, corporates and other institutions finances to pay back later at an agreed interest. Nevertheless, Saccos have been operating under declining profitability in Kenya. Therefore, the purpose of the study was to investigate the effect of innovation on financial performance of deposit taking saccos in Laikipia County, Kenya. Further, the specific objectives were to examine the effect of product innovation, process innovation, institutional innovation and policy innovation on financial performance. Additionally, the study was guided by three theories which are Credit creation theory, The Unified Theory of Acceptance and Use of Technology [UTAUT], and Resource-based view theory. Further on, the study used descriptive research design to collect data from nine deposit taking Saccos in Laikipia County. Specifically, the target population were 118 respondents who included 22 departmental managers and 96 support staff selected using census method. Notably, the study collected both primary and secondary data whereby primary data was collected in form of questionnaires from departmental managers and support staff. Secondary data was collected from financial reports such as income statement, whereby various financial ratios such as return on assets, return on equity, gross profit, net profit, liquidity ratio were noted. Further, the study conducted a pilot study in Bingwa and Nufaika Saccos in Kirinyaga County whose 2 departmental managers and 10 support staff took part in the piloting. The study sampled the piloting managers and staff through obtaining 10% of from the sample size. The study also measured reliability using Cronbach Alpha Coefficient method while face, content and construct types of validity were measured. Further, SPSS software version 24 was used to analyze and generate various statistical reports whereby, in the analysis of the questionnaire, the study examined and generated descriptive statistics such as frequency, percentage and mean. Additionally, the study generated various linear regression statistics such as model summary and ANOVA of each independent variable. Thereafter the study generated inferential statistics to test the general model. The study found out that the desired number of clients was not yet achieved due to bombastic requirements and processes when opening accounts or accessing loan products; The Sacco’s bid to incorporate ICT to assist in financial transaction such as having enough servers and skilled staff was still low hence increased system downtimes; There were poor management operations such that the process of coming up with new policies were either poorly done or done with less involvement of the junior staff; and the management took longer time when communicating to the staff on changes in policies on time. The study thus recommends that; The management of the Saccos should consult risk management professionals to further review on the requirements needed on each product and service the Sacco offers; The Sacco management should invest in secure servers to protect client’s information from unauthorized access or use; The Sacco management should restructure the decision-making procedures and processes to see to it that at consultation stage, the opinion of junior staff involved in operations is incorporated; and the Sacco management should develop policies on the time frames on when changes in policies should be communicated to staff
Relationship between Islamic Financing Instruments and Financial Performance of Commercial Banks in Isiolo County Kenya
(KeMU, 2021-08) Halake, Abdi Huka
Islamic banking has become popular in the last three decades, not only in Arab and Islamic world but also in other parts of the World. Due to its profit-risk sharing principles, Islamic banks, compared to non-Islamic banks, seek for a just and an equitable distribution of resources. This caused non-Muslims to also adopt Islamic banking in different parts of the world. However, despite over four decades of experience of Islamic banking and finance, the industry had its critics, both Muslim and non-Muslims due to low market share rate of Islam banking in Kenya as compared to conventional banks. This study aimed to examine relationship between Islamic financial instruments and financial performance of banks in Isiolo County Kenya. The study had specific objectives such as measuring the influence of Islamic home, auto, personal and trade financing instruments on financial performance of commercial banks in Isiolo County Kenya. This study was guided by three theories; assimilation theory, Solow Swan class growth theory and social exchange theory. Assimilation theory guided the survey into Islamic home and personal instruments. Solow Swan class growth theory will guide the survey into Islamic automobile financing instruments and social exchange theory guided the survey into Islamic trade financing theory. Descriptive research design was used in the study. The respondents were customer service officers and loan officers in the ten commercial banks in Isiolo County. They were be selected using census method. Data collection was done using closed-ended questionnaires and secondary data collected through analysis of report from 2017 to 2020. To ensure validity and reliability, pre-testing of questionnaires was done at Kenya Commercial Bank in Meru town. Coded data in SPSS 24.0 computer program analyzed quantitative and qualitative data using the descriptive statistics such as mean, percentage and standard deviation. Multiple regression was used to test hypothesis of the study. Tables, graphs and detailed explanations were used to present the final results of the study. The study found out that the problem was not in provision of home financing instruments by the bank but untimely re-payment on the issued financing. In addition, the respondents did not tally that having sharia committee in disbursing car loans had enabled clients have confidence with the automobile loans. Further on, most Islamic personal products were almost similar to conventional products hence clients did not really distinguish between the two. In addition, it could also mean that Islamic personal products were very complicated for clients to understand them hence preferring the conventional personal products. The results further indicated that the community around Isiolo county did not actually know there were such kind of products that would be of benefit to them. The study recommends that the bank management should provide training to banking staff on how to administer Know Your Customer procedures when administering various Islamic financing instruments. There should marketing drives to educate the community more on these financing instruments.
Analysis of the Relationship between Corporate Governance of Banks in Kenya. A Survey of Selected Banks in Kenya
(KeMU, 2013-06) Mwebia, Kendi Doris
The corporate governance function is intended to develop ownership structures and corporate governance structures for companies to ensure managers behave ethically and make decisions that benefit shareholders. Many firms have been faced by the challenge of corporate governance that has led to collapse out poor financial performance. The study basically was meant to find out relationship that exists between corporate governance and financial performance of banks in Kenya and various variables are going to be examined that includes, Directors' ownership, Board size, Board Composition and ownership of the banks. Literature has been reviewed on various theories concerning corporate governance that includes agency theory, stewardship theory, stakeholder's theory, Resource dependency theory and transaction cost economics. Various studies have been carried out in the past by other researchers and that is captured in the empirical review of this study. Descriptive research design was applied, and population of the study consists of 20 banks selected from various categories i.e. banks that are locally owned, foreign owned and those that are listed in Nairobi securities exchange. The researcher used purposive sampling. That was done since there was specific information that the researcher wanted and that could only be gotten from specific persons in the organization. Data was collected by use of questioners that covered all questions drawn from all variables of study. Type of data that was used was primary. The data that was collected was analyzed by use of multi-linear regression. The entire research finding provided information that there is a significant relationship between corporate governance practices and financial performance. These factors have made the organizations to properly and effectively manage and observe their financial performances. The extent of board size on financial performances affects financial performances to a great extent, as the number of directors based on activities involved in the bank and also contribution in decision making influences the performances. Also having more directors on the board improves financial performance and improved firm financial performance through proper management involvement and budget allocations. The study recommends that the board size and composition be considered since they affect the financial' performance of the banks. The number of non-executive directors needs to be selected well since they affect financial performance of the bank as compared to those who are executive directors. Further the study recommends that directors' participation in direct corporate governance mechanisms as this will help the entire bank performances.
Analysis of the Effect of Capital Structure on Financial Performance. A Survey of All Firms Listed at the Nairobi Securities Exchange
(KeMU, 2013-06) Kinyariro, Kamau Dickson
Every company requires funds to meet its financial obligations. In Kenya, the most common sources of funds that are available to companies are shareholders' equity and debt. An optimal combination of debt and equity increases a company's earnings consequently leading to better performance. Shareholders invest in shares with the hope of receiving income in form of dividends, capital gains or bonus issues while lenders expect their money to be repaid in time and conveniently. Many companies listed at the Nairobi Stock Exchange (NSE) however, often face the challenge of reaching the optimal capital structure. The objective of the research was to find out the role of capital structure on the performance of all listed companies, whether high level of debt or equity in the capital structure contributes to positive or negative performance. This thesis also contain data analysis, presentation and interpretation summary of findings, conclusions and recommendations The findings from the study can help interested investors and owners in predicting the likely implications of capital structure decisions on companies in regard to performance. The study can also close the gap in the existing body of knowledge since not much has been done in this area. The study covered companies listed at the exchange. The results also reflect the current position. Secondary and primary data from 57 companies have been used. Financial statements for a period of 3 years 2009-2012 have been used for analysis of secondary data. Narrative interpretation and description have been used to present both qualitative and qualitative results.

Master of Business Administration

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