Master of Science in Finance and Investment

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Factors Influencing Development of Financial Derivatives Markets. A Survey of Quoted Companies in Kenya
(KeMU, 2011-04) Ngugi, Njoroge Nahashon
The Kenyan economy is becoming more and more open with international trading constantly increasing and as a result Kenyan firms become more exposed to foreign exchange rate fluctuations. The relative price changes affect the firms' competitive market position, leading to changes in cash flows and ultimately, in firms value. While it was observed that firms used a variety of instruments to manage financial risks, it was not clear whether the full potential of those instruments was being realized since not all firms use derivatives and not all firms use all types and more important, whether they are used appropriately. Hence the study sought to investigate factors influencing development of financial derivatives market. The study sought to analyze the specific objectives item by item. It sought to establish how legal and regulatory frameworks affect development of financial derivatives market, how capacity building is crucial in the development of financial derivatives market, how operational efficiency impact on development of financial derivatives market and establish how financial market intermediaries play a role in development of financial derivatives market in Kenya. The study used a simple stratified sampling technique to sample out 56 respondents out of the population of 186. Data was collected through questionnaire, interview and secondary data. The questions were administered through drop and pick technique. The collected data was grouped and analyzed using descriptive statistics and presented in form of pie charts, tables, and. histograms. The study found out that the use of financial derivatives instruments by quoted companies in Kenya is mainly influenced by legal and regulatory framework, capacity building, operational efficiency and the role of financial market intermediaries. Hence the study concluded that there is need of building upon existing financial derivatives instruments so as to enhance efficiency and effectiveness in their use in Kenya as modem tools for financial risk management. The study further recommended that all stakeholders should address the factors that affect efficient use and development of financial derivatives in order for Kenya to be a strong investment destination.
Factors Influencing Investment of Funds. A Survey of Selected Savings and Credit Cooperatives in Nyeri Central District
(KeMU, 2011-06) Ndambiri, Ireen Waguama
Savings and Credit Cooperatives aim at mobilizing their members and the community to improve their life. SACCOs like other firms are involved in the commitment of scarce resources to try to allocate them in a way that offers benefits to shareholders. Further, if the shareholders wealth is maximized by good investment decisions, they will tend to invest more in the company. If the investment decisions are consistently poor, the shareholders will withdraw their contributions and seek more profitable investment opportunities elsewhere. SACCOs are voluntary associations to which members contribute regularly pooled savings. They should therefore invest wisely the available funds. The objective of this study was to investigate the factors that influence how SACCOs invest funds in Kenya. The study was conducted through a survey on the SACCOs in Nyeri central District. The literature reviewed included theoretical and empirical literature. The research design employed was survey which enabled the researcher to understand relationships. The target population is 15 SACCOs registered as per the Nyeri town council. The administration of the SACCOs consists of a five member committee. The sample selected comprised of six SACCOs with a composition of thirty respondents. Data was collected via questionnaires which were prepared in accordance with the objective of the study. A pre-test with a small representative sample of a few respondents was carried out in Mukurwe-in Town. The data was analyzed using descriptive statistics and Pearson correlation with the help of output from SPSS. Data is presented in tables, charts as well as graphs. The researcher issued all the 30 intended questionnaires and received all of them back. The findings of the study reveal that most of the parameters chosen were good measures of the independent variables. However some were poor measures because they revealed very weak correlations. The findings further revealed that all the four factors in the study were very strongly correlated with the investment of SACCO funds. From the findings of the study, the researcher was able to test the hypothesis using the p- value.
Factors Influencing Reliance on Debt In Coffee Co-Operative Societies. A Survey of Societies in Kirinyaga County Kenya
(KeMU, 2011-07) Muriithi, Wilson Wachira
Achievement of the desired profitability of a business is the prime goal of each organization. To achieve this adequate finances are a prerequisite. The title of the thesis is factors influencing reliance on debt in the coffee co-operative societies. The coffee society receives heavy capital out lay from coffee sales but end up borrowing from financial institutions to finance its operation. The objectives of the study are to establish how fluctuations in world prices, production levels, price differentials among societies, role of management and government policies influence use of debt. The study will provide solutions to the problems resulting to use of high debt. The research adopted a descriptive research design since the research was modeled on a descriptive nature. The population of the study was 154 comprising of 126 committee members, 14 managers and 14 book keepers. Stratified random sampling method was used to arrive at a sample size of 54. Questionnaires both structured and unstructured were used for data collection. The collected data was analyzed by the use of statistical package for social studies and presented using tables, bar graphs for easier interpretation. The study found that production levels, comparative prices among societies, government regulations influences e of debt in societies while foreign exchange fluctuations and the number of committee members do not have a direct influence on debt reliance. The study recommends the management to strive towards production improvement to enable the societies sustain their operational costs. There is also need for the government to seek alternative ways to market Kenyan coffee rather than the conservative auction system.
Effect of Conventional Collateral Requirements on Borrowers Access to Finance. A Survey of Selected Borrowers in Kerugoya Town
(KeMU, 2011-07) Muthike, Timothy Kinyua
Credit is considered a very important aspect of modem economy in Kenyan economy; however the relationship between lenders and small business borrowers is inherently risky. Lenders insist on collateral to mitigate against risk of default. The process of collateralization is lengthy, bureaucratic, costly and unpredictable, the lenders also insist on convectional collateral mostly land movable assets among others It takes long to access a loan until what was initially an emergency is not solved in good time. The objective of this study is to establish effect of conventional collateral requirement on access to finance by the businesses. The study concentrates on borrowers selected from Equity Bank and Kirinyaga District Farmers SACCO. The study seeks to assist the government to legislation relating to collateral process as well as lenders who use conventional collateral as security on loans. This descriptive research design is carried out on a sample of 104 or 10% respondents selected form a population of 103 7 from two institutions. Data has been collected by use of questionnaires. The researcher also interviewed credit and operation staff in the two institutions to obtain the lenders point of view on the collateral processing. Results were analyzed using statistical package for social sciences and presented in tables and charts. Chi-square was used to test hypothesis. The findings from the study is Conventional collateral processing in Kerugoya is lengthy, costly and has a severe impact on small business access to financing; the process fails to protect the lender and also convey little benefit to the borrower. The study recommends a unified and automated registry that shares information as well as harmonizing the laws relating to land transaction and tenure
The Effect of Corporate Governance Practices on Financial Perfomance of Deposit-Taking Saccos in Kenya
(KeMU, 2015-07) Wachira, Diana Wanjiku
Savings and Credit Cooperative Societies (SACCOS) have been growing as a strong tool to meet financial needs. This is because, cooperatives are well placed to bring about equitable development and justice. However, SACCOS like any other business, are faced with challenges in their quest for growth and corporate governance stand as one of the main challenges facing SACCOS. Corporate governance is a concept that involves practices that entail the organization of management and control of companies. It reflects the interaction among those persons and groups, which provide resources to the company and contribute to its performance such as shareholders, employees, creditors, long-term suppliers and subcontractors. Corporate governance has received much attention in the accounting literature, with studies focusing on the impact of corporate governance and the financial performance of the firm. Few of these studies have focused on the relationship between corporate governance and financial performance of the deposit taking Savings and Credit Cooperatives in Kenya. The purpose of the study was to explore the relationship between corporate governance and the financial performance of the deposit taking Savings and Credit Cooperatives in Kenya, a survey of SACCOS in Meru County. In particular, the specific objectives were to study how CEO/Chairman duality, board composition and disclosure affect financial performance. The study adopted the use of a descriptive research design. This was done by doing a census study of the 11 deposit taking SACCOS in Meru County. From a target population of 454 employees, the study sampled 44 respondents for purposes of the study. Data collection involved the use of questionnaires for primary data and study of SACCOS' financial statements for secondary data. Data collected was analyzed by descriptive statistics and inferential statistics. Hypotheses were tested using P-value at 0.05% level of significance. Multiple linear regression was used to link the relationship between independent variables and dependent variable. Descriptive data was presented in the form of frequency tables and percentages. The data was analyzed using SPSS. Tables were used to summarize responses for further analysis and facilitate comparison. The findings of the study revealed that CEO/duality and disclosure had a significant effect on financial performance, while board composition did not have a significant effect on financial performance. The study therefore recommends the following; that clear separation and definition of functions between the CEO and chairman of the board be upheld, the board to comprise of well-educated people since they are actively involved in shaping SACCO strategy, and SACCOS should always uphold the standards and allowable levels and practices of disclosure within their ranks.
Factors Influencing the Management of Non-Perfoming Loans in Commercial Banks
(KeMU, 2015-07) Kigunda, Emily Kendi
Financial Institutions are very important in any economy as they mobilize savings for productive investments and facilitate capital flows to various sectors of the economy, thus, stimulating investments and increasing productivity. Loans have a vital contribution towards development of any economy. However, its non-payment leads to incidence of huge loss on banks in particular and the country in general. This study investigated the factors influencing the management of non-performing loans in Commercial Banks. The principal motivation behind the study was the absence of empirical studies specifically in Meru Municipality on the management of non¬performing loans and the recognition of the critical role bank loans play in the economy. The specific objectives of the study were to determine the influence of insider lending, loan performance assessment, general economic conditions and credit risk identification on the management of non-performing loans in commercial banks. Four theories were considered relevant to the study; Agency theory, Information asymmetry theory, Moral Hazard Theory and the Stakeholder theory. A descriptive survey research design was adopted. The target population was 100 bank officers; ten credit managers and ninety credit officers. The sample size was determined by census method for credit managers and simple random was used to select fifty credit officers from the ten leading commercial banks ranked according to their value of net asset as available from the Central Bank of Kenya listing. This resulted to a sample size of 60 respondents. A well designed self- administered questionnaire was used to collect the data. Descriptive statistics was used to analyze the data collected while logistic regression was used to link the relationship between independent variables and the dependent variable and to test hypothesis at 5% level of significance. Data collected was analyzed using SPSS and presented in form of tables and graphs. The findings revealed that insider lending, loan performance assessment; general economic conditions and credit risk identification all had a significance influence on the management of non-performing loans. The study recommends that loan officials must carefully grant loans by basing their consideration on loan analysis principles, using their discernment as well as experience to verify debtor credibility; i.e., debt repayment ability, capital management and collateral sufficiency. In addition, Loan officials should strictly and regularly monitor how the loan is used in order to be able to promptly handle arising problems.
Factors Influencing Foreign Direct Investments Market Destinations
(KeMU, 2015-07) Mutiga, James Mwenda
Foreign direct investment is a cross-border investment by a resident entity in one economy with the objective of obtaining a lasting interest in an enterprise resident in another economy. The choice of foreign market destinations entails several considerations, analysis, and speculations. This thesis sought to find out the factors that influence the foreign direct investments destination markets. It was conducted on a few sampled foreign companies that have operations in Kenya. The independent variables for the study were returns, fiscal policy, risks, and financial inclusion. A descriptive survey method was used in the study. The target population was all the foreign firms operating in Nairobi Kenya. The target respondents were 200 and were drawn from the population of experts through random sampling technique. The questionnaires formed the tools for data collection. The questions were both closed ended and open ended. The questions were well articulated to appropriately obtain the relevant data while avoiding questions that could affect the respondents. Questionnaires collected from the respondents were screened for relevance, appropriateness and completeness. Hypothesis was tested through a multiple linear regression analysis. The data collected was analyzed using the statistical package for social science (SPSS). T-tests were conducted in the analysis and to test the hypothesis at 95% level of confidence. The regression equation generated from the regression analysis was Y= 10272.371 + 34.818Xl + 32.204 x 2 + 119.342 x 3 + 35.953 + e. Returns, risks, fiscal policies and financial inclusion explain 55.2 percent of the variance in destinations ofFDI. All the null hypotheses were rejected leading to acceptance of the alternative hypothesis. This implies that the independent variables that were studied were found to have significant impacts on the dependent variable. It is important for the Kenyan government to establishment incentives such as tax reliefs to woo FD Is into the Kenyan market. Enhancement of business environment would boost the inflow of FDis into the Kenyan market. Double taxation bilateral agreements between the FDI host countries and home countries would be important to ensure the FDis don't suffer too much of the tax burdens. Enhancement of political stability, currency stability, and control inflation is important to lower the risks. There is a need for the customs authority to enhance cash remittance volumes to compare favorably with other countries. The study findings forms a reservoir of knowledge from where investors and capital market authorities may learn more on the factors that influence foreign direct investments market destinations. It also forms the basis for future research on this topic or related topics.
Factors Affecting Investment Decisions In Portfolio Management
(KeMU, 2016-11) Manyang, Marit Peter
ABSTRACT The purpose of this study was to investigate the factors affecting investment decisions in portfolio management for the listed companies and market participants in Nairobi securities exchange. Sixty four companies were listed at the NSE and 19 market participant in NSE. The most striking problem faced by NSE is it operation on trading decision for the securities with insufficient desirable characteristics of stock exchange market. These securities are faced by liquidity problem, non-availability of information which led to market anomalies. However, this led to high price sensitivity to new market information, price fluctuation and narrow price spread. The theoretical anchors for the study were traditional and behavioural finance theories which include modem portfolio theory, market hypothesis theory, Frame Dependency Utility Theory and prospect theory. The theories helped to understand investment decisions in portfolio management based on following variables which include risk tolerance, investors' prospect, market information and tax exposure. The theories helped to understand investment decisions in portfolio management, based on the amount of risk and other issues in which individual is willing to take. Relevant literature was identified and organized in themes of the study variables to make questionnaires which were used to conduct the investigation. Random sampling technique and purposive technique were used to obtain a sample of 62 (out of 83) investment advisers and managers to be used in this study. These techniques were considered most powerful tools that gave the required investment advisers and managers of the listed companies and market participants an equal chance at the NSE. A logistic regression was used and hypotheses were tested at significance level of 95%. The data was collected and analysed using descriptive design technique to give a vivid explanation for various factors influencing decision in portfolio management. The results obtained indicate that many people were receptive about risk. The more risk taken is warranted with corresponding gain and the reverse is true. Also investor prospect significantly affect decisions because many people may prepare short term investment due to the pressure to meet immediate demand. It was considered as a reasonable assurance from these knowledgeable advisers who had financial market information through share price analysis, future financial security valuation, and recommendations from stock brokers in such that security managers should concentrate on a well balanced portfolio creation to caution investors from losses. After high profit realization, it is paramount for investors to take time to compute risk analysis before embarking on investments. Investing in the shares should be done under a guidance of highly qualified stock managers. Finally, similar research should be carried out in areas far away from Nairobi Securities Exchange in order to observe investor disposition effect and risk attitude. Conducting the same research for Non¬listed companies in which their shares are not traded publicly, can also give foresight about investors' behaviours in unregulated market.
The Effect of Operational Risk Management on Financial Performance of Commercial Banks: A Case of Tier Two and Three Commercial Banks in Kenya.
(KeMU, 2018-09) Kamau, Rose Waithira
Kenyan banking sector is exposed to risks that initiate from external and internal environments. Operational risk threatens the viability and long-term sustainability of banks. Despite growth in the Kenyan banking sector, operational risk possesses a major challenge therefore, this study examined the impact of operational risk on the financial health of tier two and three commercial banks in Kenya. The inquiry adopted a quantitative research concept with a target population of 36 commercial banks licensed by CBK by December 2017. The banks were grouped under tier two and tier-three categories. Time Series Cross-Sectional unbalanced secondary panel data was analyzed. The panel Data was unbalanced as some of the data was unavailable over the years due to banks that had collapsed merged or bought out. The data was derived from published financial statements of accounts of the 36 commercial banks in Kenya, the CBK annual reports and the Banking survey publications for nine years from 2008 to 2016. Fixed effect dummy variable Regression analysis was applied to establish the effect of Operational risk management on the financial health of tier-two and tier-three commercial banks in Kenya. The dependent variable of the study was the financial performance of tier two and three commercial banks in Kenya and this was measured using the return on equity and return on assets as a percentage. The other variables included the bank size which was measured by a natural logarithm of total assets and operational risk was measured by the cost to income ratio as a percentage. The qualitative variables operational risk management practices, board and senior management oversight were difficult to measure and they were in cooperated in the dummy variable measure categorized under Tier two and Tier three. Under the dummy variable each bank was assigned a value of one if it fell under tier two categories and zero if it falls under tier three. Financial ratio analysis was used in the study together with panel data techniques of fixed effects and panels least squares. Hausmann test was carried out to test whether fixed effect is superior to random effects. Diagnostic tests were carried out to detect any econometric problems the regression models might possess. The study findings indicated that operational risk has a significant negative effect on the financial performance of tier two and three banks. Bank size has a significant positive effect on the financial performance of tier two and three banks. The conclusion of the study was that financial performance of tier two and three banks has an inverse relationship with operational risk which was measured by cost to income ratio. The study also concluded that tier three banks are not able to mitigate operational risks as well as tier two banks through the dummy variable measure. Banks are therefore encouraged to develop effective risk management and measurements techniques to avoid huge operational losses that negatively affect the financial health of the institutions.
Effect of Working Capital Management Practices on Financial Performance of Supermarkets in Nairobi, Kenya
(KeMU, 2018-09) Ndege, Tabitha Wanjira
Working capital management is not only improving financial performance in today’s cash-strapped and uncertain economy, but it is the question of meeting retail stores day to day operation. Recently, Kenya has had cases of some of the Supermarkets collapsing and some experiencing empty shelves. Large number of supermarkets failures in the past in Kenya like the case of Uchumi supermarket has been blamed on the inability of the financial manager to plan and control the working capital of their respective Supermarkets. The purpose of this study therefore was to evaluate the effects of working capital management practices on financial performance of the supermarkets in Nairobi County, Kenya. Specifically, the study focused on cash flow management practices, inventory management practices, account receivable management practices and account payable management practices. The study was guided by Agency theory, Liquidity preference theory, credit risk management theory, and Economic order model. A descriptive research design was adopted for this study. The target population of the study was the Supermarket in Nairobi. Operations managers, finance managers and procurement officers were the respondents in the study. Census approach was used to include all 26 supermarket in the study. The study used a sample of 72 respondents comprising operations managers, finance managers and procurement officers of the participating supermarkets. The study used both primary and secondary data. Primary data was collected using a structured questionnaire. Secondary data was obtained from financial reports of the supermarkets. A response rate of 92% was achieved in the study. Descriptive statistics such as frequencies, percentages, mean and standard deviations was used to organize findings. Regression analysis was conducted to analyze the data and test for relationships. The study found that cash flow management practices (p=0.000), account receivables management practices (p=0.025) and account payables management practices (p=0.004) were significant. There was strong positive correlation (r=0.805) between working capital management practices and financial performance of supermarkets whereby64.9%of the financial performance of the supermarkets could be attributed to working capital management practices. The findings also showed that working capital management practices were significant (F=29.110 (4,67), P=0.00) to financial performance of the supermarkets. The study concluded that working capital management practices are very important in enhancing financial performance of supermarkets. Of the four practices under investigation in the study, cash flow management practices, account receivables and account payables practices emerged as the most important in predicting financial performance of supermarkets. Cash flow management practices was the most affecting. The study recommended that supermarkets should seek to invest the cash above the optimal levels to enhance their financial performance. The study also recommended that supermarkets invest in ICT technologies for reducing lead time to enhance inventory management.
Determinants of Financial Sustainability of Housing Cooperatives in Kenya: (A Survey of Housing Cooperatives in Nyeri County)
(KeMU, 2018-09) Thangaru, Lucy Wangechi
Housing not only provides shelter, but also housing has a significant impact on the lives of the inhabitants as it is the cornerstone of community life, it brings societal esteem, it is a source of income generation, the center of family activities and most valuable asset for the households. Housing cooperatives offer affordability, a sense of empowerment in that resident has control of their own living situations, and the permanence and stability that comes with home ownership. However, housing cooperatives face many challenges in achieving this dream. Many housing cooperatives such as Posta Investment Co-operative Society, Ukulima Housing Co-operative Housing Society, and Romokia Housing have collapsed while others such as Kamuthi Housing and Chai Housing Society are in financial problems. The study sought to establish the determinants of financial sustainability of housing cooperatives in real estate development in Kenya. Specifically, the study sought to establish the influence of funding, government financial policy, financial accountability and investments on sustainability of housing cooperatives. The study was anchored in the resource-based view of the firm, contingency theory, agency theory and modern portfolio theory. This research used the descriptive survey research design. The study targeted housing cooperatives in Nyeri County. Senior management members of housing cooperatives were the respondents in the study. Slovins formula was used to come up with a sample of 152 respondents. Stratified random sampling was used to recruit respondents in the study. Data was collected by use of self-administered questionnaires. Univariate analysis for each variable was done so as to yield descriptive statistics that will be used to describe the variables. Regression analysis was conducted with the help of SPSS. Presentation of the findings was done through tables and graphs. The study found that the main source of funding was members’ deposits. Majority of the housing cooperatives had a capital base of between KES 1M and KES 50M. There was a strong positive correlation (r=0.796) between the independent variables (funding, government policy, accountability and investments) and financial sustainability of housing cooperatives in Kenya. The findings show that 63.3% of the financial sustainability of housing cooperatives in Kenya can be attributed to the independent variables. The findings show that funding (p=0.007), financial accountability (p=0.02) and investments (p=0.000) were significant. The study concluded that funding is the main determinant of financial sustainability of housing cooperatives. The study recommended that housing cooperatives review their strategies and fix gaps to ensure that are attractive organizations to banks who can lend them monies to enhance their investments.
Influence of Market Information on Decision to Invest through Nairobi Securities Exchange among Youth Groups of Kisumu County in Kenya
(KeMU, 2018-09) Kibegwa, John
This study sought to understand the market factors that influence the youths in making investment decisions at the Nairobi securities exchange market. The youths in Kenya are specifically looked at because of the pivotal role that they play in the Kenyan economy and the emphasis the government has put on youth empowerment programs to enable them to improve their financial welfare and participate in economic development as a way of achieving the tenets of Vision 2030.The government through the youth enterprise fund has invested heavily in providing seed capital for youth willing to start their own businesses. The Nairobi securities exchange provides lucrative investment opportunities following the revolution that has taken place in the market. However, the number of youth investing through it is still low. The specific objectives of the study were to; establish the extent to which price changes contribute to investment decision amongst the youth investors, examine the contribution of the market information to investment decision amongst the youth investors, assess the contribution of the past trends of the stock to investment decision among the youth investors and investigate how customer preference contribute to investment decisions amongst the youth investors. The researcher adopted descriptive survey design on youth groups registered by Youth Enterprise Development Fund in Kisumu County. In 2016 there are 380 youth groups registered and financed by Youth Enterprise Fund in Kisumu County. The study targeted the chairpersons of the youth groups or their representatives who were knowledgeable on the group investment strategies. The target population therefore was 380 chairpersons of youth groups from which a sample of 69 chairpersons was selected using stratified and random sampling method. Secondary data was obtained from the Youth Enterprise Fund, Nyanza Region for the four constituencies in Kisumu County while primary data was collected using questionnaires administered to the chair persons. The data collected was analyzed using descriptive statistics while inferential statistics was employed to determine the significance and the strength of the relationship for two independence samples. It was found that: price changes and market trends did not significantly influence youth decisions to invest through the Nairobi Securities Exchange. On the other hand, customer preferences and market information were found to significantly influence youth investment decisions. It is recommended that there is need for youth groups interested in investing through the NSE to be well trained on how market volatility influence returns on investment and the possible measures to cushion their investments in a volatile market environment, market trends analysis and the projection of market behavior. Furthermore, there is need for the capital markets authority to link the youth to platforms for accessing real-time capital markets data as well as empowering them on how to use the data in making investment decisions.
Factors Affecting Uptake of Agency Banking Services among Customers in Rural Kenya: A Case of Narok County
(KeMU, 2018-09) Githae, Lilian Wambui
The purpose of this study was to analyze factors affecting uptake of agency banking services among customers in rural Kenya. Specifically, the study sought to examine the effect of fraud on uptake of agency banking services among customers in Kenya; To determine the extent to which skills of agents affect uptake of agency banking services among customers in Kenya; To establish the effect of location on uptake of agency banking services among customers in Kenya and to find out how confidentiality affect agency banking services uptake among rural customers in Kenya. The study was informed by agency theory, delegated monitoring theory, transaction cost theory, financial intermediation theory and property right theory. The targeted population comprised of approximately 14 bank branch managers, 81 bank agents and 12,000 customers from four Cooperative Bank of Kenya, Kenya commercial Bank, Post bank and Equity Bank in Narok County, Kenya. The study sample size therefore comprised of 371 customers from the rural community, 81 bank agents and 14 branch managers in Narok County. Questionnaires were used in this study since they gather data over a large and diverse sample. A multivariate regression model was applied to determine the relative importance of each of the four variables. The research indicated that bank agent skills, location and confidentiality were found to be statistically significant in explaining uptake of agency banking services. It was recommends that agents should to always inform the bank in case there is a robbery. Banks should create awareness to the public that the bank agent‘s premises adheres to standard security measures and should also hire security services from security firms to transport cash to and from the agents where necessary. Banks should also train the agency banking agents on how to detect fake money and fraud. The study revealed that agents‘ skills affected uptake of agency banking services by rural community in Narok County. The study recommends banks to offer training to agents before they start providing specific services on behalf of the banks to improve their customer handling skills and increase the uptake of the agency banking services.
Determinants of Integrated Financial Management Information System Implementation, in the National Government Departments in Meru County
(KeMU, 2019-04) Maina, Patrick Wambugu
The government of Kenya has for a long time been very much concerned over the persistent poor performance in financial management due to lack of reliable and timely information for decision making. It took an initiative to address the shortcomings of the financial reporting system and to ensure good governance. The International Monetary Fund (IMF) carried out a survey in government accounting in early 1993 followed by a diagnostic study sponsored by the World Bank; this led to introduction of IFMIS. The main objective of this project was to computerize the whole accounting and auditing system in all the national government departments (Kinyua, 2011).The national government has endeavored to implement a fiscal management system at both to the national and county government to enhance prudent and accountable management of resources, putting in place the Integrated Financial Management Information System (IFMIS) that ensures budgeting and execution of finance commitments of the government bodies. The general objective of this study was to establish the determinants of IFMIS implementation in the national government departments in Meru County. In order to address this aim, the study was guided by the following objectives, namely to: -establish the influence of staff competence on IFMIS implementation in national government departments; assess the influence of government policies on IFMIS implementation in national government departments; determine the influence of top management support on IFMIS implementation in national government departments; and find out the influence of technological infrastructure in IFMIS implementation in national government departments. The study aimed at bridging the gap in knowledge on factors impeding the implementation of IFMIS in national government department in Meru County with the aim of suggesting strategies and approaches that can aid in promoting the implementation and use of the system. A target population of 68 employees of the national government departments in Meru County was used and a census was conducted. Descriptive and advanced inferential statistics were used to analyze data specifically by use of multiple logistic regression and p-value was used to test hypothesis. Frequency distribution tables, pie charts and bar graphs were used to represent the data more easily. The study established that government has created adequate policies in regards to IFMIS implementation; however, the presence of policies is not sufficient to enable its implementation. This was confirmed by hypotheses tests which showed that staff competency, technological infrastructure and most importantly, management support is vital for the effective implementation of the IFMIS system in national government departments. The study concluded that policies without appropriate implementation interventions is not effective in promoting IFMIS implementation. The study recommended that government to work on staff competency, right from recruiting the right personnel, and embracing on on-job training.
Influence of Porter`S Five on the Competitiveness of Small and Medium-Sized Hardware Business in Imenti South Sub County Meru County Kenya
(KeMU, 2019-06) Kinoti, Geoffrey
Kenya aims to create internationally competitive and prosperous country’s economy by supporting industrialization under the economic pillar as spelt out in vision 2030. Small and medium hardware enterprises play a critical role in this endeavor. However, the competitiveness in small enterprises hardware shops in Imenti South sub-county has continued to intensify to an extent of threatening their growth. This curtails the creation of a stable employment and can be a deterrent to affordable housing which is envisaged in Kenyan National Agenda 4. The purpose of this study was to assess the influence of porter’s five forces on the competitiveness of hardware stores in South Imenti sub-county. It hypothesized that business rivalry, threat of new entrants, bargaining power of buyers, bargaining power of suppliers, and threat of substitute product have no significant influence on the competitiveness of hardware sector in South Imenti sub-county. The porters five competitive model was significant in guiding this study. Descriptive survey design was adopted. Data was collected from registered hardware stores in South Imenti using a structured questionnaire. Census sampling technique was used since population was small, 83. Content and construct validity ensured data quality, while Cronbach's alpha value was 0.767 which was used to test the reliability of the research instrument. Mean, standard deviation, and regression analysis were used in analyzing data which was presented using tables. Results indicate that all the five forces; threat of new entrants, competitive rivalry, bargaining power of buyers, bargaining power of suppliers and threat of substitute product were jointly statistically significant in influencing competitiveness of small and medium hardware enterprises in South Imenti Sub-county, Meru County. However, when examining these forces separately, only competitive rivalry and threat of substitute products were found to be statistically significant in influencing competitiveness of hardware SMEs in South Imenti Sub-county, Meru County. It is concluded that the competitiveness of small and medium hardware enterprises in South Imenti Sub-county, Meru County is real and is largely influenced by competitive rivalry and threat of substitute products. The study recommends need for diverse innovative hardware products that are highly differentiated in terms quality and value addition. The hardware owners should utilize their economies of scale, foster collaborations and solidarity among themselves in order to push for quality products and better prices. This will also help to scale down business rivalry among traders. Manufacturers and major suppliers should embark on consumer awareness and education as well as on foster intensive promotion and advertising of various hardware products. Manufacturers should also control the quality of products to ensure value for money. The government should support the hardware sector by providing tax incentives in order to encourage local production/manufacture of quality hardware products. The findings of this study have enormous implications on business practices, pricing strategies, collaborations and poses challenge to the manufacturing companies to differentiate their hardware products in terms of the value they add.
Relationship between Entrepreneurial Marketing Mix and Growth of Jua Kali Enterprises in North Imenti Sub County
(KeMU, 2019-07) Gatobu, Jackline Kanana
Small and Medium Enterprises are the key drivers of the country’s economy. The government is tasked with spurring growth of SME’s through provision of supportive legal structure and conducive policy environment. However, growth of these small and medium enterprises predominantly depends on proper configuration of entrepreneurial marketing mix practices. The purpose of this study was to investigate the effect of entrepreneurial marketing mix on the growth of jua kali Enterprise in North Imenti Sub County, Meru County. Specifically, the study assessed the relationship between pricing, promotion, distribution, product and growth of jua kali enterprises in North Imenti sub-county, Meru County. The study employed the resource based view theory, Kirzner’s “alert” theory of entrepreneurship and the 4P’s Marketing Model. The population comprised of one hundred and twenty eight (128) owner managers of jua kali enterprises operating within North Imenti Sub County, Meru County and registered by Micro and Small Enterprises Authority Kenya (MSEA-K). A stratified random sampling technique was used to select a sample of ninety seven (97) jua kali Enterprises from the target population. A structured questionnaire was administered after which data was entered and analyzed using Statistical Package for Social Sciences (SPSS) version 22. The questionnaire was tested for validity and reliability. A pre- test was carried out to test for reliability. The results were analyzed using both descriptive (frequencies and percentage) and inferential statistics (Pearson Correlation, One Way Analysis of Variance (ANOVA) and Regression analysis). The study established that product strategy affects growth of jua kali enterprises hence rejecting the hypothesis concluding that product strategy significantly affects SME’s growth. The study found a strong positive relationship between distribution strategy and SME’ growth. The null hypothesis was rejected hence concluding that distribution strategy has significant linear relationship to growth of jua kali SMEs. The study found an intermediate positive relationship between promotion strategy on growth of jua kali sector and rejected the null hypothesis hence concluding that promotion strategy affect growth of jua kali SMEs. The study found that pricing affects the growth of jua kali enterprises to a moderate extent in North Imenti constituency. Therefore, rejecting the null hypothesis and concluding that pricing strategy has a significant linear relationship with growth of jua kali SMEs. The objectives of the study were achieved. The study recommends need for SMEs to invest in research and development for products innovations, define clearly distribution channels as well as public, private and NGO’s partnerships dedicated to sourcing for sustainable market for products and services. Finally, more research for identification of customer specific needs. The study is valuable to entrepreneurs as they seek for better strategies to grow their enterprises.
Relationship between Resource Mobilization and Wealth Maximization in Saving and Credit Cooperative Societies in Meru County, Kenya
(KeMU, 2019-07) Njagi, Charles Mugendi
Saving and Credit Cooperative Societies in Kenya face challenges in terms of resource mobilization, including strict requirements/bureaucracy, inadequate government support, legal restrictions, default risks/poor repayment, inadequate lending funds, and the lack of adequate legal framework. This study's overall objective was to investigate the relationship between resource mobilization and wealth maximization in Meru County saving and credit cooperative societies. The specific objectives were; to assess the influence of savings strategy, product development, ICT adoption and staff development process on SACCOs wealth maximization n Meru County. The study was informed by four theories; dynamic capability theory; resource-based theory and human capital theory. It adopted descriptive research design and targeted 11 deposit taking SACCOs in Meru County. The unit of observation comprised of 168 loan officers, 17 IT systems administrator and 20 managers from all the SACCOs. A sample size of 155 was obtained from a total target population of 205 respondents. The study adopted stratified sampling method which ensured proper representation of the different study respondents. Using structured questionnaires, primary data was collected. SPSS version 24.0 was used to analyze data collected using descriptive statistics (frequency, percentage, mean and standard deviation) and inferential statistics (analysis of correlation and regression). The findings indicated that separately, all the resource mobilization aspects (savings strategy, product development, ICT adoption and staff development process) positively and significantly influence SACCOs’ wealth maximization. When combined staff development process had a negative and significant influence on wealth maximization. However, product development was found to have no significant influence on wealth maximization. The research concluded that resource mobilization aspects, specifically, savings strategy and ICT adoption have a positive and significant influence on SACCOs’ wealth maximization in Meru County, Kenya. Based on the findings, the research recommends that SACCOs in Meru County need to strengthen their resource mobilization strategies; savings strategy through attraction of new members, interest rates on deposits, use of lotteries, continued savings arrangements and use of liquid products; product development through new types of products, quality of products, products features, product research and number of products; ICT adoption through use of mobile transaction, availability of internet and training staff on technical skills and agency banking; and staff development process through skilled human resource, decision making, staff trainings and organization of workshops and conferences aimed at enhancing staff skills. The findings have significant implications on resource mobilization strategies among SACCOs not only in Meru but also in other parts of the country. Particularly, the findings inform the direction that these SACCOs should take in order to achieve wealth maximization.
Effect of Mortgage Financing on Profitability of Islamic Banks in Kenya
(KeMU, 2019-08) Sheikh, Abdullahi Rashid
The growth of Islamic banking has been on a steady increase hence currently a force to reckon with in the financial market. This banking subsector is presently competing for market share with conventional banks. The purpose of this study was to assess the effect of mortgage financing on profitability of Islamic banks in Kenya. Specifically, the study sought to establish the effect of interest-free mortgage financing on Profitability Islamic banks, to explore how collateral requirements influence profitability in Islamic banks, and to examine the effect of mortgage credit on profitability in Islamic banks. This study adopted the descriptive research design and sampled 45 respondents by Census survey technique. Data was collected by use of a structured questionnaire and analyzed both by descriptive and inferential statistics. On the correlation analysis to determine the relationship between interest free mortgage financing and profitability of Islamic banks in Kenya the findings indicated a significant correlation (r = 0.637, p < 0.05). The findings indicated that that interest free mortgage financing had a positive and statistically significant influence on profitability of Islamic banks in Kenya. On collateral the correlation analysis yielded a Pearson’s product correlation (r = 0.607, p < 0.05) indicating that a strong and positive relationship existed between collateral and profitability in Islamic banking. On mortgage the findings yielded a Pearson’s product moment coefficient of correlation (r = 0.575, p < 0.05) suggesting that a strong and positive relationship existed between the two variables. The study established that there was a positive correlation between mortgage credit and profitability in Islamic banks. The R square was 0.609 indicating that 60.9% of variance in profitability in Islamic banking could be explained by interest free mortgage financing, collateral and mortgage credit. Based on the findings it was recommended that in order to address Interest free mortgage financing in Islamic banks further studies on Islamic banking should be carried out. On collateral further analysis should be carried out on factors that influence collateral and how this can be expanded to address more clients. On Mortgage Credit it was recommended that Banks should make efforts to ensure that mortgage credit is easily available.
Financial Determinants of Dividend Policy Payout among Commercial Banks in Kenya
(KeMU, 2019-09) Tut, Angelina Nyachol
Dividend payout policy for commercial banks differ as each company decides on what, how and when to pay dividend to its shareholders. Some banks pay higher and other pay less dividend despite the fact that they operate under same business environment. The questions how do the commercial banks set their dividend and why do banks pay dividend, impose the problem in dividend payout in Kenyan context. These reveal that there is no unified picture regarding dividend payout policy and therefore remain one of the most contested disputes within the field of corporate finance. The general aim of the study was to investigate the financial determinants of dividend payout policy among commercial banks in Kenya. Specifically, the study sought to achieve the following objectives: To establish the influence of levels of profits on dividend payout policy among commercial banks in Kenya; To establish the influence of liquidity on dividend payout policy among commercial banks in Kenya; To establish the influence of bank size on dividend payout policy among commercial banks in Kenya and lastly to establish the influence of leverage on dividend payout policy among commercial banks in Kenya. This study used descriptive research design. The researcher targeted all the 42 commercial banks in Kenya. Secondary quantitative data was collected using secondary data collection sheet. The data was analyzed by descriptive and inferential analysis that involved multiple linear regression and correlation analysis. The results indicated that levels of profits had significant influence on dividend payout policy of commercial banks in Kenya (p-value < 0.05), liquidity had significant influence on dividend payout policy of commercial banks in Kenya (p-value < 0.05), bank size had significant influence on dividend payout policy of commercial banks in Kenya (p-value < 0.05) and leverage has no significant influence on dividend payout policy of commercial banks in Kenya (p-value < 0.05). The study recommended that banks should work towards improving their profit levels to facilitate dividend payout policy. The study in addition recommended that, bank managers should ensure they are able to fulfill both expected and unexpected demands of cash on an ongoing basis. Further the study recommended that bank managers should work towards the growth of the banks, when a firm becomes larger, and its operational activities are more efficient.
Effects of Information Communication Technology Adoption on Financial Management in Meru County Government
(KeMU, 2019-09) Mugambi, Bonface Mutuma
Information Communication Technology (ICT) is used in different areas. The common factor is its acceptance as a technology for facilitating transfer of information by use of electronic mode. Financial management automation is where financial activities are computerization from the preparation of the budget all the way to budget execution using an integrated financial management system. Despite the significance of automating of financial management, the audit report of Meru County government by the auditor general indicated that Meru County Government as having poor ICT policy for key functions such as the budgeting process, revenue collection and procurement processes. There is no report showing that the problem has been addressed to date. Lack of effective financial management practices in the aforementioned functions hinders effective service delivery. The main purpose of the study was to find out if ICT adoption has a significant effect on financial management in the public sector in Kenya purposing on Meru County Government. The study was done the sole aim of achieving a definite objective: to examine the effect of budgeting process automation, revenue collection automation, procurement process automation and cash management automation on financial management. This study used the three theories; diffusion of innovation, systems theory and the technology acceptance model. The study used a census survey of seventy respondents which comprised of fifteen (procurement officers, six budget officers, thirty six accountants, twelve revenue officers and one chief officer in charge of finance. The study used Questionnaire as a research instrument for data collection. For the determination of validity of instruments, content validity index was used. The cronbach’s alpha was computed in order to assist in measuring the reliability of instruments used to collect data and also to measure the internal consistency. The finding of the study shows that all the four predictors are relevant in financial management in the Meru County Government. The study established that budgeting process automation affected financial management in Meru County to a great extent. The study found out that revenue collection automation affected financial management in Meru County to a great extent. The study found that procurement process automation affected financial management in Meru County. The study also found out that cash management automation affected financial management in Meru County to a great extent. On The study recommends that for Meru County to overcome the challenges of budgeting process automation the county should fully embrace the use of ICT and train the users to enhance their skills. On revenue collection automation the study recommends integrated form to enhance efficiency timely revenue collection, enhance management integrity and provide clear records among other factors. On Procurement process automation a fully automated process to be implemented to that will make sure transparency is achieved and proper record keeping. On cash management automation the accountants and other relevant