Master of Science in Finance and Investment

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Determinants of Financial Literacy Level among Residents of Meru Municipality, in Meru County, Kenya
(KeMU, 2019-09) Njehia, Milcah Wanjiru
In recent years, financial literacy has come to play an important role in financial reforms across the world. Modem technological developments and market liberalization have resulted in complicated financial products. There is the perception of inadequate and even total lack of financial literacy, hence to solve this many organizations have invested resources to financial education programs, targeting to access majority of the population in future. The objective of the research was to examine and analyze the determinants of financial literacy level among residents in North Imenti Sub County in Meru County, Kenya. The determinants studied were; Level of education, Demographic characteristics of Gender and Age, Socio-economic factors of Occupation status and Income level, Sources of Financial information and advice of informal tools and formal tools. The research problem was analyzed using Descriptive research design where Primary data was collected using closed-ended questionnaires while secondary data was collected from the relevant books and journals. The target population for the study was 30,804 people in Meru Municipality. The Sampled size form this accessible population using Mohamed, (2014) formula gets 400 people, which finds that for population above 10,000 people the sample size would be 400 people. The sample design involved individuals from the nine Meru municipality locations with a population response rate of 75%, male being 167 and female 133. Descriptive statistics included frequencies and percentages presented in tables which summarized and categorized data based on their similar themes and Statistical Package for Social Sciences Version 20 was used for further processing. In determining the relationship between the dependent and the independent variables, Regression analysis was used and recommendations made based on the findings. The study revealed that the relationship between financial literacy level and Level of Education was the most significant, followed by Demographic Characteristic of Age and Gender. Level of education and demographic factors have significant relationship in the financial literacy level in Meru Municipality. Socioeconomic factors and source of information did not have a significant influence on Financial literacy level. In Conclusion, emphasis was made to focus on better ways to implement the best methods of learning to enhance the Level of Education of the population. It was identified that the manner of learning played a vital role on retention rate. It recommended that all stakeholders should be encouraged to support availed digital literacy programs for the population. These would play a vital role in increasing literacy level since it incorporates technology in learning and multimedia teaching methods. The study further recommended establishment of Money management programs that would enhance public participation in financial management matters by all stakeholders.
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.
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.
Effect of Competitive Strategy on Financial Performance of Commercial Banks in Kenya. A Case Study of Nairobi County, Kenya
(KeMU, 2023-08) Njue, Leonard Mugendi
Competitive strategies are critical in the bank’s financial performance. The banks that have effective competitive strategy are likely to achieve better competitiveness in terms of financial and non-financial performance. The study sought to determine the effect of competitive strategy on the financial performance of commercial banks in Nairobi County Kenya. The specific objectives were; to determine the effects of product differentiation strategy on the financial performance of commercial banks in in Nairobi County Kenya, to establish the effect of innovation strategy on the financial performance of commercial banks in Nairobi County Kenya; to analyze the effect of the post-COVID-19 recovery strategy on the financial performance of commercial banks in Nairobi County Kenya; and to establish the effect of human capital strategy on the financial performance of commercial banks in in Nairobi County Kenya. The study was guided by porter's generic competitive strategies theory resource-based theory, knowledge-based view, and agency theory. The study adopted a cross-sectional survey design, targeting the branch managers of licensed commercial banks operating in Nairobi County. A total of 564 banking branch managers were targeted. A sample of 234 branch managers were selected using random sampling. Data was collected using an online questionnaire administered through the Qualtrics survey portal. The data was analyzed using Statistical Package for the Social Sciences version 29. The data was presented in tables and graphs. The pilot study was conducted in Murang’a County, using 20 branch managers in commercial banks. The ordinal logistic regression was used to analyze the relationship between the variables. The result of the regression indicated a positive statistical relationship between product differentiation, COVID-19 recovery strategy, human capital strategy and innovation on financial performance. It was also established that the overall competitive strategy had a statistically significant effect on the bank’s financial performance. It is recommended that the banks should establish strategies aimed at improving the product quality and review strategies to improve product quality to meet the customers’ expectations and focusing on refinancing and restructuring of loans to assist the customers who are unable to pay the loans on time due to the financial challenges. The recommendation for future research includes using the qualitative approach, comparative analysis across different regions in Kenya and using the longitudinal approach.
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.
Effect of Costing Models on Financial Performance of Cement Manufacturing Industry in Kenya
(KeMU, 2024-07) AHMED, MAHAMUD
In East Africa, particularly in Kenya, the cement industry holds a prominent position both in production and consumption. Kenya boasts approximately eight cement companies, three of which are publicly traded on the Nairobi Securities Exchange (NSE): East Africa Portland Cement Limited, ARM Cement Limited, and Bamburi Cement. The rest of the businesses are privately held and include Mombasa Cement, Savannah Cement, and National Cement. The real estate industry's increasing dynamics of supply and demand have made the competitive scene within the cement manufacturing sector more intense. As a result, in order to maintain or grow their market share, businesses are concentrating more and more on assessing their financial positions. Unlike in the past when Kenyan cement manufacturers were able to make good profits now they are struggling to make a profit due to the low demand for building materials and the high levels of importation of cheaper cement from Asian countries. The purpose of this study is to establish the impact of various costing techniques on the financial planning of the manufacturing sector in Kenya. The specific research question of the study is therefore; what is the comparative effect of Activity-Based Costing (ABC), standard costing, and target costing and marginal costing on the financial performance of the Kenya’s cement manufacturing industry? The study employs both quantitative and qualitative research methods to ensure the credibility of the findings. The target population is comprised of 100 middle-level management personnel. The method of data collection is survey interviews, and the data collected is of a quantitative nature, analyzed using descriptive statistic and presented in the form of percentage, Mean Standard Deviation and frequency using SPSS. The research thus concludes that there is a positive correlation between financial performance and the various costing techniques namely, the activity based costing, the target costing and the marginal costing while the standard costing has little or no impact on the performance. Notably, ABC, target costing, and marginal costing are found to positively impact performance. In conclusion, standard cost accounting proves valuable for managers seeking precise budget planning. ABC is particularly beneficial for cement manufacturing firms, as it facilitates cost reduction, thereby contributing to increased profits and overall organizational performance. Further research is recommended across manufacturing firms in different regions and sectors to generalize these findings. Additionally, exploring the frequency of adoption of management accounting practices in diverse industries would enrich future studies.
Effect of Financial Technology Adoption on Performance of Commercial Banks in Meru County, Kenya
(KeMU, 2023-08) Wilter, Mwigereri Munyua
This study aimed to probe the effect of financial technology (Fintech) on the performance of Commercial banks in Meru, Kenya. Fintech had surfaced as a disruptive force in the financial industry, offering new ways of delivering financial services to customers. The study explored the extent to which commercial banks in Meru had embraced Fintech and the impact it had on their performance. By concentrating on lending, deposit mobilization, payments and customer acquisition of using fintech on commercial banks revenue streams in Meru County, Kenya. The study was anchored on three theories mainly: diffusion of innovation, technology acceptance model and theory of financial intermediation. The study adopted a mixed-styles approach, combining both quantitative and qualitative data. The study involved a check of commercial banks in Meru County, Kenya, to gather information on their use of Fintech as well as their financial performance. The study was anticipated to give perspective into the benefits and challenges of Fintech use in the commercial banking sector in Meru County, Kenya. The findings would be useful to commercial banks, policymakers, and other stakeholders in the financial industry in developing strategies to enhance financial performance and use of Fintech in the region. Results on regression study designated that there was a robust optimistic association (R=0.998, p- value of 0.000) between adoption of financial technology and financial performance of commercial banks. The findings further indicated that fintech payment, lending and deposit mobilization have significant influence on financial performance while fintech customer acquisition does not have a significant influence on financial performance of commercial banks. It is important to outline the need to adopt fintech payment to improve the efficiency of banking operations and to increase the accessibility and convenience of banking services for customers. Fintech lending need to be adopted by the commercial banks to increase the accessibility of credit for small and medium- sized enterprises (SMEs) and enable banks reach to a broader customer base, including underserved individuals or businesses. The study further recommends adoption of fintech deposit mobilization to create new business opportunities for banks and increase the efficiency of banking operations. Similarly adoptions of fintech customer acquisition enhance the convenience of banking services for customers and improve banks' ability to offer personalized financial products and services. The commercial banks in Meru County were the only ones included in this study. It is advised that more research be done that includes financial data from other Kenyan counties, as this could offer new perspectives. Additionally, the study failed to recognize and look into the influence of moderating factors on financial performance. The researcher suggests that future studies examine how modifiers affect the implementation of technology for finance and financial performance.
Effect of Governance on risk Mitigation among County Governments in Kenya A Case of Mombasa and Kilifi County
(KeMU, 2022-10) Mbaru, Eddy Munga
The purpose of the study was to assess the effect of governance on risk mitigation among county governments in Kenya. The study's main goals were to find out how managerial accountability, public involvement, financial reporting, and adherence to the rule of law impact risk mitigation in the county governments of Mombasa and Kilifi. Because of the ease with which information could be obtained, the research was carried out in the departments of the Mombasa and Kilifi County governments. The Modern Portfolio Theory, Agency Theory, and Risk Mitigation Theory were all used to inform the research. The research design used in this study was a descriptive cross-sectional one. The target demographic consisted of 85 senior staff members County Executive Committee members, Chief Officers and Directors working in 11 departments throughout Mombasa and Kilifi County governments. The sample size for the research was determined by the use of a census sampling approach. Primary and secondary data were used in the investigation. Researchers also visited Mombasa and Kilifi County governments before delivering surveys in order to get formal authorization to conduct the study for academic reasons solely from the academic office of Kenya Methodist University before administering the questionnaires. Descriptive statistics, such as frequency distributions, means, modes, and standard deviations, were used to compile and analyze the data. In order to guarantee that the information was accurate, detailed, and consistent, it was sifted and changed. The data was organized and recorded in accordance with the study's objectives and research questions, and a range of statistics were obtained. All four independent variables (management accountability P=0.000, public participation 0.006, financial reporting 0.000, and compliance with the rule of law 0.019) had a P value less than the threshold level of significance of 0.05, indicating a significant relationship between governance and risk mitigation in the county governments. Risk identification and mitigation are critical in determining the financial success of county governments in terms of income and expenditure, according to the results of the study. In order to reduce the impact of risks on the organization, they must be mitigated as soon as they are discovered. According to international accounting standards, financial reporting by county governments is standardized to increase accountability and transparency by lowering the complexity of present financial reporting and enhancing the value of financial information for stakeholders and consumers. County government executives, according to the findings of the research, should develop and convey to their staff clear rules and processes for creating, implementing, and modifying conflict-of-interest policies at the appropriate levels in the public sector. It is also necessary for county leadership to establish protocols for sharing and debating financial reports and audit reports with members of the public and other stakeholders in the running of the county.
Effect of Knowledge Management Practices on Academic Performance of University Students in Kenya: A Survey of Private Chartered Universities
(KeMU, 2023-02) ONDITI, WALTER OUMA
The concept of Knowledge Management has recently been applied as a practice for measuring or gauging performance. However, the effect of these practices on academic performance of university students is yet to be analyzed and contextualized in a university setup. The research purposed to analyze the effect of knowledge management practices on academic performance of private universities in Kenya. Four sets of knowledge management practices were identified and conceptualized to guide this study: knowledge acquisition, knowledge transfer, knowledge retention and knowledge sharing. Private chartered universities in Kenya were used as the case with primary data collected through questionnaires. The target population comprised of 2,653 postgraduate students and faculty/department heads. A sample size of 370 respondents was determined using a sample size table from the Commission for University Education. Respondents were selected through stratified random sampling while data collected analyzed using descriptive and inferential methods. This finding established that 27.8% variation in postgraduate academic performance in private universities was attributable to knowledge management practices in use in private universities in Kenya; Knowledge acquisition had very weak positive and insignificant correlation (r=0.044) and insignificant partial factor effect (β = 0.040, p=0.526); Knowledge transfer had strong positive and significant correlation (r=0.252**) and significant partial factor effect (β = 0.014, p=0.03); Knowledge retention had very weak negative and insignificant correlation (r=-0.034) and an insignificant negative partial factor change (β = -0.124, p=0.064); and finally Knowledge sharing had strong positive and significant correlation (r=0.485**) and a significant partial factor change (β = 0.455, p=<0.001), all on postgraduate academic performance. The study drew the conclusion that Knowledge transfers and Knowledge sharing significantly affected postgraduate academic performance, while knowledge acquisition and Knowledge retention do not have significant effects. Lastly, the study strongly recommends further analysis on the following (i) explain the observed negative effect of knowledge retention on academic performance, (ii) an analysis to explore other factors accounting for 72.2% variation on academic performance not addressed, and (iii) a similar study be extended to public universities for comparison and complementarity of findings.
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.
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 Process Innovations on Financial Performance of Microfinance Institutions in Nairobi County, Kenya
(KeMU, 2023-08) Mwirichia, Christine Makena
Micro-Finance Institutions in Nairobi County have experienced intense pressure to adapt to new developments during the past ten years because of market rivalry, advancements in computer technologies, and varying employee demographics. Micro-Finance Institutions that do not innovate run the risk of being surpassed by rivals. The financial sector has been affected by globalization and technological advancement. Locally in Kenya the performance of MFIs has declined. The study's objective was to define the process innovation effects on the financial performance of microfinance institutions in Nairobi County, Kenya. The process innovation variables used were remote data processing, digital cards, point-of-sale terminals, real-time gross settlement, and their effects on the financial performance of MFIs. Task-technology fit theory, diffusion of innovation theory, and theory of financial innovation are the theories on which the study is based. Cross-sectional survey research approach was em`1ployed. The current study concentrated on the head employees of finance, information technology, operations, and credit control from 12 MFIs in Nairobi County that are registered with AMFI. Stratified random sample technique was used. An initial sample of 44 individuals was selected using the Yamane statistical technique. Structured questionnaires were used to gather in-depth data. Pre-testing was conducted to assess validity and reliability of the data collection techniques. Version 26 of the SPSS was used to evaluate the data and guarantee its accuracy. Mean and standard deviation were used to determine descriptive analysis, whereas model brief, ANOVA, and coefficients of regression were used to determine regression analysis. According to the correlation analysis, real-time gross settlement, digital cards, point-of-sale terminals, and remote data processing were all positively correlated with financial performance. The outcomes of the regression showed that every predictor had a favourable, significant effect on financial success. The research concluded that the processes of the MFI have been automated to improve MFIs operations. The study concludes that digital cards introduction in to the Microfinance institutions has attracted more retail depositors to the MFIs. Also the Microfinance institution offers debit cards to its customers. Further, it is concluded that the MFI has sufficient POS infrastructure and the MFIs have put in place security measures on point of sale transactions. The study concludes that the Microfinance institution uses Real time gross settlement to minimize risk related to high value payment settlements. The findings of the study endorsed that in addition to automating core processes, the Microfinance institutions should make it possible for the clients to open and operate accounts remotely. In order to ensure maximum benefits through digital cards use, the Microfinance institution should encourage their customers to use digital cards.
Effect of Restructuring on Financial Performance of Commercial Banks in Meru County, Kenya
(KeMU, 2023-08) Jepleting, Kipkorir Janet
Banking industry is section of financial sector. Its role in economy development cannot be overemphasized. Globally, it facilitates financial intermediation process. In Africa however, the commercial banks have been decreasing owing to tightening regulations, mergers, acquisitions, liquidations and collapses. On the same vein, profitability trend of commercial banks in Kenya have been fluctuating for the past eight years .This could be linked to raising inflationary pressure, emerging risks, concerns of public debt sustainability, fragile economic recovery among others. However, in an effort to enhance performance, commercial banks have been restructuring but it is not clear which restructuring strategy is most successful in doing so. The subject study therefore sought to examine effect of restructuring on financial performance of commercial banks in Meru County. It assessed the effect of technology adoption, downsizing of employees, business process reengineering and outsourcing on financial performance of commercial banks. The study was anchored on financial intermediation theory, resource-based view, technology adoption model and transaction cost theory. It employed descriptive research design, target population of sixty branch management staff and adopted census approach. It made use of structured questionnaire which was reliable for use in actual data collection since Cronbach's Alpha coefficient for each variable was greater than 0.7. The content validity of the questionnaire was enhanced by ensuring questions were formulated based on the objectives. Criterion validity was utilized to test how well results were relevant to measuring the effect of restructuring on financial performance. Additionally, it utilized both qualitative and quantitative data. Pilot testing was carried out in Fina Bank, Nanyuki branch, Laikipia County and Ecobank Kenya Karatina branch, Nyeri County to enhance reliability of questionnaire. Data was coded using SPSS and analyzed using descriptive statistic correlation and multiple regressions. Further, it was presented using charts and tables. The study discovered that downsizing, technology adoption, outsourcing and BPR positively and significantly affected the financial accomplishments of commercial banks in Meru County. The study concluded that downsizing of employees constructively and significantly influenced financial achievements of commercial banks. In addition, technology adoption is essential on financial performance of commercial banks. Likewise, outsourcing of services positively and significantly influenced fiscal performance of commercial banks. Furthermore, it was inferred that BPR enhanced financial accomplishments of commercial banks. Therefore, the study recommended that commercial banks should establish training programs to boost morale and instill commitment spirit among the employees left behind after downsizing process. In addition, they should employ entertaining language to capture the potential market available in social media. They should also outsource services that are expensive to nurture and has declining function. Last but not least, future researchers should consider exploring impact of innovation related risks on financial performance of commercial banks; challenges and opportunities posed by outsourced fintech services on financial performance goals of commercial banks; relationship in between BPR, organizational culture and organization performance. Eventually, the study may be replicated by future researcher in savings and credit societies in Kenya to establish whether the results realized would hold
Effect Of Socioeconomic Dynamics on Financial Inclusion of Business Women in Isiolo County, Kenya
(KeMU, 2025-10) Constance, Mwaro
Financial inclusion has increasingly been recognized as a central driver of economic empowerment, poverty reduction, and inclusive growth, particularly among marginalized and underserved groups. In the Kenyan context, and more specifically in Isiolo County, business women continue to face notable challenges in accessing and fully utilizing financial services, despite the rapid spread of mobile banking technologies and the government’s formulation of policies aimed at supporting inclusion. These persistent barriers are largely attributed to a range of socioeconomic factors that either limit or enhance women’s ability to participate in the financial ecosystem. This study was designed to investigate how specific socioeconomic variables namely employment opportunities, cultural norms, financial literacy, and infrastructure availability affect financial inclusion among business women in Isiolo County. The research was anchored in four theoretical perspectives: the Resource-Based View, Institutional Theory, Financial Literacy Theory, and Diffusion of Innovation Theory. Methodologically, the study adopted a descriptive cross-sectional design, with a target population of 920 female entrepreneurs operating in Isiolo County. From this group, a sample of 279 respondents was drawn using a cluster sampling approach to ensure adequate representation across different business segments and localities. Data were collected through structured questionnaires and analyzed using both descriptive and inferential techniques to generate a comprehensive understanding of the relationships involved. The findings demonstrated that each of the four socioeconomic factors had a substantial influence on women’s financial inclusion. Employment opportunities were found to enhance women’s financial independence and capacity to interact with financial institutions, while cultural norms shaped attitudes, expectations, and levels of economic engagement. Financial literacy played a crucial role by equipping business women with the knowledge and skills needed to navigate financial systems, and infrastructure development, such as transport networks and digital connectivity, proved indispensable in facilitating access to financial services. The study concludes that financial inclusion for business women in Isiolo County depends significantly on aligning these socioeconomic factors. It recommends policy interventions focused on expanding employment opportunities, implementing culturally sensitive reforms, scaling up financial literacy programs, and investing in infrastructure to foster inclusive economic growth.
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.
Effects of Credit Risk Rating on the Firm Value of Listed Commercial Banks in Kenya
(KeMU, 2022-03) Mohamed, Maalim Issackow
The banking sector is key to boosting economic growth in any specific region. A stable and sustainable banking area produces successful output and controls cash flow, which in every given country promotes economic development. In Kenya, both domestic and international threats and uncertainties endanger efficacy and competitiveness in the banking sector. Despite the various control measures put in place especially the CBK’s prudential laws to ensure that the performance of commercial banks in Kenya is ensured, Kenyans have witnessed most commercial banks collapsed with a combined assets valuation of Kshs 187.9 billion. It is in this light that the current study sought to investigate the effect of credit risk rating on firm value of listed Commercial banks in Kenya. Descriptive research design was employed on a population sample of eleven publicly listed retail banks using census. Secondary data was collected from CBK and other public financial reports on a target of 11 retail banks over the 12 – year period from 2009 to 2020. The collected data was analyzed using a multivariate panel regression model while SPSS Version 23.0 was used to generate the relevant regression tests. Presentation of data results was done using charts and frequency tables for ease interpretation. The study established that the capital adequacy has a marginal positive impact on the firm value of Kenya commercial banks earning ability was found to have a statically insignificant positive effect on firm value among Kenya commercial bank. The study finding indicated that liquidity was insignificantly and negatively correlated with firm value of Kenyan commercial banks. On the other hands’ asset quality had insignificant positive effect on firm value among Kenya commercial bank. The study recommends that, managers of listed banks should embrace utilization of internally generated equity capital since this financing mode is cheaper and readily accessible source of capital that ultimately promotes credit risk rating of the firms. There is need to maintain optimal level of liquidity to maximize firm value. The quality of assets as well as higher but sustained levels of earning that boost output is to be keenly considered by management of the Kenya commercial banks maximizing value the firm value.
Effects of Financial Innovation on Performance of Commercial Banks in Kenya Case Study of Leading Commercial Banks in Kenya
(KeMU, 2022-06) Mwiti, Eva Kendi
The core of this study was to assess the effects of financial innovation on performance of commercial banks in Kenya with reference to listed banks in Kenya from 2012-2017. The study is guided by three specific objectives; to determine the financial systems on the performance of commercial banks in Kenya; establish the process innovation on the performance of commercial banks in Kenya; and to realize the effects of product innovation on the performance of commercial banks in Kenya. The study is based on three theories; Merton’s Market Efficiency Theory of Innovation, Pecking Order Theory, and Diffusion of Innovation Theory. This study adapts a quantitative research approach with focus on panel data. The target population were commercial banks in Kenya and was limited to the leading listed commercial banks in NSE but the 6 public and private leading banks with the in terms of customer and assets base. The study through purposive sampling selected six leading commercial banks and included Kenya Commercial Bank, Cooperative Bank of Kenya, Equity Bank, Family Bank and Barclays Bank and The Standard Bank. Both primary and secondary data were used in this study. Primary data was drawn from the questionnaires that were collected from the respondents. On the other hand, secondary data was used in this study was obtained from the financial statements of the 6 sampled commercial banks. Secondary data were extracted to develop a panel data that included financial reports and calculated ratios collected for the 5 years, since 2012-2017. Descriptive analysis was used to analyze primary data collected from the questionnaires and was used to show the extent to which the three type of financial innovation (Financial systems innovations, Process Innovation, Product innovation) influence the performance of commercial banks in Kenya. Quantitative data analysis methods were done through SPSS software for the secondary data collected from the financial reports. After all data is collected, data was coded and keyed into the computer for analysis using the statistical packages for social sciences (SPSS). Partial correlation and linear regression analysis was used through regression analysis to determine whether financial innovation (financial systems innovations, process innovation, and product innovation) has an influence on the performance (ROE and ROA) of selected commercial banks in Kenya. The findings from primary data indicated that Y=1.777+.290X1+.148X2+.106X4+ε.This indicates that a .290 increase in Financial Systems, a .148 increase in Process Innovation while 086 in Product Innovation will have unit change in the performance of commercial banks. Product Innovation is the only financial innovation component that does not have a significance influence on the performance of commercial banks. The analysis on secondary data indicated that if all other factors remained constant at 0.487 there would have a 0.048519 change in financial innovation (financial systems, process innovation and product innovation) then there would be a unit change on the performance of commercial banks in terms of ROA. On the other hand if every other factors remained constant 0.487 and there 0.330825 change in financial innovation (financial systems, process innovation and product innovation) then there would be a unit change on the performance of commercial banks in terms of ROE.
Effects of Financial Profitability on Profitability of Domestic Commercial Airlines in Kenya
(KeMU, 2023-07) NJOROGE, SAMUEL NGINYA
This study was undertaken with the sole intention and purpose of establishing whether there is a significant relationship between levels of profitability and four main components of the financial structure of domestic commercial airlines in Kenya. The researcher undertook to establish how share capital finance, lease finance, debt finance and retained earnings related with the profit levels of domestic commercial airlines in Kenya, measure the strength and magnitude of the variables’ relationships while establishing if the relationships are significant and negative/positive. Three theories founded the basis of literature review in this study, i.e. agency theory, the pecking order financing model and the trade-off theory of capital structure. The study adopted a causal-effect research design. The study targeted eleven commercial domestic airline companies registered by AFRAA’s approval that were in operations between 2012 and 2021. Annual average secondary data was collected using a secondary data collection sheet, and the data covered a period from 2012 to 2021. This study used numerical financial data that was retrieved from respective airlines’ annual and audited financial statements posted on their respective airlines’ websites. The data was obtained from the airlines’ audited annual financial statements from respective company’s website. Both inferential and descriptive statistics were used. Data were analyzed using STATA version 15 alongside Microsoft Excel. Various diagnostics tests including normality, multi-collinearity, heteroscedasticity, serial correlation, stationarity and Hausman tests were performed prior to running the regression analysis. Analysis of the collected data showed that there was a positive correlation between share capital finance and net profit margin, (r = 0.4226; P< 0.05), positive correlation between lease finance and profitability (r = 0.4520; P< 0.05), debt finance and net profit margin were positively correlated (r = 0.5231; P< 0.05), and lastly, retained earnings and net profit margin were positively correlated (r = 0.4905; P< 0.05). Data analysis by use of simple linear regression analysis found that there was a significant relationship between share capital finance and profitability (β = 0.3778; P< 0.05), the relationship between lease finance and profitability was significant, (β = 0.4066; P< 0.05), the relationship between debt finance and profitability was significant, (β = 0.3758; P< 0.05), and lastly, the relationship between retained earnings and profitability was also significant, (β = 0.4458; P< 0.05). When study applied multiple linear regression analysis method, results indicated a significant relationship between share capital finance (β = 0.402; P< 0.05), lease finance (β = 0.737; P< 0.05), debt finance (β = 0.904; P< 0.05), and retained earnings (β = 0.244; P< 0.05) with the Net Profit Margin, i.e. profitability of domestic commercial airlines in Kenya. This research concluded that at bivariate level, retained earnings was the most significant variable among the four variables under study. However, at multivariate level, debt finance was the most significant variable among the four variables under study followed by lease finance, share capital finance and lastly retained earnings. This study recommended a greater need for efficient and effective policies which a firm can use and apply to determine and monitor its financial structure. The study further recommended to the domestic commercial airlines in Kenya to have a good and performing financial management team that will make the correct decisions about financing mix and the resultant relevant policies, while matching various sources of funds to the goals and objectives of the firms. Further, in order to reduce the risks and costs associated to debt finance, local airline companies should make more use of shareholders’ sources of funds as the preferred option of financing, compared to borrowing. However, if it becomes mandatory for the firms to borrow, commercial airlines must first borrow in short term rather than long term.
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