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Master of Science in Finance and Investment

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2011 - 201923

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Start date: 2011End date: 2019

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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.
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    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.
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    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.
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    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.
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    Relationship between Monetary Policies and Financial Performance of Banking Institutions in Kenya: A Case Study of Commercial Banks in Nairobi City
    (KeMU, 2019-09) Thuc, Dabora Yar
    The main purpose of this study was to determine if central bank rate relate with financial performance, to establish whether central bank open market operations associate with financial performance, to evaluate relationship between cash reserve ratio and financial performance and finally to determine the moderating influence of banks size on the relationship between monetary policies and financial performance. A case study of commercial banks in Nairobi city had a sample size of 42 commercial banks. The study adopted descriptive research design. Data was collected using secondary data collection sheet. The collected data was analyzed through quantitative methods of descriptive and inferential statistics such as correlation and multiple regression models. The tool used was Statistical Package for Social Sciences version 20.0. The findings established were represented in form of Tables and Figures. The study established that central bank rate has a positive and significant influence on financial performance of commercial banks in Kenya; central bank open market operations also has a positive and significant influence on financial performance of commercial banks in Kenya; cash reserve ratio has a negative and insignificant influence on financial performance of commercial banks in Kenya and bank size as a moderating variable has positive significant moderating effect on the relationship between monetary policies and financial performance of commercial banks in Kenya. The study recommends commercial banks to put more emphasis on both internal and external factors; the study recommends that the financial regulatory authorities such as the central bank of Kenya should formulate policies that can foster commercial banks involvement in investing in treasury bills and treasury bonds; the central bank of Kenya should be flexible when changing the cash reserve ratio and finally the banks management should embark on activities that will lead to high assets volume such as lowering of interest rate to attract borrowers and better customer relationship to retain customers.
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    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.
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    Influence of Corporate Governance on Financial Performance of Listed Corporations in Kenya
    (KeMU, 2019-09) Gitonga, David
    Corporations with government shareholding in Kenya have served different purposes in different industries since their establishment during the colonial period. Despite tight regulatory framework, Corporate Governance continues to weaken in Kenya. The purpose of the study was to investigate the influence of corporate governance on financial performance of listed corporations with government shareholding in Kenya. Specifically, the study sought to examine the influence of financial transparency, internal audit standards, internal controls and ownership structure on financial performance of listed corporations with government shareholding in Kenya. The study was anchored on stakeholder theory, stewardship theory, agency theory, and resource dependence theory. This study adopted descriptive survey design. The target population of the study was 98 CEO’s, general managers and managers drawn from 12 corporations in Kenya with government shareholding. The study adopted census design where all target corporations were sampled. Primary data was collected using structured questionnaires while secondary data collection sheet was used to collect secondary data. Using collected data, descriptive statistics such as mean, standard deviation and frequency distribution were used to analyze the data. Data presentation was done by the use of charts, percentages and frequency tables Inferential statistics were used in drawing conclusions A t-test was conducted to test the significance of the results at 5% level of significance. Univariate tests were used to provide an insight using both parametric (t-test) and non-parametric test (Pearson correlation coefficient). Statistical Package for Social Science (SPSS) Version 25 was used for data analysis. The results showed that there was a moderate positive correlation between financial transparency, internal audit standards, internal controls, ownership structure and financial performance. Regression analysis results showed that financial transparency, internal audit standards, internal controls, ownership structure explain 71 per cent of variance in the financial performance of corporations. The study established that financial transparency leads to reduced conflicts between shareholders and managers. The corporations voluntarily provide forward looking information and the corporations are mandated by regulations to disclose all financial statements which are accessible to all stakeholders at any time. The study concludes that corporations targeted engage members who have financial knowledge and experience in the committees. The management of sampled corporations enjoys cordial relationships with audit committee and internal auditors observe professional ethics & standards. The study recommends that management of corporations should adhere to laid down regulations on financial disclosure to avoid agency conflicts with shareholders and creditors. The information disclosed by the corporation should be adequate to enable stakeholders to make informed decisions and should be forward looking. The study recommends that the management and regulators of listed corporations should only recruit and select those members who possess financial knowledge and experience to be part of internal audit committees.
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    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.
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    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.
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    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