Masters Theses and Dissertations
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Item Effect of Agency Banking on Financial Performance of Commercial Banks in Isiolo County, Kenya(KeMU, 2025-01) Dulacha, Amina AbdiCommercial banks authorized for commercial purpose are the super focal empowering the economy. Therefore, the performance of agency banking stabilizes the commitment of banks to the country's economic development. However, the financial performance of commercials banks in Kenya was noted to decline in 2023 partly caused by decreased agency banking transactions from Kshs 158.4 million to Kshs 145.3 million in 2022 and 2023 respectively. The purpose of the study was therefore to examine the effect of agency banking on the financial performance of commercial banks in Isiolo County, Kenya. The specific objectives were to explore the effect of agency convenience, agency cost, quality of agent services, and agency compliance on financial performance of commercial banks in Isiolo County, Kenya. The study was guided by diffusion of innovation theory, transaction cost economics theory, network effects theory and principal-agent theory. A mixed designs comprising descriptive, qualitative and quantitative were used, targeting Cooperative Bank, KCB, and Equity Bank, which control over 90% of authorized banking agents in the region. The target population included 102 staff in Equity bank, 123 staff in Cooperative bank, and 80 staff in KCB bank, which was a total of 305 banks. The study adopted the Yamane’s formula (1967) to result to a sample size of 58 staff in Equity bank, 70 staff in Cooperative bank, and 45 staff in KCB bank, which was a total of 173 staff. Stratified sampling was applied to select respondents from the finance and accounts departments of these banks. Data were collected via structured questionnaires and supplemented with secondary financial data. The pilot research used a sample size of 10% for this investigation, with 17 respondents randomly selected to fill out the survey in Meru County. To ensure the data was reliable, Cronbach's alpha was applied, which measures internal consistency. The questionnaires included in this study underwent a validation process to guarantee their content and face validity, as well as to gauge their overall quality. The results were presented using Tables and explanations. The study found out that the correlation for agency cost was r = 0.751, p < 0.01; correlation for agency cost was r = 0.702, p < 0.01; correlation for quality of agent services was r = 0.655, p < 0.01; and correlation for agency compliance was r = 0.774, p < 0.01 with financial performance. Therefore, the conclusion on agency convenience some of the agency banking services were noted not to be user friendly which hampered a lot of the clients from subscribing to them. On the agency costs, the operational costs associated to installation and maintenance of IT, compliance with banking regulations and staffing the agencies to suit the needs of the bank were high. On the quality of agent services, the study noted that most of agency banking had average standards to low standards as compared to what the branch banking was offering. On regulatory compliance, conclude that it stood out as the most critical factor influencing financial performance. The study’s recommendations on agency convenience are that bank managers should prioritize the convenience of agency services. This can be achieved by expanding the network of agents to ensure that services are accessible anywhere. On agency cost are that operations supervisors should consider focusing on implementing more efficient operational processes. On quality of agent services are that the senior management should develop a policy structure that ensures ongoing training programs for agents to equip them with exceptional service skills. On adherence to agency compliance are that the branch managers should foster a culture of compliance within the organization, emphasizing the importance of ethical practices and regular training on regulatory updates.Item Effect of Budgetary Control Process on Financial performance of Public Universities in Mount Kenya Region, Kenya(KeMU, 2023-09) Kaithia, Lilian KawiraManagers use budgetary control to match financial performance objectives with budgets, compare budgets with the actual outcomes and implement essential modifications. Attaining robust financial performance stands as a fundamental goal for any prosperous organization. Nonetheless, public universities in Kenya persist in encountering obstacles in their financial performance. The key intent of the research was to establish the effect of budgetary control on the financial performance of public universities located in the Mount Kenya Region. The specific objectives were; to establish the effect of budget planning, implementation, monitoring and participation on financial performance of the public universities in Mount Kenya region. This research majorly used the hypothesis of budgeting, the agency hypothesis and the stakeholder’s hypothesis. The design used in the investigation was descriptive. The target population was 7 universities located in Mount Kenya Region. The specific respondents were the 284 heads of departments in both Academic and Administration divisions of the universities. Since the target population was small, all the 284 respondents were used in the study. Structured questionnaires were used to seek opinions from the 284 respondents. The researcher used drop and pick method to issue and collect filled in questionnaires after 2 weeks. Data analysis was performed to establish a link between theory and reality by examining the research hypothesis and addressing the study objectives. The clean data were entered in the SPSS for further analysis. These data were analyzed using descriptive techniques, correlations and regressions. The data was presented using charts and tables. The study results showed that budgetary planning, budget participation, monitoring and implementation had a positive and significant effect on financial performance of public universities. The study concluded that most public universities were not able to fully involve their employees in the budgetary process. Further most public universities employees are not committed to ensuring an effective budget process. The study concluded that though the public universities had budgetary committees the committees were not able to periodically meet and review the budget performance. In addition, most public universities budget policies were not able to help in monitoring budget spending limits. The study concluded that most public universities were not always able to audit their report. Further, the evaluation process of the budgets in most universities was not transparent. Further, budget auditing enhanced the performance of the institutions. Further, effective communication and transparency during the budgetary process enhanced the financial performance of the universities. Universities are urged to embrace budgetary control techniques since they play a key role in improving the financial performance of universities. Therefore, the research recommends university management to pay attention to proper planning, monitoring, and implementation of the budgets as well as allowing participation of employees in the budget processItem Effects of Working Capital Management on Financial Performance of Level Three and Four Public Hospitals in Meru County(KeMU, 2024-09) Kanana, Kimathi DoreenFinancial performance of Kenya's public hospitals is essential for the nation's economic development. The notion of hospital quality improvement is centered on measuring public hospital performance. A description of what hospitals actually accomplish can be made possible by measuring hospital financial performance. Level three and four hospitals in Kenya focus on the provision of health care activities and develop individual spending plans and budgetary needs based on recommendations from headquarters distributed throughout the counties. In addition to other issues, the MOH health care delivery system was plagued by diminishing resources, ineffective use of those that were still available, and unfair resource distribution by 2015. Public health institutions now have to manage their own internal resources more effectively as the government's power to save failing institutions of higher learning was severely undermined. The purpose of this study was to ascertain how working capital management techniques affected the level three and level four hospitals in Meru County in terms of their financial performance. The particular objectives were to determine the effect of cash management, inventory management, accounts receivable, and accounts payable on the financial performance of Meru County's Level three and Four Hospitals. The study was grounded on the theoretical premise of contingency, resource-based theory, liquidity preference theory and cash conversion cycle theory. The study's research design was descriptive survey, which allowed the researcher to explain the elements of interest with regard to their attributes. The study used a questionnaire for data collection purposes. The target population consisted of fifty-three senior managers from all the fifty-three public Level three and Four Hospitals in Meru County. These managers included Hospital administrator or finance manager where applicable. The investigation was conducted in Kenya's eastern Provence, in the county of Meru. Data analysis was conducted using SPSS version 27. Utilizing both descriptive and inferential statistics, the examined data was displayed. Regressions, both linear and multilinear, were utilized to determine the association between the variables. The investigation's findings showed that the majority of respondents were female, Additionally, most of the participants were between 31-40 years of age. According to the data, undergraduates made up the majority of respondents with the highest level of education. The investigation concluded that working capital management techniques, which include inventory control, cash management, and cash payables and receivables management, significantly impact financial performance. The accounts payable results ultimately show a statistically significant correlation coefficients, thereby supporting the rejection of the all the null hypotheses. The study thus recommended that the head of finance in these hospitals should continuously communicate payment terms to the clients in a timely manner as this would ensure the payment terms adherence. Further, the study recommends that credit officers of these hospitals should time to time review accounts receivables age so as to facilitate continuous follow up on unpaid dues.Item Effect of Competitive Strategy on Financial Performance of Commercial Banks in Kenya. A Case Study of Nairobi County, Kenya(KeMU, 2023-08) Njue, Leonard MugendiCompetitive 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.Item Effect of Process Innovations on Financial Performance of Microfinance Institutions in Nairobi County, Kenya(KeMU, 2023-08) Mwirichia, Christine MakenaMicro-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.Item Effects of Internal Audit System on Financial Performance of SACCOs in Meru County, Kenya(KeMU, 2023-08) Kiambi, James KaimenyiIn today’s business world, the major interest is to enhance accountability, profitability and enjoy competitive advantage. As a way of achieving this, SACCOs employ internal auditing, to enable them monitor the monetary activities to enhance financial performance. Despite the fact that the majority of SACCOs (around 70%) have implemented either an in-house or outsourced audit system, their financial performance remains below expectations, with instances of fraud, poor fund management, and inadequate budget development and utilization. Given these circumstances, the purpose of this research was to examine how the internal audit system affects the financial performance of SACCOs in Meru County. The study concentrated on four primary goals: evaluating the influence of compliance, risk assessment, control function, and monitoring on the financial performance of SACCOs in Meru County. The study's theoretical foundation was built on the agency, legitimacy, and capture theories. To accomplish the research objectives, a descriptive research design was employed, targeting 42 SACCOs that had operated in Meru County for a minimum of ten years. The study adopted a census approach, including all 42 eligible SACCOs in the study. The respondents consisted of the chief executive officers of the respective SACCOs, totaling 42 participants. Data collection involved the use of a structured questionnaire, which was pre-tested in four SACCOs from Tharaka-Nithi County, selected purposively. The collected data were accurately coded based on the responses to various items. In the analysis of data, this study employed SPSS (Version 24) and utilized descriptive and inferential statistics. Multiple linear regression models were used to investigate the connections between the dependent and independent variables. The study's findings uncovered a noteworthy correlation between compliance and the financial performance of SACCOs in Meru County, rejecting the hypothesis that the compliance slope is zero (b = 0). Similarly, a noteworthy relationship was observed between risk assessment and financial performance, rejecting the hypothesis that the risk assessment slope is zero (b = 0). However, no noteworthy impact on financial performance was found for control function and monitoring. The study concluded that compliance plays a vital role in ensuring SACCOs adhere to regulations and guidelines, thereby fostering transparency, accountability, and good governance. Furthermore, effective risk assessment can assist SACCOs in reducing operating costs, enhancing efficiency, and improving financial performance. The study recommends that SACCO management strive for full compliance with relevant regulations to enhance accountability and financial performance. Additionally, implementing robust risk assessment policies is advised to mitigate risks, reduce operational costs, and boost financial performance. Finally, the study suggests expanding the research to encompass other financial institutions to explore potential variations in the correlations between the internal audit system and financial performance.Item Effect of Restructuring on Financial Performance of Commercial Banks in Meru County, Kenya(KeMU, 2023-08) Jepleting, Kipkorir JanetBanking 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 holdItem Influence of Micro Determinants on Financial Performance of Microfinance Institutions in Nairobi County, Kenya(KeMU, 2023-08) James, Margaret WanjaMFIs have a goal of accepting client’s deposit and act as financial lenders such that they operate within the laid down policy structure. This structure should be developed by highly experienced board members whose decisions influence positively the general direction of the operations. The general objective of the study was to determine the influence of micro determinants on financial performance of microfinance institutions in Nairobi County, Kenya. The specific objectives were to assess the influence of capital structure, product diversification, credit risk management and board members’ composition on financial performance of microfinance institutions in Nairobi County, Kenya. The study was guided by three theories whereby pecking order theory guided capital structure, resource-based view theory guided product diversification and composition of board members; and credit risk theory guided credit risk management variable. Notably, the study applied descriptive research design during the collection of data. The study’s target population was 14 microfinance banks registered and regulated by the CBK. Further, the respondents were 19 operations managers, 34 tellers, 40 credit officers, and 28 customer care officers. The study collected primary and secondary data whereby close-ended questionnaires and secondary data collection form was used respectively. The study conducted a pre-test study of the questionnaires in Cooperative bank and I&M banks in Nairobi County. Further, the study tested reliability through the Cronbach Alpha coefficients. Notably, the study assessed criterion, construct and face types of validity. Further, quantitative data was analyzed using SPSS software version 25 to generate descriptive and inferential statistics. The various descriptive analysis was frequencies, percentage and mean, while linear and multiple regression analysis was done as part of inferential statistics analysis. The conclusion made on capital structure was that MFIs’ management had failed to balance between raising their capital from the share capital and other forms of funding. On product diversification, the management failed to incorporate various improvement suggestions made on the different implemented products. On credit management, there were poor debt recovery methods in the branches leading to numerous default rates. On board members, they lacked a policy framework on the frequency and range of timelines when decision should be made and if they did, they did not put it into practice. The study recommends on capital structure that the MFIs’ board of management should provide a reliable policy framework on payment structure. On product diversification, the management of MFIs should commission a special committee of expert to review the requirement of each and every product being offered. On credit management, there should be a thorough audit of the ICT financial systems used by the MFI to ensure that it works seamlessly. On board members composition, there should be a clear framework developed through a consensus meeting with shareholders’ representativeItem Influence of Asset Management Strategies on Financial Performance of SACCOS in Imenti North Sub-County, Kenya(KeMU, 2023-08) Rahima, Atikiya SoraThe consistency of offering asset management products by Saccos enables them to easily settle their obligations when they fall due. Nevertheless, Kenyan Sacco’s have been experiencing low liquidity ratios concerns. The general objective of the study was to examine the influence of asset management strategies on financial performance of Saccos in Imenti North Sub-County, Kenya. The specific objectives were to determine the influence of cash flow management strategy, mortgage loan management strategy, treasury bills management strategy and stock control management strategies on financial performance of Saccos in Imenti North Sub-County, Kenya. The study used pecking order theory, contingency theory and resource based-view theory. Descriptive research design was adopted to collect data from 7 deposit taking Saccos located in Imenti North Sub- County. Further, the selection of representatives from the entire population was done using simple random sampling method to have 13 accounts department officers, 34 tellers, 28 back-office staff and 36 loans officers hence a total of 111 respondents. Quantitative data inform of closed-ended questionnaires and financial statements was collected and measured using SPSS version 24. The study conducted a pilot study in Unison Sacco located in Isiolo county. Descriptive statistics such as frequency, percentage and mean were analyzed while at the same time inferential statistics line Pearson Coefficients and multiple regression were similarly analyzed. The study found out that there was a positive influence of asset management strategies on financial performance of Saccos in Imenti North Sub-County, Kenya. This was because the p-value was 0.000 hence less than 0.05. Notably, the overall r was 0.779 and r-square was 0.607 with a Durbin Watson value of 1.392. Therefore, asset management strategies had a 60.7% influence on financial performance with a positive correlation. The conclusion made regarding cash flow was that the investment department was still undeveloped in many Saccos therefore limiting on the authorization of incorporation of funds in investment options like capital markets. On mortgage loan, there were high cases of default and inconsistent payment of interest, which was brought about by poor communication and follow-up skills applied by the staff when reminding the clients to pay their dues. On treasury bills, the Saccos had not adequately created awareness to their clients on the opportunities that they could generate from investing in treasury bills. On stock control, the Saccos had not invested resources towards acquiring latest stock management software that would offer real time data on the current inventory. Therefore, the study recommends that on cash flows, the BOM should create policies and provide adequate funds to establish an investment department, if there is none, or strengthen it if in existence. On mortgage loans, the management should introduce communication in-job training whereby the staff equipped with basic etiquette, and negotiation skills. On treasury bills, the marketing managers should ensure that they have developed treasury bills campaigns such as having a sensitization week in the branch. where clients get access to information regarding the T-bills. On stock control, the senior management should allocate funds to purchase various stock management software that would be used within the branches to manage their stock levels.Item Effect of Innovation on Financial Performance of Deposit Taking Saving and Credit Cooperative Societies in Laikipia County, Kenya(KeMU, 2023-08) Jillo, Safia AbdiSaccos are beneficial since they inject capital to the economy through various individuals, corporates and other institutions finances to pay back later at an agreed interest. Nevertheless, Saccos have been operating under declining profitability in Kenya. Therefore, the purpose of the study was to investigate the effect of innovation on financial performance of deposit taking saccos in Laikipia County, Kenya. Further, the specific objectives were to examine the effect of product innovation, process innovation, institutional innovation and policy innovation on financial performance. Additionally, the study was guided by three theories which are Credit creation theory, The Unified Theory of Acceptance and Use of Technology [UTAUT], and Resource-based view theory. Further on, the study used descriptive research design to collect data from nine deposit taking Saccos in Laikipia County. Specifically, the target population were 118 respondents who included 22 departmental managers and 96 support staff selected using census method. Notably, the study collected both primary and secondary data whereby primary data was collected in form of questionnaires from departmental managers and support staff. Secondary data was collected from financial reports such as income statement, whereby various financial ratios such as return on assets, return on equity, gross profit, net profit, liquidity ratio were noted. Further, the study conducted a pilot study in Bingwa and Nufaika Saccos in Kirinyaga County whose 2 departmental managers and 10 support staff took part in the piloting. The study sampled the piloting managers and staff through obtaining 10% of from the sample size. The study also measured reliability using Cronbach Alpha Coefficient method while face, content and construct types of validity were measured. Further, SPSS software version 24 was used to analyze and generate various statistical reports whereby, in the analysis of the questionnaire, the study examined and generated descriptive statistics such as frequency, percentage and mean. Additionally, the study generated various linear regression statistics such as model summary and ANOVA of each independent variable. Thereafter the study generated inferential statistics to test the general model. The study found out that the desired number of clients was not yet achieved due to bombastic requirements and processes when opening accounts or accessing loan products; The Sacco’s bid to incorporate ICT to assist in financial transaction such as having enough servers and skilled staff was still low hence increased system downtimes; There were poor management operations such that the process of coming up with new policies were either poorly done or done with less involvement of the junior staff; and the management took longer time when communicating to the staff on changes in policies on time. The study thus recommends that; The management of the Saccos should consult risk management professionals to further review on the requirements needed on each product and service the Sacco offers; The Sacco management should invest in secure servers to protect client’s information from unauthorized access or use; The Sacco management should restructure the decision-making procedures and processes to see to it that at consultation stage, the opinion of junior staff involved in operations is incorporated; and the Sacco management should develop policies on the time frames on when changes in policies should be communicated to staff