School of Business and Economics

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Influence of Trust on Savings Mobilization in Co-Operatives in Nyamira County
(International Academic Journal of Economics and Finance (IAJEF), 2017-08) Nyatichi, Jeremiah Mauti; Evangeline, Gichunge; Risper, Orero
The purpose of the research was to study the influence of trust on savings mobilization in co-operatives in Nyamira County. It was conducted using descriptive research among co-operative members in savings and credit co-operatives. The statistical sample consisted of 220 members who were randomly selected and studied through questionnaire. Data was collected from a random sample of 220 respondents and was analyzed using the STATA 13 computer software. The validity of the questionnaire’s reliability was ascertained by the researcher using the Cronbach’s alpha coefficient which was at 0.991. The data was collated using the Likert scale. The results showed that trust highly influenced savings mobilization through co-operatives among the people of Nyamira. Therefore, it is recommended that trust which significantly influenced savings mobilization in Nyamira County should be taken seriously when dealing with savings mobilization, government policies and programmes. The findings of the study will be useful for the County and National Governments in formulating coherent Policies that address developmental challenges in co-operatives
Antecedents of Technology Adoption and Financial Inclusion among Micro Enterprises in Machakos County, Kenya
(KeMU, 2018-08) Mwania, Paul Mutwiwa
The increased levels of mobile and internet banking has enabled the Micro Enterprises (MEs) to save, undertake transactions and access low cost credit without necessarily having security for their loans. Many micro-enterprises are not included in the mainstream financial system and hence they cannot access credit. However, with the increased level of antecedents of technology adoption (mobile and internet banking), the micro enterprises have not fully adopted this new innovation to increase their levels of financial inclusion. The aim of the study was to examine the antecedents of technology adoption (mobile and internet banking) on financial inclusion among the micro enterprises in Machakos County. The study adopted a descriptive research design since it seeks to build a profile about the relationship between antecedents of technology adoption (mobile and internet banking) to financial inclusion in Kenya. The study was targeting micro enterprises operating in Kenya with a special focus to Machakos County. Purposive sampling technique was used to select the sample for the study. Questionnaire was used for data collection as it was cost effective as opposed to other instruments. Pilot testing involved60 businesses which were not included in the final sample. To enhance validity in this study, content related validity of the questionnaire was used. On the other hand, reliability was assessed using the test-retest method and was done alongside the pilot study. The researcher selected a pilot group comprising 10% of the sample. The research instruments were tested for reliability using the split half method. This was done by collecting data from 60 respondents. Data was verified and edited for completeness and consistency. Content analysis and descriptive analysis was employed. Regression analysis was applied to establish the relationship between the variables. Regression results showed that convenience and financial inclusion are positively and significantly related (β=0.201, p<0.001). Transaction cost and financial inclusion were also found to positively and significantly related (β=-0.091 p<0.002). Perceived value and financial inclusion are positively and significantly related (β=0.233, p<0.001).Collateral and financial inclusion are positively and significantly related (β =0.154, p<0.002) while technology adoption and financial inclusion are positively and significantly related (β=0.573, p<0.001). The study further found that financial services technology innovation moderates the relationship between transaction cost, perceived value and convenience and financial inclusion of micro enterprises. The study concludes that collateral, transaction cost, convenience, perceived value and technology adoption have a positive and significant relationship with financial inclusion of micro enterprises. It was further established that mobile and internet banking have improved the access to financial services by micro-enterprises. This is seen through improved business growth among the enterprises as they can access low cost credit for business growth. The low cost of credit for the micro-enterprises has improved the level of financial inclusion. It’s recommended that owners of micro enterprises should use mobile banking since it makes it easier for them to carry out their businesses operations. According to the study, use of internet banking makes it easier for owners of micro-enterprises to carry out their businesses operations. The study recommends that owners of micro enterprises should adopt use of internet banking since it does not require a lot of technical knowledge for it is simple to use hence convenient for business owners. The owners of micro-enterprises should use mobile and internet banking to accomplish their banking tasks anytime and anywhere since it is efficient for them.
Credit Risk and Lending Performance of Commercial Banks in Kenya
(KeMU, 2019-08) Karanja, John Gakuu
Credit risk poses substantial exposure both to the banks and the economy; a scenario evident in East Africa financial crises; this in part owing to the fact that the banking sector is vital in any economy. The decline of profitability within the banking industry and financial losses can be attributed to credit exposures that went awry. This underscores the significance of management of credit risk within the banking sector. While lending is profitable for the banks especially on account of the interest paid on the amount borrowed, it also has disadvantages which results from delays or default in loan repayments. This study was purposed to evaluate the credit risk and lending performance of commercial banks in Kenya. Descriptive survey research design was employed whilst the target population for this study was employees of the 42 commercial banks in Kenya as at 1st January, 2018. Purposive sampling was used to pick 42 credit managers and simple random sampling invoked to determine the other 301 respondents from the target population of 1260 employees. Both structured and unstructured questions were used to collect primary data. Thereafter, the data was analyzed using descriptive statistics including frequency distribution tables, measures of central tendency and standard deviations. In addition, advance statistical techniques including logistic regression analysis and Pearson correlation were used to establish relationships among variables and provide description of the data while qualitative data was analyzed in narrative form. The results were then presented in tabular representations supplemented by relevant explanations. The results of the study revealed that the combined effect of credit risks positively influenced the lending performance of banks. The study concluded that credit risk activities significantly influenced the lending performance of commercial banks; and as a result the operating capital of commercial banks had gone down to very low levels since lending is a source of income for the commercial banks and this has affected the performance of the entire banking sector. The study recommended that Government of Kenya through the National Treasury and in collaboration with Central Bank of Kenya and Kenya Bankers’ Association should formulate policies that will help the commercial banks reduce the level of credit risks and improve the lending performance which was currently affected to a great extent.
Capital Adequacy Framework, Funds Allocation Strategy and Financial Performance of Deposit Taking Sacco’s in Kenya
(KeMU, 2019-09) Ng`eno, John Cheruiyot
This study was aimed at establishing the relationship between capital adequacy framework and financial performance of deposit taking savings and credit cooperatives societies in Kenya. There is a declining trend of deposit taking SACCOs in Kenya. In 2016,164 SACCOs were licensed to operate as deposit taking SACCOs in Kenya. The study intention was to conduct a census survey but the responses were less. Only 111 deposit taking societies responded. The government had introduced various legislations attempting to streamline the operations of cooperative entity. Sustainability of cooperative movement depends on various factors one of which being capital adequacy. In this study the influence of six dimensions of capital adequacy framework namely: internal financing, external financing, portfolio selection, credit management, risk management and managerial capability was examined. A descriptive survey was conducted using questionnaires to collect data from the respondents. Pilot survey was conducted on 12 deposit taking SACCOs to ensure that questionnaire serve the intended purpose. Data analysis was carried out using both descriptive and inferential statistics with the aid of statistical package for social sciences (SPSS 23). Correlation and regression analysis were used to establish the relationship between research variables. It was found that internal financing, credit management; portfolio selection, risk management and managerial capability had positive effect on financial performance of deposit taking SACCOs in Kenya. This means that as the five variables increase then financial performance will be increase. External financing had negatively influenced on the financial performance. With prudent external financing, deposit taking SACCOs will attain favourable outcome. Funds allocation was found to have a significant moderating influence on the relationship between capital adequacy framework and financial performance. Hypotheses were tested at 5 percent significance level. The null hypotheses were rejected and it was established that capital adequacy framework and moderating variables influenced significantly financial performance. It is recommended that focus on capital adequacy framework will enhance financial performance of deposit taking SACCOs in Kenya.
Socio-Entrepreneurial Practices and Community Empowerment within the Coastal Tourism Circuit in Kenya
(KeMU, 2019-08) Ikwaye, Samuel
A relatively small segment of business, known as social entrepreneurship (SE), is increasingly being acknowledged as an effective source of solutions to a variety of social problems. Despite this, little is documented as regards the role of social entrepreneurial practices and how they impact the local communities in Kenya in the context of the contribution of tourism and hospitality. Further, little is known about the requirements an innovation has to fulfill in order to be a social one and distinguish itself from other types of innovations. Also considered as important but whose evidence is also scarce is the role of SE practices on empowerment of local communities as well the existence of a legal framework to encourage the development of SE as a social economy in Kenya’s coastal tourism circuit. This study sought to contribute in filling the existing knowledge gap by assessing the role of tourism and hospitality enterprises’ SE practices on empowerment of communities with specific focus on the coastal tourism circuit in Kenya. Specifically, the study sought to determine the influence of enterprises’ socioeconomic practices, sociocultural practices and that of their green initiatives on empowerment of communities. Additionally, the role of innovations that the enterprises implement on empowerment was assessed. A descriptive survey of Kenya Association of Hotel Keepers registered enterprises as well as classified facilities, beneficiaries of empowerment programs and civic leaders were conducted. Data was collected from 42 enterprises purposively selected as well as from beneficiaries sampled using snowball sampling. Prior to the commencement of the actual study, 35 respondents affiliated to five enterprises participated in a pilot study to pre-test the research instrument. Data was collected using self-administered questionnaires. Quantitative data was analyzed descriptively and inferences drawn from correlation and multiple linear regression analyses results which were obtained with the aid of Statistical Package for Social Sciences (SPSS) version 23 computer software. Findings were that hotel enterprises within the coastal tourism circuit in Kenya had adopted socio-entrepreneurial practices, with socio-cultural practices having the greatest extent of adoption followed by green initiatives then social innovations, and lastly socio-economic practices. The practices were positively and significantly related with community empowerment at 0.05 level of significance. The relationship which was linear was strongest for social innovation followed by socio-cultural practices then socio-economic practices and lastly green initiatives. Similarly, it was found that socio-economic practices, socio-cultural and green initiative significantly influence community empowerment. Lastly, hierarchical regression analysis illustrated that social innovation mediates the relationship between socio-economic, socio-cultural and green innovation and community empowerment. It is therefore recommended that hotel enterprises enhance their level of adoption of the socio-entrepreneurial practices to enable local communities feel their impacts. In the process, due regard should be given to the vulnerable groups including women, youth and persons with disabilities. At the same time sensitization of host communities should be enhance through involvement of local civic leaders.
Relationship between Financial Management Practices and Financial Stability of Football Clubs in Kenya. A Survey of Football Clubs at the Kenya Premier League
(KeMU, 2018-09) Kinyariro, Dickson Kamau
This research investigated whether there exists an association between the financial management practices put in place by the Kenyan football clubs and their financial stability. The specific research objectives guided the study by establishing the influence of investment practices, financial reporting framework, working capital management and financing activities on stability of football clubs in Kenya. The underpinning theories include: Agency theory, game theory in sports and contracting theory. Explanatory research design was adopted. Questionnaires were used to collect data. The target population comprised of sixty-three respondents from twenty-one football clubs that were participating between 2010-2014 seasons of the Kenyan Premier League. The respondents comprised financial officers, the chairpersons, and accountants at the clubs. Purposive sampling as well as simple random sampling were adopted to select the respondents. Yamane (1967) formula which is used to calculate sample sizes at 95% confidence level and e = 0.05 was used to obtain the sample size. The total number of respondents was fifty-four (54). Descriptive statistics and inferential statics were used in data analysis. From the research it was established that with well laid financial management practices, there exists significant influence on the financial stability of football clubs. The research concludes football clubs have the capacity to improve their performance both by winning matches as well as enhancing their financial capability through embracing standard financial management structures and thereby leading to financial stability. The research recommends that for the clubs to succeed, pro-active and innovative measures must be put in place. Football academies that train young footballers should be established. This would ensure supply of senior players to the football clubs hence reducing cost of player recruitment while also maintaining high level of competitiveness. Football clubs should ensure that financial reporting is enhanced at all times. Qualified staff with competitive salary packages should be employed to ensure credibility of financial reports. The management should be in a position to analyze the financial reports for financial decision making. Automation of accounting systems has proved to enhance efficiency, security and credibility of accounting information generated. Football clubs should embrace this technology to enable them monitor at all levels the expenses, flow of cash and proceeds generated. More research needs to be undertaken on other financial aspects affecting the overall performance of football clubs.
Key Account Management, E-Commerce, Implementation Models, Market Orientation and Performance of Selected Private Sectors Firms in Kenya
(KeMU, 2014-05) Muhia, charlse mwangi
Modern business firms are facing stiff competition in this era of a rapidly changing business environment coupled with the globalization of markets. Consequently, many firms have adapted key accounts management model to build, nurture and maintain strong customer bonds in addition to other marketing strategies. The key account management model has successfully been utilized in the developed economies. With the advent of e-commerce, business environment has rapidly changed impacting greatly on business strategies practices. This is not the case in developing countries like Kenya, thus this study assessed the effects of key accounts management on selected private sector firms 'in Ken-ya. The core ofthis study was to assess the relationship between key accounts management, e-commerce, implementation models, market orientation and performance of private sector firms in Kenya. The objectives of the study were to: assess the effect of key success factors of key account management on performance of private sector firms; assess the effect of implementation models on firm performance; establish the effects of e-commerce; and lastly establish the role of market orientation on the firm performance. Descriptive survey research design was used and data was collected through questionnaires that were e-mailed to the respondents. The target population comprised of private sector firms operating in Kenya with a minimum turnover of KES750 Million per annum during year 2010 and 2011. The population comprised of 301 firms and a sample size of 168 firms was obtained through stratified random sampling technique. Data analysis was done using factor analysis, Pearson correlation coefficient and multiple regression analysis. Jn order to test the proposed theoretical study model, Structural Equation Modeling was performed using AMOS version 17.0. The model was supported as having a good fit since all the key statistical indices were above or below the recommended levels. The findings showed that core success factors of key accounts management (organizational, inter-firm and individual factors) significantly impacted firm performance as was indicated by the regression model results (R2 = 0.487, p= 0.01). The three main implementation models (change, collaborative and cultural variables) had a significant effect on firm's performance as indicated by the regression model results (R2 = 0.624, p = 0.01). E-commerce had a significant impact on the firm's performance (R2 = 0.662, p = 0.01). Finally, market orientation significantly influenced firm performance (R2 = 0.224, p = 0.01). In conclusion, key account management strategy significantly affected the firm's performance while e-commerce influenced firm performance through information technology and organizational capabilities. From this study it is recommended that managers of private sector firms should tap into this new knowledge regarding key account management to enhance their competitiveness.
Effects of Regulatory Reforms on Security Market Returns: Evidence from Nairobi Securities Exchange
(2014-04) Gillian, Wambeti Mwaniki
Capital markets are key to the economic development of any economy. Most governments have invested immensely on the capital markets through regulation to ensure that the investors are protected and making the market more efficient. The responsibility of regulation of the capital market in Kenya rests with the Capital Market Authority. Since its establishment the authority has created a regulatory framework that is aimed at creating orderliness, fairness and efficiency in the capital market. This study aims at examining the effect of reforms, guidelines and regulations enacted by the capital market authority on stock market returns. This was achieved through carrying out an event study methodology on specific regulation independently. The causal research design was used on each event to find out whether there was any significant difference between pre and post regulation by observing the behaviour of abnormal returns and stock returns volatility. Data was collected from a sample of 39 companies out a population of 55 companies which traded continuously from 1998 to 2010. NSE and stock returns were subjected to market model to determine alpha and beta to calculate abnormal returns. The GARCH model was used to find the significant difference between the pre and post regulation through stock market volatility. The study results indicate that each regulation analysed had evidence of abnormal returns that accumulated slowly over the event period for each of the regulations under analysis. The analysis of regulation on insider trading shows high level of abnormal returns ranging from O to 8. The analysis of the information disclosure regulation, corporate governance and licensing requirements regulations indicates reduced abnormal returns ranging from -02 to 0.7,-0.4-0.6 and -0.4-0.06 respectively. The regulation on the Central Depositories (operational rules) had abnormal returns ranging from -1 to 4 but much was after the regulation was enacted. This could be attributed to the December 2002 general election which constituted the pre regulation period. All regulation indicated reduced volatility during the post regulation measured using the GARCH model. This is an indication of the positive effects of the regulation on Stock returns. The volatility of the mean, standard deviation and variance indicates that the market efficiency has improved as new regulations were being enacted by CMA. Each regulation created shock in volatility of the stock returns which was not persistent over time. The results indicate that investors viewed the regulation as good news to the market. There was anticipation among the investors before each regulation was enacted by CMA as reflected by stock volatility during the pre -regulation period. The study concludes that regulation of the capital market bring about efficiency through reduced volatility and reduced abnormal returns as successive regulations are enacted by the government. These results create attention to policy makers on the implementation of reforms, regulation and guidelines targeting market operations and institutional development in Kenya.
Effects of Situational Factors and Packaging Characteristics on the Outcome of Purchase Behavior in Kenyan Supermarkets
(2014-06) Hannah, Wanjiku Wambugu
Previous studies on shopping behavior have paid considerable attention to the effect of situational factors in explaining the outcome of consumer's buying behavior in the supermarkets. Other studies have limited the explanation of consumer's shopping behavior to the influence of packaging elements. However, no study has considered the effect of the two sets of factors on the shopper's behavior at the supermarkets in same framework. Moreover, despite the growing number of supermarkets in Kenya, customer shopping behavior in supermarkets in Kenya has received very limited attention. This study investigates the effect of situational factors and packaging characteristics on the outcome of behavior (amount of processed milk bought from supermarkets in Kenya). The knowledge generated by this study could help retailers and other marketing practitioners to formulate and undertake more efficient marketing strategies. Several hypotheses were tested against cross-section data collected from 1230 shoppers in supermarkets in three towns in Kenya. Data was collected using self-administered questionnaires. It was analyzed using quantitative techniques. Descriptive statistics were used when analyzing shopper's characteristics. Regression analysis was used to test hypotheses concerning the effects of situational factors and packaging characteristics on the amount of fresh processed milk bought. The results showed that except for purpose for drinking directly from the pack reason for buying, all the other situational factors had significant effect on the amount of milk purchased. They include: supermarket atmospherics, store density/crowding, presence of companions, time of the day, being cash-constrained state and long stay at milk stand in the supermarket. However, being cash-constrained state, time of the day when shopping was done (morning), crowding at the milk stand and the purpose for drinking directly from the pack had negative effect on the amount of processed milk bought. Perceived importance for milk packaging characteristics had positive and significant effect on the amount of processed milk bought from supermarkets. After the controlled factors (individual characteristics) were included in the regression model, the effect of perceived importance for packaging characteristics and all situational factors (except for drinking purpose of buying) on the amount of processed milk bought remained significant. Shopper's age, education, income, gender (male) and family size had a positive effect on the amount of fresh processed milk purchased. However, price had a negative effect on the amount of processed milk purchased.
Implementing Business Strategy: A Critical Analysis on the Role of Strategic Communication among Parastatals in Kenya
(KeMU, 2018-02) Mutali J., Namulia Immaculate
A review of literature indicates that strategy implementation is an important component of strategic management process. There still exists a high failure rate in the implementation of business strategy as a result of the existence of many potential barriers. The improvement of service performance is one of the most pressing issues facing public organizations in Kenya. The lack of communication-specifically strategic communication in the management structures of organizations has repeatedly been identified as one of the barriers to effective implementation of business strategy. The significance of this study was represented by its attempt to examine the influence of strategic communication on the implementation of business strategy among Parastatals in Kenya. Independent variables under study were communication policy alignment to strategy; adequacy of information communicated; communication channels used and communication activities. The dependent variable was the implementation of business strategy. This study adopted an exploratory approach using a descriptive survey design. The study was anchored on the philosophy of pragmatism; a mixed design involving quantitative and qualitative designs which were used to obtain information from 126 Parastatals drawn from the total population of 187. The target respondents comprised of managers at all three levels in sampled Parastatals in Kenya. The study required the collection of both primary and secondary data for triangulation purposes. The sampling frame entailed all Parastatals as obtained from the Kenya Gazette. Proportionate stratified random sampling was used to select a sample of 378 in selected strata's of 126 statistically selected Parastatal headquarters. Self-administered questionnaires were used to collect the data. A pre-test was conducted on a different sample of similar characteristics to the actual sample to ascertain the reliability of the data collection instruments. Data was analyzed using the Statistical Package for Social Sciences (SPSS) version twenty two and summary statistics such as mean scores, variances, standard deviation and inferential statistics namely; correlation analysis and regression results were used to test the hypotheses. The results provided statistical evidence that a positive and significant influence exists between implementation of business strategy and strategic communication. In the practice, this study recommends that managers must make efforts to consistently communicate the strategic intent to all employees at all levels; have in place communication policies as well as conduct communication audits for proper alignment to strategy. Further, the study acclaims that managers at all levels should be competent communicators in giving correct, clear, timely and easily understandable information to employees to enhance success of implementation. On methodology, the study recommends further studies using experimental designs because strategy implementation is a process and actual effects can only be well captured using a longitudinal approach. Regarding policy, this study recommends that the need for Kenyan government to audit and strengthen existing communication policy frameworks to support and improve implementation of strategic plans. This study therefore is of significance to the Government of Kenya, policy makers and strategic management scholars to use the study findings

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