Accounting and Finance
https://repository.maseno.ac.ke/handle/123456789/686
2024-03-28T21:33:47ZEffect of asset valuation approaches on financial performance of real estate investments in Western Kenya region
https://repository.maseno.ac.ke/handle/123456789/5932
Effect of asset valuation approaches on financial performance of real estate investments in Western Kenya region
BIFWOLI, Tracy Florence
The real estate sector accounted for 6.2% of U.S. gross domestic product in 2018. It's more than the $1.13 trillion in 2017 but still less than the 2006 peak of $1.19 trillion. At that time, real estate construction was a hefty 8.9% component of GDP. Real estate valuation is still a challenge in Nigeria posing a significant challenge to the country's real estate sector. Due to lack of robust valuation approaches, most Nigerian cities are overpriced, which discourages potential investors.According to Uganda Bureau of Statistics, the real estate sector on average contributed about 7.5 per cent to Uganda’s GDP in 2020 as compared to 9.1% in 2017 showing a significant reduction. In the recent past, there has been progress in infrastructure advancement in Kenya. However, in the Kenyan real estate sector, financial performance has been on a declining trend with a slowed down performance of up to 18.4% in 2017, with far reaching implications in its potential contribution to the Kenyan Economy. In Western Kenya Region, real estate sector offered investors with 13% return on investments annually with the income revenue of 4.8% and yearly capital gratitude of 8.5%. This was still low compared to other regions in the country for instance information on the Kenyan real estate sector’s financial performance indicate a slowed down trend with 16.2% in 2016, 15.5% in 2017, 10.1% in 2018 and 13.2% in 2019.In spite of the relative National success in the sector, real estate asset valuation still presentedsignificant problem in measuring industry performance.Incorrectly valued assets can create a number of problems to the investors and the country at large. These could range from negative or stagnant cash flows to shocks in the general economy brought about by inflation. Therefore, the main aim of this study was to examine the effect of asset valuation approaches on financial performance of real estate management investments in Western region, Kenya. Specifically, the study sought to establish contribution of asset-based valuation approach on the financial performance of real estate investments; to determine effects of the Income Approach to the valuation on the financial performance of real estate investments; and to examine effects of Market Approach to the valuation on the financial performance of real estate investments in the Western region, Kenya. This study was guided by the Q Theory of Investment which deals with Market Value and Development costs and the Real Estate Simulation Theory. The study targeted 52 registered real estate agents within the western Kenya region. The study adopted a census technique to gather all the required data from the existing population. The studyemployed a correlational research design and was targeting the real estate agencies registered in Western region of Kenya.Structured questionnaires and secondary data schedules wereused to gather the required data for analysis. Pretesting of survey instruments was conducted as an effort of ensuring that there was both content validity and reliability. Both descriptive and inferential statistics was employed for data analysis. From the study results, asset-based approaches explained 34.3% of variance in financial performance of real estate investments while income based explained 12.1% and market based explained 57.2%. Using returns on investment as measure of financial performance, the three hypotheses were rejected although income based valuation had significant negative effect on return on investment. This implied that increase in market and asset based valuation approach would result to increase in the return on investment while increase in income approach would result to decrease in the return on investment. The study therefore concluded that asset valuation approaches influence financial performance and recommended that real estate firms should use more than once approach during valuation of their assets.
Master's Thesis
2023-01-01T00:00:00ZInfluence of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya
https://repository.maseno.ac.ke/handle/123456789/5912
Influence of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya
ODHIAMBO, Daniel Dondi
Financial performance of commercial banks has not been stable as evidenced in annual supervision report of 2011 to 2020, the period within which Return on Assets (ROA) rose to 6.2% in 2012 from 3% in 2011, and to lower than 3% in the years 2016 to 2020. Literature reveals commercial banks’ lending criteria as pro-cyclical, implying being very strict during real estate boom and flexible during the bust; with likelihood of commercial Banks underestimating the default risk of the loans during periods of high demand, subsequently resulting in credit risk exposure to mortgage product. Literature provides evidence of increased mortgage lending while the performance of the Commercial Banks was declining on a fluctuating trend with non-performing Loans increasing. On the other hand interest rates demonstrate fluctuation in a less volatile order despite that studies revealing limited information on the influence of lending cost on the relationship between mortgage financing and financial performance of commercial banks. The purpose of this study was to analyse the influence of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya. Specifically, the study sought to: establish the effect of mortgage financing on financial performance of commercial banks in Kenya, to analyse the effect of lending interest rates on financial performance of commercial banks in Kenya and to evaluate the moderating effect of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya. The study was guided by Title Theory and Lien Theory of Mortgages, Loanable Funds Theory and Efficiency Theory. Banks in rerun; gain right to title, interest income and better management in respective theories. Secondary balanced panel data obtained from the audited published financial reports of 27 commercial banks offering mortgage financing in Kenya was used and found to be valid and reliable. The study covered 7-year period as from 2015 to 2021, giving 189 data points. Data was analysed using E-views 10 statistical package. The regression analysis revealed that the independent variables explained 86.69% (R2=0.8669). In the regression analysis, the coefficient of mortgage financing is 0.004434, with a p-value=0.0004 meaning that mortgage financing has a significant positive effect on financial performance of commercial banks in Kenya. The coefficient of lending interest rate was found to be -0.158824 with a p-value= 0.0020 meaning that banks’ lending interest rates have a significant negative effect on financial performance of commercial banks in Kenya. The coefficient of the product term for mortgage financing and lending interest rate was found to be -0.057650 with a p-value=0.0066. This means that lending interest rates moderates the relationship between mortgage financing and financial performance of commercial banks in Kenya. This study will be of significance to banking industry, government and academicians. The conclusions of the study are that mortgage financing has a significant positive effect on financial performance; lending interest rates have a negative and significant effect on financial performance; lending interest rates have a moderating effect on the relationship between mortgage financing and financial performance; the effect of capital adequacy on financial performance is non-monotonic. The study recommends that commercial banks in Kenya should increase the amount of mortgage offered and adjust their mortgage lending rates positively whenever they increase the amount of mortgage offered which will in turn enhance their profitability leading to an improvement in financial performance.
PhD Theses
2023-01-01T00:00:00ZEffect of operating leverage on the relationship between liquidity management, credit risk and loan repayment among microfinance Banks, Kenya
https://repository.maseno.ac.ke/handle/123456789/5909
Effect of operating leverage on the relationship between liquidity management, credit risk and loan repayment among microfinance Banks, Kenya
NADEBU, Philbert Caleb
Globally, reports indicate that of the loans disbursed in the United States of America, 45% of borrowers default on repayment, 60% of whom eventually end up as non-performing. In India, loan repayment rates experienced rise in default by over 50% between 2017 and 2020. In Ghana, adverse loan repayment was recorded at USD 0.97B in 2015 which grew to USD1.84B by 2018. Uganda recorded about USD.1.215 billion worth of non-performing loans in its MFI sector in 2018, from USD 324 million in 2017. The Kenyan scene recorded steep rise in default from about Kshs.100M in 2015 to over Kshs. 2.7B in 2022. Leverage remains an alternative source of funding available to microfinance banks (MFBs) to plug financial deficiency brought by default-triggered liquidity shortfalls for their operational sustainability. MFBs serve low-end borrowers, prone to fall in default of honouring their loan repayment obligations. The reported adverse loan repayment trend among MFBs reflects a trajectory calling for urgent invention measures. Previous studies on loan repayment have focused on conventional banking institutions, whose operational lending dynamics are significantly distinct from those of MFB. Existing literature is focused towards investigating study parameters associated to profitability, yet its analysis is preceded by loan repayment. Operating leverage (MLG) was a plausible robust moderator since literature demonstrates it influencing the transactional environment of study parameters. Main study objective was to establish effect of operating leverage on the relationship between liquidity management, credit risk and loan repayment among MFBs in Kenya. Specifically, it sought to; analyze relationship between liquidity management (MLDM) and loan repayment (LRP); assess relationship between credit risk management (MCRK) and LRP; determine relationship between MLG and LRP; assess moderating effect of MLG on relationship between MLDM and LRP; and, investigate moderating effect of MLG on relationship between MCRK and LRP among MFBs in Kenya. The anticipated income, credit risk, liquidity preference and moral hazard theories underpinned study objectives. Secondary balanced panel data sourced from audited annual reports of 12 regulated MFBs in Kenya was used. The study covered an eight-year period from 2015 to 2022, yielding 96 data points. Moderated multiple regression was applied to realize the study objectives. Regression results showed; a unit change in liquidity management results in 2.01% significant change in loan repayment (β=0.020110, p=0.0085) with adjusted R2=79.7024%; credit risk management yields a negative and significant change in loan repayment (β=-0.009874, p=0.0260); operating leverage to loan repayment is positive and insignificant (β=-0.004192, p=0.9100) with adjusted R2 of 78.5133%; product term of MLDM and MLG yields an inverse significant relationship (β=-0.099417, p=0.0109) with adjusted R2 of 79.8886%% posting an overall computed effect size change in R2 of 1.36%, calculated to 3.481%. Results indicate MLG fully moderates the relationship between liquidity management and LRP. In conclusion, the interaction term of MLDM and MLG alters the direction of primary relationship between MLDM and LRP. The study recommends MFBs to cautiously use debt capital in their financing options. The regulations for MFBs should streamline their proclamation on acceptable liquidity controls to foster sustainability. Further studies should investigate why credit risk management posts conflicting results when implemented to overcome default.
PhD Theses
2023-01-01T00:00:00ZEffect of cognitive biases on individual investment decision in stock market among teachers in Vihiga sub county, Kenya
https://repository.maseno.ac.ke/handle/123456789/5235
Effect of cognitive biases on individual investment decision in stock market among teachers in Vihiga sub county, Kenya
LUDENYO, Jesse Isiaho
Globally, investment in the stock market is paramount to the establishment of a vibrant economy and personal wealth building and in some instances is influenced by behavioral factors such as cognitive biases. According to Cambridge Analytica, stock market investment among individual investors in the UK has been declining, to average at 13.5 % from 1970 to 2019. The same trend is also reported among Kenyan’s individual investors stagnating at 5.5% in 2019 according to Capital Market Authority report, of whom teachers are a part of. Even though behavioral finance contends that cognitive biases explain this declining participation in stock market investment, previous studies mainly used descriptive research design in investigating factors affecting investment participation among lawyers and financial managers among others. The main purpose assesses the effect of behavioral cognitive biases on teacher investment decision in stock market. Objectives of the study were to: determine the effect of financial literacy bias; cognitive dissonance bias and herd-perception bias on teacher investment decision in stock market investing in Vihiga Sub-County. The study was guided by behavioral finance and efficient market theories. The study adopted correlation research design through binary logistic regression analysis. The target population of the study was 1,126 teachers where stratified random sampling was used to select the sample size of 257 teachers. Primary data was collected through structured questionnaires. The research instrument reliability test yielded alpha coefficients of more than 0.7 implying the instrument elements were consistent and reliable whereas validity was done using two expert reviewers and an average score of 80%. Results revealed that there exists significant effect on individual investment decision of financial literacy bias measured by investment knowledge awareness (β =0.623; Odds Ratio=1.865, p=0.021) and investment services access (β =0.828; Odds Ratio=2.288, p= 0.015); cognitive dissonance measured by teacher perceptions (β =-1.361; Odds Ratio=0.256, p=0.042) and teacher risk averseness (β= 0.984; Odds Ratio=0.374, p= 0.033) and herd- instinct bias by family influence (β= 0.576; Odds Ratio=1.779, p= 0.02) and peer influence(β= 0.432; Odds Ratio=1.5403, p= 0.031). This meant that access to investment services; investment knowledge, family and peer influence increased the log odds of teachers having invested in the stock market while teacher perceptions and risk averseness decreased the odds. Based on the overall relationship financial literacy bias and herd-instinct bias had a positive effect on investment decision while cognitive dissonance bias had a negative effect. Therefore, cognitive biases had significant effect on individual investment decision among teachers in Vihiga Sub- County. Aside from improvement in financial literacy among teachers, the study recommended that more cognitive skills need to be enhanced among teachers and individual investors in Kenya in order to counter the negative effect of cognitive dissonance bias. Study is significant in adding value to existing knowledge in behavioral finance among individual investors in Kenya.
2021-01-01T00:00:00ZEffect of Electronic Payment Mechanisms On Revenue Performance: A Case of Kisumu County Government, Kenya
https://repository.maseno.ac.ke/handle/123456789/3670
Effect of Electronic Payment Mechanisms On Revenue Performance: A Case of Kisumu County Government, Kenya
OKWANYO, George Mboya
ABSTRACT
Globally,realization of revenue targets in counties is core to meeting their financial
responsibilities which will lead to recognition of their directive to offer valuable and well-timed
services to the residents.Counties have sufficient revenue streams to fund their current projects
and programmes, but revenue collection levels often do not meet projections. According to
approved supplementary budget of Kisumu county for the financial year 2017/2018, the total
revenue generated by the county from all its revenue streams depicted a deficit 4.59% less than
the projected revenue.This is a pointer to the fact that electronic payment(e-payment) system
introduced by the county government in revenue collection is not achieving the much desired
outcome in revenue collection.Studies however reveal that the use of electronic payment
positively influence revenue performance.The effect of e-payment on revenue performance is
still not clear.Similarly past studies have failed to examine the extent of mobile and online
payments in revenue collection. The general objective of the study was to assess the effect of
electronic payment mechanism on revenue performance in Kisumu county.Specifically, the study
sought to: establish the extent of usage of mobile phone payment in revenue collection, to
determine the extent of application of online payment in revenue collection in Kisumu
county.The study was anchored on technology acceptance theory.A correlational survey design
was adopted with a study population of 140 taken from 7 sub counties using stratified
judgemental sampling technique, primary data was collected using structured questinnares and
secondary from audited financial records.Out of the 140 respondent there was 72.1% response
rate. The questionnares were administered on drop and pick technique. The 140 sampled group
was informed as a result of pilot study in Butere subcounty of Kakamega County and subsequent
reconnaisance in the target subcounties in Kisumu county. The validity of the instrument was
achieved through pilot testing with analysis of the pilit study data yielding a Cronbach alpha of
0.742 which compares favorably with the acceptance standard value of Cronbach's Alpha
coefficient at α=0.7 used to test reliability There was a strong positive association between
mobile phone payment and revenue performance in Kisumu County as depicted by r value of
0.781, p-value 0.006< 0.05 hence indicating there was sufficient evidence to confirm existence
of a significant relationship between mobile money payment and revenue performance. The
value of r of 0.603 signifies moderate positive association between online payment and revenue
performance which resonate with the p-value of 0.000<0.05 (at 95% confidence level/alpha
value) which evince existence of sufficient evidence to confirm existence of a significant
relationship between online payment and revenue performance. In conclusion it was evident that
the electronic payment mechanisms have a significant effect on revenue performance. Therefore
it was recommended that the county government finds a mechanism of fully implementing
electronic payment to boost revenue collection. It also forms a basis of theory building for future
research endeavors.
2019-01-01T00:00:00ZEffect of Banking Sectorial Factors on Financial Stability of Commercial Banks In Kenya
https://repository.maseno.ac.ke/handle/123456789/1368
Effect of Banking Sectorial Factors on Financial Stability of Commercial Banks In Kenya
ODUNDO, Omondi Godfrey
In recent years, the stability of commercial banks in a number of countries across the globe has not been that robust with those in Portugal recording cumulative decline of about 26.6% in assets since 2010. In the Sub-Saharan Africa (SSA) region, and Ghana in particular, commercial banks have continued to record higher figures for non-performing loans (NPLs), ranging from as high as 13%. Locally, the ratio of NPLs to gross loans for commercial banks in Kenya has continued to be on an upward trend, rising to 9.5 % in March 2017 from 6.8 % in March 2016. This is has also been the case for the listed commercial banks at the Nairobi Securities Exchange (NSE). This might be attributed to a number of factors including the banking sectorial factors. However, existing empirical studies including those based on data from commercial banks in Kenya are mixed at best on their findings on the effects of these factors on bank stability. This is despite them being critical in the formulation of effective policies essential to bank stability. Hence, the purpose of this study was to assess the effect of banking sectorial factors on financial stability of commercial banks in Kenya. The specific objectives were to; establish the effect of bank size on financial stability of commercial banks listed at the NSE, determine the effect of bank concentration on financial stability of commercial banks listed at the NSE and evaluate the effect of nation-wide branching on financial stability of commercial banks listed at the NSE. The study was anchored on the too big to fail hypothesis and adopted a correlation research design. Secondary balanced panel data sourced from the annual reports of all the 10 commercial banks listed at the NSE was used. The study spanned over a 5 year period as from 2013 to 2017, yielding 50 data points. Multiple regression was done to achieve the study objectives. In the regression analysis, the coefficient of bank size was found to be -7.132958 with a p-value=0.0391 meaning that bank size has a significant negative effect on the stability of commercial banks listed at the NSE. The coefficient of bank concentration was found to be -0.022892 with a p-value=0.4637 meaning that market concentration has a negative but insignificant effect on the stability of commercial banks listed at the NSE. Nation-wide branching was found to have a coefficient of 6.016090 with a p-value=0.4659 meaning that nation-wide branching has a positive but insignificant effect on the stability of the listed commercial banks at the NSE. Further, loan portfolio/risk was found to have a coefficient of 3.453852 with a p-value=0.6934 meaning that it has a positive but insignificant effect on the stability of commercial banks listed at the NSE. The conclusions of the study are that bank size has a significant negative effect on financial stability of commercial banks listed at the NSE; bank concentration has a negative but insignificant effect on the stability of commercial banks listed at the NSE; nation-wide branching and loan portfolio/risk have a positive but insignificant effects on financial stability of commercial banks listed at the NSE. The study therefore recommends that effective policies on bank size should be formulated by the Central Bank of Kenya (CBK) to ensure sustained stability of the commercial banks listed at the NSE and the country’s banking sector at large.
2018-01-01T00:00:00ZEffect of internal control systems on financial Performance of Seventh day Adventist Church, Kenya
https://repository.maseno.ac.ke/handle/123456789/1283
Effect of internal control systems on financial Performance of Seventh day Adventist Church, Kenya
OYUGI, Nicodemus Okoth.
Internal controls help prevent errors and irregularities from occurring. If errors or
irregularities do occur, internal controls will help ensure they are detected in a timely
manner. However,there are financial challenges in Seventh Day Adventist churches
(SDA) evidenced by financial statements,there is poor budgetary controls, low liquidity
and working capital leves. They are therefore faced with many financial challenges
hindering,there mission,vision and growth. Empirical evidence shows that, good internal
controls may influence the financial performance of organizations. While past studies
indicate contradicting evidence on the influence of internal controls on financial
performance,studies on the the the link between review of control environment,review of
existence of assets, conduct of annual audit to financial performance in the the seventh
Day Adventist church is missing. Therefore,the general objective of this study is to
determine effect of internal control systems on financial performance of SDA churches in
Kenya. Specific objective of the study were to; determine the relationship between review
of the control environments and financial performance; establish the association between
the review of existence of assets and financial performance of SDA church and establish
the relationship between conduct of annual audit and financial performance of SDA
church. The study was anchored on the systems theory, and lending credibility theory.
Corelation research design was employed. The study target population was all the 200
employees of the centre. Stratified random sampling was used to select 67 respondents for
the study. Both primary data collected using questionaires and secondary data collected
using review. Inferential statistics using pearson correlation analysis was used to anaylize
data.The findings were that indicates that review of control environment and financial
performance had a positive and significant association (r = .457, p =.000) implying that
review of control environment leads to improved financial performance; review of
existence of assets had a positive and significant association with financial performance
(r = .441, p=.000) meaning that review of assets leads to improved financial performance
and conduct of annual audit and financial performance had a positive and significant
association (r = .256, p =.000). The data is presented in tables and figures. The findings of
the study may benefit policy makers in new policy formulation, investors on how to
partner with the fund and future researchers in the area internal control systems in relation
to financial performance.
Masters' Thesis
2017-01-01T00:00:00ZEffect of risk based audit practices on financial performance in selected public owned Sugar companies in Kenya
https://repository.maseno.ac.ke/handle/123456789/1252
Effect of risk based audit practices on financial performance in selected public owned Sugar companies in Kenya
GEKE, Abel Manas
Risk based internal auditing being a methodology that links internal auditing to an organization’s overall risk management framework, provides risk management process, annual audit planning, internal audit capacity and internal auditing standards which improves the efficiency of the internal control system of an organization thereby improving the overall financial performance. Existing literature demonstrate that RBA has capacity of risk identification and reduction i.e. its adoption had several achievements amongst which were identification and resolving of civil servant payroll weaknesses to eliminate ghost staff thereby streamlining payments in a cost saving manner. It also increased law courts’ revenue collection of between 33% and 166% in 2007. Having been implemented by public institutions, including public sugar companies in Kenya, it requires analysis of its contribution in maintaining efficiency and effectiveness. Whereas public sugar companies apply risk based auditing as a tool of internal control system and financial performance, available information reveal that a number of the sugar companies still face critical challenges with internal control system and financial performance. The purpose of this study was to analyze the effect of risk based internal auditing on financial performance in public owned sugar companies in Kenya. Specifically the study sought to establish the effect of risk management on financial performance, to determine the effect of annual risk based planning on financial performance and to analyze the effect of internal audit capacity on financial performance. Agency theory was among the theories that guided the study. This study adopted correlation research design which provides for description, correlation and regression as it’s expected by the focused relations. The target population for the study constituted 50 respondents, comprising finance officers, deputy finance officers and internal auditors in the selected public owned sugar companies in Kenya. A pilot study was carried out on 5 respondents at a scale of 0.7 leaving 45 respondents for the main study and was used to test reliability of the research instrument. The study administered questionnaires to all the respondents since it was the most appropriate tool to gather information. Bi-variate correlation analysis was used to test hypothesis and regression analysis model to establish the relationship between the effects of RBIA elements on financial performance of selected 4 public owned sugar companies in Kenya. Level of association was factored i.e. independent and dependent variables in the study. The study may also be significant in that it may be a reference for other scholars interested in the general body of knowledge and form a basis for further research. The study established that risk management had a significant positive correlation (0.678, p<0.01) with financial performance. The study also found out annual risk based planning had a significant positive relationship (0.597, p<0.01) with financial performance. Finally, the study also established that. This was also supported by regression results which showed a significant positive influence (0.677, p<0.01) between internal audit capacity and financial performance. As such the null hypothesis that there is no significant positive relationship between risk base financial audit and financial performance was rejected. The study concluded that there was a significant positive relationship between risk based financial audit and financial performance. The study recommended that other researcher should focus on non-financial factors and their relationship with financial performance
Masters' Thesis
2017-01-01T00:00:00ZInfluence of internal control practices on financial management of counties in western Kenya region
https://repository.maseno.ac.ke/handle/123456789/1251
Influence of internal control practices on financial management of counties in western Kenya region
AKINYI, Caroline Onjala
Organizations face common risks in the form of failures in internal control mechanism, financial fiasco, catastrophe or environmental disasters, non-compliance, and regulatory violations. The public sector is undergoing transformation towards more efficient and effective delivery of services. To ensure sustainable, efficient and effective daily operations, management of any organization must come up with internal control procedures that guide in allocating, controlling and ensuring efficient utilization of resources so as to achieve the overall objectives of an organization. However, internal control is not a sole procedure or policy performed at a certain point but rather a continually operating, integrated system at all levels within an organization. Prior studies have not explored the influences of control activities on financial management. The purpose of this study is, therefore, to analyze how internal controls and in specific how the control activities impact on financial management of Counties in Western Kenya. The specific objectives will be to: determine the influence of Internal Audit function, effects of policy on authorization and approval for all transactions on financial management and the effects of segregation of duties on the financial management by the county governments of western Kenya region in financial management. The study will be anchored on agency, system and financial control theories. A survey research design will be employed. The study population shall be the 150 heads of department and senior managers in the financial and accounting departments in all the 10 counties. A purposive sampling technique will be used to arrive at a sample size of 109 chief officers, head of accounting services, directors of internal audit and budget, accountants in charge of payments, departmental accountants, examination officers and Authority to Incur Expenditure holders who shall constitute the respondents in the study. Structured self-administered questionnaires will be used to collect primary data. Secondary data will be collected through desk reviews. Reliability of questionnaire will be tested on pilot data from 10 respondents. Results from the pilot study shall be excluded from the main study. Cronbach reliability coefficient will be used for reliability test. Content validity will be done using expert reviewers. Data will be analyzed using descriptive statistics and inferential statistics done with multi regression analysis to show support for the proposition that internal control activities influence financial management in counties of Western Kenya. Statistical Package for Social Sciences (SPSS) V. 21.0 will be used. The study findings will be of significance to management of county governments in getting an in-depth knowledge of how the control activities they have put in place are working. In addition it will form a basis for future research on other areas internal control practices.
Masters' Thesis
2018-01-01T00:00:00ZEffect of corporate governance practices on profitability of commercial banks in Kenya
https://repository.maseno.ac.ke/handle/123456789/1249
Effect of corporate governance practices on profitability of commercial banks in Kenya
MMBONE, Consolata Muhindi
Corporate Governance is important to all financial institutions for its contribution to firm performance. Despite being critical to the world economic stability, the banking industry has experienced severe financial challenges since the 2007 global financial crisis, which negatively affected economic performance of most countries. Whereas the Kenyan banking sector remained stable in profit during 2015; from Kshs. 3.2 trillion in 2014 to Kshs. 3.5 trillion in 2015, the period 2012 to 2016 registered declining trends despite the slowdown in global economic growth to 3.1% in 2015 from 3.4% in 2014. Studies relating to Corporate Governance and profitability of Commercial Banks have also given mixed results; where some scholars argue that it improves Commercial Banks profitability while others observe the contrary. Consequently, this study sought to analyze the effect of Corporate Governance practices on profitability of Commercial Banks in Kenya. The specific objectives of this study were to establish the association between qualification of Board of Directors and profitability of Commercial Banks in Kisumu, to determine the relationship between role definition and profitability of Commercial Banks in Kisumu, to assess the relationship between operational and ethical controls and profitability of Commercial Banks in Kisumu, to analyze the relationship between board performance and compensation and profitability of Commercial Banks in Kisumu and to determine the relationship between risk management and profitability of commercial banks in Kisumu. The study was anchored on Stewardship theory and Stakeholder theory. The study used Correlation research design. Primary quantitative data was collected through semi-structured questionnaires while Secondary data was collected from Bank Supervision Reports and Commercial Banks’ websites. Validity of the questionnaire was ensured through finance expert review and opinion, a Cronbach’s Alpha technique was adopted to ensure reliability of the questionnaire. A survey was conducted on 13 Commercial Banks in Kisumu County. The target population was 75 top Managers of Commercial banks in Kisumu County. The collected data was analyzed using SPSS Version 20.0. Multiple regression analysis was used to determine the effect of Corporate Governance practices on profitability. The research findings were presented in tables for clarity. The findings revealed that there is a positive significant correlation between board of directors and profitability of commercial banks (r=.270, p=.023), role definition among commercial banks and bank profitability (r=.373, p=.001), operational ethical control and bank profitability (r=.623, p=.000), board performance& compensation and bank profitability (r=.335, p=.004) and risk management and bank profitability (r=.561, p=.000). Finally, the Regression results indicated that corporate governance practices accounted for 63.7% adjusted to 60.9% change in bank profitability; with Board performance, qualification, ethical control and risk management yielding significantly positive contribution to profitability. The study concluded that corporate governance has an effect on bank profitability. It was recommended that all the corporate governance selected dimensions be improved to ensure maximum bank profitability. This study may help banking policy makers understand the need to streamline Corporate Governance implementation requirements. It will contribute to the existing body of knowledge on Corporate Governance.
Masters Project
2017-01-01T00:00:00Z