BBSF Research Projects (2016)

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    Effect of capital structure on financial performance: the case of banks listed on the Nairobi securities exchange.
    (Strathmore University, 2016) Onyango, Allen Alexander
    This paper seeks to examine the relationship between capital structure and bank perfonnance in Kenya. This study has employed the use of panel data techniques to analyze the relationship between capital structure and bank performance. The performance variables used in the study were retum on asset (ROA), Retum on equity (ROE) and net interest margin (NIM). The results from Levin-Lin-Chu and Im-pesaran-shin unit root test show that all the variables were stationary in levels. The study hypothesized negative relationship between capital structure and bank performance, The results also indicate that capital structure does not detennine bank performance but rather it is performance that determines banks capital structure.
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    The Impact of exchange rates and inflation rate on the marketed returns to suppliers in the Kenyan tea industry
    (Strathmore University, 2016) Kurui, Joy Chepngetich
    Tea production and processing is a focal sector in the Kenyan agricultural sector with its' being the largest foreign exchange earner in the sector and thus a key contributor to the country's GDP. The tea sector is also a key employer with 150,000 Kenyans employed and a key income source with over 600,000 farmers. The Agriculture sector performed well from independence accounting for 40% of GDP in 1963. Its significance in the economy has been declining over time accounting for 27.3% of the country's GDP in the year 2014 (KNBS, 2015) however despite the decline in significance, the sector remains the leading contributor ofGDP in Kenya. Tea was the second leading export commodity earner of the country contributing 20.4% of total export value in 2014 (KNBS, 2015). Kenya is the largest exporter of tea by volume producing 32% of the world's tea exports volume in 2014 (Statista, 2015) and (Andae, 2015).
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    The relationship between executive remuneration and credit risk of banks listed in Kenya
    (Strathmore University, 2016) Kinyanjui, Brenda W.
    The collapse of the financial system in 2008 brought into light the strong impact that executive remuneration had in the management of credit risk in banks is the United States. The relationship of agency looks at executive pay as a mode of linking the interests of shareholders to that of management. This study attempts to reveal the relationship between the measures of credit risk and executive remuneration and give an overall assessment of the impact of executive remuneration on credit risk in Kenyan banks. It will enable shareholders be able to know to what 'extent they can use executive remuneration to control credit risk inbanks. It can also be used by the government to ensure proper credit risk management in banks for the sound health of the financial system. A panel data from eleven listed commercial banks in Kenya covering a seven year period (2008-2014) was analyzed within the random effects framework. The results from this study find a positive but insignificant relationship between credit risk and executive remuneration. The study can be extended to include the structure of executive remuneration especially with the introduction of a derivatives market in Kenya and the possibility of the inclusion of share options in the pay structure of management.
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    Institutions and economic growth: Kenya, 1963 - 2014
    (Strathmore University, 2016) Murugi, Mbelu K
    This paper examines the existence of a relationship between political institutions and economic growth in Kenya. Through empirical analysis, carried out for the period between 1963-2014, the study aims to use the findings to improve and develop the policy in this area. The variables under scrutiny in this paper are GDP, political rights and civil liberties. Univariate and multivariate time series analysis are used to examine the relationship. The univariate time series helps to evaluate stationarity of the variables. The study finds that all three variables are non-stationary in the level unit root test. The multivariate time series examines the long run and short run relationships. The Engle-Granger test showed no cointegration between the variables. After subjecting the variables to a Johansen test, cointegration was found to exist indicating two cointegrating equations. This proves that indeed a long run relationship exists among the variables. Granger Causality tests reveal that political rights Granger Cause GDP at the 5% significance level. However, at the 10% level there was some significant causality from civil liberties to GDP and civil liberties to political rights.
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    Effects of interim dividend announcement on the value of a firm
    (Strathmore University, 2016) Kipkosgei, Purity J
    This research focuses on the impact of interim dividend announcement on the value of a firm. The purpose of this research , is to empirically investigate whether the magnitude of stock market reactions to-interim dividend is greater than final dividend announcements for companies listed Under the Nairobi Securities Exchange 20-Share Index. Out-of the 20 companies in the Index, 7 companies 'paid interim dividends under the period of study. The event study methodology was employed to analyze effects of both dividend announcements. The findings of this research show that the reaction by market participants to final dividend announcements in the Kenyan stock .market is stronger than interim dividend announcements. This contradicts previous research . that indicate interim -dividend 'announcements lead to a stronger reaction. The limitation of this study is small sample size due to the limited number of companies that pay interim dividends. The findings of this research will be useful to investors with vested interest in publicly traded companies for proper decision making. The study's originality stems from the fact that it focuses on the effects of both interim and final dividend announcement on Kenyan stock.