SMC Scholarly Articles

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Browsing SMC Scholarly Articles by Author "Mboya, Josphat Kiweu"

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    Does board diversity leadership affect corporate decisions and risk control? evidence from Kenyan commercial banks
    Mboya, Josphat Kiweu
    The aim of this paper is to provide preliminary analysis of the relationship between corporate decisions, risk taking behavior and gender diversity. Using a panel of 28 Kenyan banks over the period 2000-2009, the study examined effect of corporate leadership in banks (number of female directors, proportion of female directors on boardrooms and gender presence in boards) and its value to board effectiveness, strategic control and monitoring of management. After controlling for relevant sources of endogeneity, the value of women in bank boardrooms could not be clearly justified. Particularly, the results show a negative association between profitability and female directors on the board and that diverse board in Kenyan banks probably lack decision control or are less effective. The study also shows that in the context of an emerging country, there is increased gender diversity in boards with women holding 9% of bank board seats in 2009. Larger boards and larger firms in addition to a long history of existence determine women appointment to the board. The study also finds evidence of a high risk appetite for a women director that does not pay off. In addition, the results support a positive association between gender diversity and financing costs. Overall, the results indicate tokenism is a key practice in the Kenyan banking sector.
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    Effect of board gender diversity on the performance of commercial banks in kenya
    Ekadah, John Wachudi; Mboya, Josphat Kiweu
    The purpose of this paper was to analyze the effect of board gender diversityon performance of commercial banks in Kenya for the period 1998-2009. Stepwise regression was used to analyze the effect of board diversity on performance. It was found that boards of commercial banks in Kenya are male-dominated. On average, out of a typical board size of 8 members,only 1 is a female director. Finally, this study finds that board diversity has no effect on performance of banks in Kenya.
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    Factors affecting institutional transformation for regulated MFIs
    Mboya, Josphat Kiweu; Ndulu, John Kimuli
    Purpose - Regulating microfinance activities has been an important policy concern in improving financial inclusion and extending financial services to all. However, introducing a regulatory framework of any kind pushes targeted institutions to change. In this case, microfinance regulatory framework in Kenya that came to effect in 2008 has created three tiers of microfinance institutions: prudentially regulated deposit-taking institutions, credit only and unregulated informal groups. Those undertaking deposit-taking business were required by this regulation to transform their operations to comply with the requirements. Though many institutions wanted to be allowed to mobilise public deposits, only six institutions had managed to obtain a license in four years after the regulation became operational. The purpose of this research was to establish the factors affecting this microfinance transformation process. Design/methodology/approach – The research was carried out by collecting empirical evidence from microfinance institutions target by regulation in Kenya to establish these factors contributing to the slow phase of transformation. The possibility that the challenges could be affecting both the regulator and institutions being regulated was explored. Findings – This study identifies several important factors affecting the transformation process of microfinance institutions in Kenya. These include the ability to meet capital requirements, restructuring existing ownership and getting new shareholders, ability to raise funds for transformation, acquiring suitable information systems, motivation to be regulated, governance issues and managerial inertia. These factors explain why certain institutions have moved faster than others in the transformation process and why some have opted to remain credit only. Research limitations – The availability of reliable database of microfinance institutions that were a target for this study was a challenge affecting sampling and reach. In addition, data collected was limited to one point of contact yet some factors could relate to operational process. Originality/value – The study broadens research to transformation process of regulated microfinance institutions, factors affecting them and regulatory framework.
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    Is there profit from bonus share announcements in Nairobi Securities Exchange?
    (International Institute for Science, Technology and Education, ) Mboya, Josphat Kiweu; Ndegwa, James N.
    The question of whether the announcement of issuance of bonus shares by quoted companies is news to stock market participants or it is anticipated by the market has been the subject of research. If the announcement is anticipated, then stock prices should not change drastically during the days surrounding the announcement date.This research employed the event study methodology by using the bonus announcements of eighteen NSE listed companies that occurred during the year 2005 to 2010. The t-test statistic was employed to test the significance of the average abnormal returns and cumulative average abnormal returns from zero. It is possible to profit from bonus share announcement when the abnormal or abnormal returns are significant from zero. The results of ttestson the average abnormal return (AAR) and the cumulative average abnormal return (CAAR) indicated that abnormal returns were significantly different from zero which implied that implied that there is an anomaly in the semi-strong form efficiency of the NSE with regards to bonus announcements as it is possible to profit from such announcements which is regarded as news by NSE investors.
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    Leveraging donor funds: the switch to commercial sources of funding
    Mboya, Josphat Kiweu
    Sustainable livelihood strategies in microfinance are a major force behind enterprise development in poor societies. But uncertainty of continued donor funding poses a risk to operations. This paper presents findings on, critical success factors that define minimum pre-conditions for microfinance institutions considering commercial funding as an alternative. The study is conducted on broad -based industry experts responsible for making funding decisions. Paper explores what it takes to finance MFIs through leveraged funds and argues that key transitional factors are critical for a successful switch to commercial funding. A realistic checklist for self-assessment of MFI's progress in a commercialization strategy is proposed.
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    Relaxing financing constraint in the microfinance industry : is commercialization the answer?
    Mboya, Josphat Kiweu
    A critical question facing Microfinance Institutions (MFIs) is whether they can attract commercial capital as a solution to their financing problem and as a way of relaxing strained development aid. While donations have made enormous contributions to microfinance development and poverty reduction among the poor to date, an attempt to scale-up funding from this traditional source has been an uphill task. It is argued that vast resources of commercial capital can become available to microfinance if critical success strategies of access to commercial funding are developed. This paper offers research evidence that identifies significant predictors for successful Commercialization of microfinance based on firm-level data from African MFIs for three financial years between 1998 and 2003. The research develops and tests a commercial rating rule (predictive model) for determining success in tapping commercial capital. The results indicate the emergence of new finance sources, widened financing options for MFIs and the capacity to relax growth constraints in the industry. However, the findings also suggest the need for MFIs to satisfy the interests and requirements of prospective commercial investors to overcome new challenges.