Browsing by Author "Mboya, Josphat Kiweu"

Now showing 1 - 9 of 9
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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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    Effects of information technology on the financial performamce of small and medium sized enterprises : a case of SMEs in Nairobi
    Gikonyo, Geoffrey Mungai; Mboya, Josphat Kiweu
    This study examines the effects of Information Technology (IT) on the financial performance of small and medium sized enterprises (SMEs) situated in Nairobi. The primary objective of the study was to examine whether there is any relationship between the use of IT and firm performance. Data was obtained through the use of purposive sampling from the National Social Security Fund (NSSF) Register of Kenya database as of 2009. The purposive sampling employed on the SMEs registered in the NSSF register led to the database of a leading IT firm which then formed the population of the study. The data obtained was analyzed through the use of descriptive analysis and also through the use of ordinary least squares regression analysis. The key finding of study was that firm performance and IT use are positively correlated. It also found that of the factors that affect the use of IT, only the level of spending on IT systems and the organizational structure of a given firm have a significant effect on IT use and its subsequent effect on firm performance. The study suggests that firms should place more emphasis on the role that individuals play within the organization since the organization will tend to perform well when each individual plays their role well. Further research is recommended to be carried out through the use of other methodologies so as to examine different angles of the role of IT in SME performance improvement.
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    Examination of factors influencing lending decision to SMEs : a case of finance providers in Tanzania
    Magreth, John Pallangyo; Mboya, Josphat Kiweu
    This study examines the factors that finance providers in the mainland of Tanzania consider important in SMEs lending decisions. Data were collected from the headquarters of finance providers in Dar-es salaam. A sample of 32 out of 46 finance providers was studied. Data was collected through questionnaires. The statistical analyses included descriptive statistics (mode and mean ranks), and Pearson chi-square. The findings show that the most critical criteria that are used by the finance providers to accept or reject the SME loan proposal were collateral, bank policy, risk of the default, size of the loan, credit history, net profit to sales, existing profitability, repayment of the previous loan, trading experience, repayment schedule, type of business, purpose of the loan, business ability and honesty, projected income, gearing, liquidity ratio, equity stake, management skills, and maturity. Using Pearson chi-square (x²) the association between factors was examined whereby the empirical results indicate that there is an association between having audited financial statements and access to credit. There is also an association between collateral and access to credit. When financial information were unavailable or unreliable, finance providers ranked very high the use of industry sector information, ownership type information, age of the firm information, work experience information, location of the firm information, firm size information, and education background information. The research concludes that lack of financial information and inability to present appropriate collateral are the reasons why finances are not available from the finance providers.
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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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    Rationale for use of forensic accounting in reducing audit expectations gap : a case for central Kenya cooperative societies
    Wanjohi, Festus M.; Mboya, Josphat Kiweu
    This study examines the rationale for the use of forensic accounting as a mechanism for reducing the audit expectations gap. Fraudulent activities in Kenya have been responsible for widespread collapse and poor performance of firms, hence the potential use of forensic audit to detect frauds and narrow the audit expectations gap. The study tests empirically the three hypotheses that, first, the audit expectations gap exists in Kenyan audit engagements; secondly, the introduction of forensic audit will be an important mechanism in reducing audit expectations gap; and thirdly, the introduction of user education and better auditing and accounting standards are other important mechanisms for reducing the audit expectations gap. The study employs a descriptive research study design. The study uses a sample of 134 respondents, comprising of 118 cooperatives and 16 audit firms which were selected using a stratified systematic sampling approach. The data collection instrument preferred for the study was a questionnaire. The data was analyzed using inferential statistics such as Chi square statistics, f exact test, one sample and two sample tests. Study findings indicate that there is a significant difference in responses between auditors and cooperative members. These findings imply the existence of audit expectations gap in Kenyan audit engagements. In addition, t-tests indicate that forensic accounting, user education and better auditing standards are important mechanisms in reducing the audit expectations gap. The study contributes to literature on the discourse of the audit expectations gap which is scarce in Sub-Saharan Africa in general and Kenya in particular.
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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.