MDF Theses and Dissertations (2023)

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An Investigation of the challenges in sustainable finance for water and sanitation in Kenya
(Strathmore University, 2023) Bundi, P. K.
Water and sanitation are critical to achieving the Sustainable Development Goals in addition to having an impact on health, particularly that of children under the age of five. Economic losses prevalent because of increased household expenditures on health-related expenditures and decreased productivity because of water and sanitation-related diseases, translate into additional budgetary allocation requirements for curative health that could otherwise be used for developmental initiatives and projects in a country's economy. The study set out to investigate the challenges that impede sustainable financing of water and sanitation, as well as to investigate solutions that will aid in bridging the gap in the sustainable financing of water and sanitation in Kenya. The sustainability theory and stakeholder theory formed the foundation of this study. A qualitative research design was used for the study, with the respondents comprising of officials from the Ministry of Health (MoH) (national and county), the Ministry of Water, Sanitation, and Irrigation (MoWSI), developmental organisations, and financial institutions. The study gathered qualitative data from 30 experienced key informants and an interview guide was used to guide the interviews. Content analysis was used to analyse qualitative data, and the results were presented in prose form. The challenges impeding sustainable finance in water and sanitation including inadequate financing, dependency syndrome, rapid urbanisation, affordability, and knowledge gaps were examined, and solutions to bridge the gap in water and sanitation financing were discussed. Financial innovations such as blended finance, institutional arrangements, improvement of the regulatory framework, promotion of accountability in water and sanitation financing were among the solutions. Alignment of the solutions brought out the fact that water and sanitation sector harmonisation was crucial for its sustainable financing to aid in enhanced intersectoral monitoring and knowledge harmonisation, which would not only improve information exchange for improved sector monitoring and informed investment choices for the sector's sustainable finance for water and sanitation but also aid in the development of the water and sanitation sector financing governance framework. With these a market that attracts sustainable finance for the sector because of increased transparency, readily available information, and a market whose risks have been evaluated, mitigation measures developed, and information made available to all stakeholders, would result in the development of suitable financial solutions, and enhanced access to sustainable finance. Key Words: Sustainable Finance, Sustainable Development Goals, Stakeholder
Capital market reforms and market efficiency: case of the Nairobi Securities Exchange, Kenya
(Strathmore University, 2023) Owade, W.
The role and importance of stock markets globally and locally has led to significant efforts being put into ensuring growth of these markets. Key among these efforts include implementation of reforms within the stock markets with the aim of promoting market development. The Kenyan stock market has had several reforms implemented since the 1990s to date, however, there still remains a gap between expected market performance in comparison to the reforms that have been put in place. The objective of this study was to examine and assess market efficiency following implementation of capital market reforms at the Nairobi Securities Exchange (NSE). Specifically, the study intended to assess the stock market efficiency upon implementation of the following reforms: automated trading system reforms, Central Depository and Settlement (CDS) reforms and stock market demutualization reform at the NSE. The choice of the reforms is highly influenced by studies that have been done in the past for which results have been inconclusive or not previously researched. The underpinning theories guiding this study include the efficient capital markets theory, theory of over and under market reaction and theory of economic regulation. Empirical reviews were also done to build on existing methodologies from similar studies done previously. The study took an event study approach for each of the independent variables to determine how the markets reacted each time the particular reform was implemented. The study applied positivism given that quantitative data was analysed, and a purposive sampling technique was used to obtain data from the listed companies at the NSE. The study utilised secondary data obtained historically from the NSE. Data was analysed using Stata 14.0 and SPSS 23, and findings revealed strong positive correlation between automation reforms and market returns throughout both the short term and long-term event windows. Findings also reveal consistent significance of abnormal returns from zero, which is an indicator of market inefficiency; additionally, results reveal significant volatility across all their reforms upon implementation. In the case of CDS and demutualization reforms implementation the market was efficient as no autocorrelation was observed. However, in the case of automation reforms, there was negative autocorrelation pattern which is not consistent with efficient markets and thus in the period of automation of the NSE, the market experienced inefficiency. The findings of the study are intended to benefit various stakeholders including policy makers, sector practitioners and scholars. The study recommends that future studies consider research on reforms cutting across the East African region or comparative study with findings in local markets in comparison to more developed markets. Additionally, there is room to study more recent reforms that have been implemented in the local stock markets.
Determinants of financial performance among Kenyan insurance companies
(Strathmore University, 2023) Wainaina, E. N.
The past two decades have seen the collapse or near-collapse of several insurance companies in the country because of the inability to honor their obligations due to diminished net worth. Covering risks lies in their ability to generate value for their shareholders and firms. Past studies had conflicting outcomes on the factors that influenced the insurance companies’s financial performance. The paper focused on assessing the factors that affected an insurance company’s financial performance. The study scrutinized the effects of underwriting risk, the influence of solvency, the impact of premium growth, and firm size on the financial returns of Kenyan insurance firms. The study also considered the moderating effect of market share on the financial performance of insurance companies. The research used data collected from 55 listed Kenyan insurance companies. Secondary data sourced from the financial statements of insurance companies from 2012 to 2020. The data analysis offered some critical insight into the issues that control the financial performance. The regression analysis showed that underwriting risk, firm size, premium growth together with solvency positively and substantially affected performance. However, once market share was introduced as the moderation variable, premium growth, underwriting risk, firm size, and solvency which are independent variables failed in having an influential relationship with the financial performance in the firm. The results from the present study indicate that insurance companies should focus on improving their premium growth, underwriting risk, firm size, and solvency, as this significantly impacts the company's performance. It is recommended that companies seeking a higher financial performance in the market should work to improve their premium growth, underwriting risk, firm size, and solvency. Although the results were insightful, a few limitations exist. The study was limited to a single sector. Similarly, the study’s completion was during the COVID-19 pandemic which affected many businesses. Therefore, this imposed some restrictions on the methodological choices made. Nevertheless, the study provides the basis for further research on the same subject.
Effect of corporate taxation on investor attraction of listed manufacturing firms in Kenya
(Strathmore University, 2023) Kariuki, C.
The manufacturing sector in Kenya has been a key component to the robust growth in the country’s total productivity. According to the vision 2030, the ambition of the Big Four Agenda is to raise the sector’s contribution to 15 per cent of GDP by 2022. However, in recent years the contribution of the sector has been declining and the performance of the listed manufacturing companies has been volatile. The sector has been experiencing a falling GDP share in recent years from 9.3 per cent in 2016 to 7.2 per cent in 2020. The share of formal employment in manufacturing sector has also largely remained stagnant in the same period at 11 per cent to the total formal sector employment. Despite manufacturing being a key pillar in the development agenda, the country generally lacks a predictable and stable tax policy that gives manufacturers a long-term view to enable them to make appropriate growth plans. This study therefore utilised Kenyan listed manufacturing firm-level panel data set over the period 2009 - 2021 to investigate the nexus between corporate taxation and investor attraction in the manufacturing sector in Kenya. The research adopted the neoclassical investment theory and the Q theory of investment in guiding the study. The study used a panel data regression model which allowed for the handling of not only the dynamic structure of the model and of the predetermined or endogenous explanatory variables, but also firm-specific factors, macroeconomic effects, heteroskedasticity, and autocorrelation of individual observations. The study revealed that corporate taxation held a significant effect on investor attraction of listed manufacturing companies in Kenya. In terms of the individual proxies for corporate taxation; tax incentives did not have a significant effect on investor attraction. However, effective tax rate and tax progressivity had a significant effect on investor attraction. Given the significance of taxation on investor attraction, the study recommends the need for policy makers to create a more effective and pro-industry national taxation structure that carefully considers the impact of the mutual effect of tax incentives, effective tax rate and tax progressivity on investment attraction of firms in the country. By addressing issues related to clear tax policy objectives, frequent changes in the tax code and multiple taxation, the government can improve the economy’s competitiveness and value proposition to attract investors.
Effect of financial accessibility on the sustainability of manufacturing Small and Medium Enterprises in Nairobi County, Kenya
(Strathmore University, 2023) Kimondo, M.
Access to finance has remained one of the notable factors that impede the sustainability of small and medium-sized enterprises in the developing world. This study aims to investigate the effect of financial accessibility on the sustainability of manufacturing small and medium-sized enterprises (SMEs) in Nairobi County, Kenya. The elements of access to finance that are in the interest of this study include cost of credit, interest rate, credit rationing and business risk. The specific objectives were to analyse the influence of loan processing fees on the sustainability of manufacturing small and medium enterprises (SMEs); to establish the influence of interest rate on the sustainability of manufacturing small and medium enterprises (SMEs) in Nairobi County, Kenya; to determine the influence of credit rationing on the sustainability of manufacturing small and medium enterprises (SMEs) in Nairobi County, Kenya; and to find out the influence of business risk on the sustainability of manufacturing small and medium enterprises (SMEs) in Nairobi County, Kenya. The study was underpinned by the Delegated Monitoring theory, Relationship Lending Theory and legitimacy theory. The study adopted descriptive research design methodology, which involved the collection of first-hand data from the operators of manufacturing SMEs in Nairobi County, Kenya. Stratified sampling technique was used to select the manufacturing SMEs that were involved in the study. A total of 89 participants were involved in the study. Data collection involved administration of online questionnaire to the participants using online communication platforms. The study documented positive effect of loan processing fees on sustainability of manufacturing small and medium enterprises in Nairobi, Kenya. Secondly, there was a negative and not significant effect of interest rate on sustainability of small and medium manufacturing companies in Nairobi County. Thirdly, there was positive and significant effect of credit rationing on sustainability of manufacturing small and medium enterprises. Further, there was positive and not significant effect business risk and sustainability of manufacturing small and medium enterprises in Nairobi, Kenya. From the findings it can concluded that loan processing fees, legal fees, insurance fees and negotiating fees have inverse effect on sustainability of manufacturing small and medium enterprises in Nairobi County, Kenya. Secondly, sustainability of manufacturing small and medium enterprises is significantly affected by inflation rates and total cost of credit. Thirdly, credit access was limited by number of loans applied by manufacturing companies, type of loan products applied for, repayment period and collateral required. Further, the higher the price fluctuations, competition and emergence of technologies that hinders the odds of sustaining firms. There is need for evaluation of measures aimed at minimizing credit access costs through mitigation of loan processing fees, legal fees, insurance fees and negotiating fees. Moreover, there is need for adoption of time series approaches while managing price fluctuations, competitiveness and emergence of new products
Effect of firm-specific factors on the financial performance of food and beverages manufacturing firms in Kenya
(Strathmore University, 2023) Mokaya, D. O.
Assessments and projections of the growth of the Kenyan economy are founded on the increases on the contribution of the manufacturing sector to the economy. The performance of this sector has been overtaken by the novel telecommunications and real estate sectors on the contribution to GDP. The Food & Beverages Manufacturing sector accounts for a majority 22% share of the Kenyan manufacturing sector, thus, the most sources of livelihood to workers in the manufacturing industry. It is for this reason that this research embarked on a quest to determine the factors within the control of these firms that affect their financial performance. The success of this sector has a larger effect on the overall performance the Kenyan Manufacturing sector owing to its sheer contribution to the industry. This study assessed the effect of the: size, age, leverage, and liquidity of a firm on its financial performance. This study employed descriptive correlational research design on data from 2009 -2018 of 75 Food and Beverages firms in Kenya. The data collected from this study was analysed through a panel regression model to test the influence of the variables in this study on the financial performance of Food and Beverages manufacturing firms. The study found positive influence on financial performance by leverage being statistically significant. The study recommends strategies to increase cash reserves through retaining earnings, issuing equity, or selling non-core assets, reducing debt by paying off loans or refinancing them at a lower interest rate.
Effect of institutional quality on Foreign Direct Investment: a case of selected Eastern African countries
(Strathmore University, 2023) Musili, D. M.
Empirical evidence points to a positive relationship between Foreign Direct Investment (FDI) and economic growth, especially in developing economies. However, research shows that multiple country-specific factors influence FDI inflows to respective countries, for example, the policy environment. Data show that while investment inflows have increased in Asian countries, and in Northern and Southern Africa, FDI inflows to Eastern Africa have decreased in recent years, with the Covid-19 pandemic that restricted international capital flows exacerbating the issue. Given the reduced FDI inflows in the Eastern Africa region in recent years and the fact that it is important to increase the attractiveness of Eastern African states to foreign investors to ensure sustainable development in the region, this study examined the effect of institutional quality factors (political stability, government effectiveness, regulatory quality, control of corruption, rule of law and voice and accountability) on FDI in East Africa. The research was grounded on the Eclectic Paradigm (Ownership-Location-Internationalization- OLI theory) and the institutional FDI fitness theory. A positivist philosophy focused on quantitative analysis of the relationship between the selected research variables was adopted. The interaction between institutional quality factors and FDI was analysed using panel data analysis covering Kenya, Tanzania, Rwanda, Burundi, Ethiopia, and Uganda over the period from 2005 to 2021. A panel regression model was used to determine the interaction between the research variables. Cointegration tests revealed there existed a long-run relationship between institutional quality factors and foreign direct investment in the Eastern Africa region. Panel regression results showed that 58.95% of foreign direct investment in the Eastern Africa region can be predicted by institutional quality factors. The study established that overall, institutional quality factors have a positive and significant effect on the volume of foreign direct investment in the Eastern African region and calls on Eastern African countries to embrace the role of institutions and good governance in enhancing FDI inflows. To enhance foreign direct investment (FDI) inflows, it is recommended that East African states develop and enforce policies that promote investment in the private sector. This can be achieved by leveraging institutional quality metrics as a foundation for attracting investment into the different countries. Keywords: Institutional Quality, Foreign Direct Investment
Evaluating Micro-Finance Institution factors influencing indebtedness status: case of businesswomen borrowers - Nairobi County
(Strathmore University, 2023) Kiragu, A.
It is without a doubt that Microfinance institutions promote economic growth by providing financial support to the poor in the society including women. It is for this reason that various governments in the developing economies including Kenya have put in place measures that help the MFIs to thrive albeit with mixed results. Notably, MFIs are instrumental advancing financial support to the low-incomers, women not exclusive. However, given that many MFIs have developed various financing strategies that ensure women borrowers access their services, the rate of over-indebtedness among women is noticeable. It is for this reason that this study intended to evaluate. The overall objective of the study was to evaluate the MFI factors influencing indebtedness status: case of businesswomen borrowers in Nairobi County. The following specific objectives were used; the study assessed the indebtedness status of women in Nairobi County; investigated the effect of MFI lending factors on the indebtedness status of women in Nairobi County; and examined the moderating effect of inflation rates on the relationship between MFI lending factors and the indebtedness status of women in Nairobi County. Both life cycle theory and the learning theory were used. The study adopted a mixed research design due to the use of both quantitative and qualitative data in the study. The target population of this study was the 407,455 women borrowers and managers of the 19 MFIs in Nairobi with a sample size of 399 and 19 respectively. The study used both structured questionnaire as main data collection tool and unstructured interview guide. By using Statistical Packages for Social Sciences (SPSS) version 24, data was analysed using descriptive statistics and regression model. Results were presented in tables, figures, mean, and standard deviation. The study found that borrowers’ personal factors had significant and positive relationship with the indebtedness status among women borrowers (β = 055; p-value = 0.038). This research also found that, that MFI lending factors had significant positive relationship with the indebtedness status among women borrowers (β= 0.017; p-value = 0.019). The study again found that, inflation rate had a positive significant connection with the indebtedness status among businesswomen borrowers in Nairobi County (β = 0.177, p-value = 0.002). Therefore, regression results resonate with the interview findings. The study concludes that, an increase in MFI lending factors by any unit could lead to an increased indebtedness status and vice versa. The research concluded that, a unit increase in the personal factors could increase indebtedness. It concludes that, an increase in inflation will lead to an increase in indebtedness status. The study recommends that, regular risk analysis and assessment for credit should be considered, preferably on a monthly or quarterly basis by the MFIs’ management because this is an ongoing process rather than a one-time exercise. It recommends that, the Consumer Federation of Kenya should be able to consider conducting awareness campaigns to teach women borrowers on planned investment and spending of borrowed credit. It also recommends that the government through the Treasury and other line ministries such as Trade, preferably policy makers should introduce legislative measures to streamline MFIs’ lending to safeguard women borrowers from unjust lending terms and conditions. In addition, it recommends that, every stakeholder in the MFIs sector including regulatory bodies and development agencies can perform an essential role in promoting financial and business literacy among women borrowers in line with their own area of specializations. Therefore, financial literacy training needs should be specifically connected to debt literacy to obtain the desired effect.
Factors affecting the implementation of multilateral infrastructure development projects in Kenya
(Strathmore University, 2023) Alas, I. M.
Across the world, population growth derives increasing requirements for infrastructural developments. The implementation to completion and appropriate use of these projects is as critical as the need for them in the first instance. Despite this, Kenya has been witnessing poor implementation of multilateral infrastructure development projects. The study sought to establish the factors affecting the implementation of multilateral infrastructure development projects in Kenya. The specific objectives were to; examine the effect of strategic choice of implementing partner, determine the effect of community stakeholder engagement and assess the influence of the conditions laid out by the financier on the implementation of multilateral infrastructure development. This study was guided by three theories namely; agency theory, stakeholder theory and theory of conditionality. The study adopted mixed methods research design. The main philosophical underpinning of this study was the pragmatism. This study focused on 192 people that have a relationship with or are affected by infrastructural portfolio projects under NEDI and LAPSET. The research instrument that was used for the survey was a structured questionnaire supplemented by interview guides. Quantitative data was analyzed using descriptive statistics. Qualitative data was analyzed based on the content matter of the responses. Descriptive statistics involved use of absolute and relative (percentage) frequencies, measures of central tendency and dispersion (mean and standard deviation respectively). Quantitative data was presented in tables and graphs and explanation was presented in prose. The study also used inferential statistics to establish the relationship between the factors affecting the implementation of multilateral infrastructure development in Kenya. Specifically, the study use chi- square to establish this relationship between the independent variables and the dependent variable. The study results established test statistics are in the significant levels meaning that there exists a significant connection between strategic choice of implementing partner and implementation of multilateral infrastructure development projects reviewed in this study. From the study test statistics all the factors of community stakeholder engagement considered have an influence that is significant on implementation of multilateral infrastructure development projects reviewed. The study test statistics are in the significant levels which means conditions laid out by the financier have a significant influence with the implementation of multilateral infrastructure development projects reviewed in this study. The study concludes that components of strategic choice of implementing affect the implementation of multilateral infrastructure development in Kenya. On the aspects of community stakeholder engagement they all affect the implementation of multilateral infrastructure development in Kenya. The study concludes that the conditions laid out by the financier have an effect on the implementation of multilateral infrastructure development in Kenya since the project is guided by planning conditions, the project having in place effective compliance conditions and financial conditions are being taken into considerations for any project task. The study recommends that it is essential to establish the specific characteristics strategic choice of implementing partner like partnership in terms of cooperation, customer ownership issues, and intellectual property sharing if implementation of multilateral infrastructure development in Kenya is to be a success. It crucial to establish other important elements associated with community stakeholder engagement that can improve on the implementation of multilateral infrastructure development in Kenya. The study recommends that when negotiating with lenders it is important to put more emphasis on the form of security, covenant to the lenders and other aspects which allow lenders additional rights and powers in the event of non-compliance of the conditions laid out occurrence
Factors influencing the participation of youth in agribusiness in Kiambu and Machakos Towns in Kenya
(Strathmore University, 2023) Mullu, L. M.
Despite the high levels of unemployment, the youth rarely exploit opportunities in the agribusiness sector due to preconceived misconceptions and negative perceptions of agriculture as a career choice. However, agriculture is a significant contributor to the country’s economic development and the participation of the youth in the sector would surely play a significant role in easing the income challenges faced by the youth. To this end, the research sought to examine the factors that influence the participation of the youth in agribusiness activities. Specifically, the examination focused on the effect of market factors, technological factors, government factors and socioeconomic factors on the participation of the youth in agribusiness. The theoretical scope of the research was limited to the Push-Pull Theory and the Theory of Planned Behavior, which are relevant to the study. The research adopted a descriptive research design. The population of the research was 1,289,820 youth members drawn from both Kiambu and Machakos Counties. The study adopted convenience random sampling in the selection of the research participants, who were determined using the Krejcie and Morgan table. A sample of 384 youth members was selected, and the participants were apportioned across the two counties. Data was collected through structured questionnaires with focus interviews conducted with key informants in the agribusiness field. Data analysis was done using the SPSS software. The research implemented descriptive and inferential statistics in the analysis. The research further applied content analysis to review the qualitative research data within the study objectives. The analyzed research data was presented through pie charts, tables and graphs. Out of the response being sought in the study, the research was able to garner a 97% response rate which was deemed adequate for quantitative analysis. Overall regression analysis revealed that market factors have no statistically significant effect on youth participation in agribusiness, technology factors have a positive and significant effect on youth participation in agribusiness, socioeconomic factors a positive and significant effect on youth participation in agribusiness, and demographic factors have a significant relationship with youth participation in agribusiness in Kiambu and Machakos town. Regression results were that there was no statistically significant effect of market factors have no significant effect on youth participation in agribusiness. Findings led to the conclusion that technology factors and socioeconomic factors have a statistically significant effect on youth participation in agribusiness. Further, the study found that demographic factors such as gender, employment status, age and level of income have insignificant impacts on youth’s participation in agribusiness. On the other hand, the size of the household and the academic achievement of the youth were determined to have significant influences on the likelihood of participating in agribusiness. The study findings provide evidence that the youth are highly enthusiastic and motivated to participate in agribusinesses and that under the right conditions, more youth will get involved in the country’s biggest income earner. The study further calls on the inclusion of agricultural programs in schools from an early age to ensure the citizenship recognizes agriculture as a viable business activity from a young age. Another recommendation is for increased marketing and financing of agribusiness as a vital component of the economy to increase its attractiveness to foreign investors who can bring in newer farming methods, technologies and expertise. Key words: Market factors, technological factors, socioeconomic factors, Youth in agribusiness
Influence of socio-economic factors on the adoption of weather-based agricultural insurance products in Narok County, Kenya
(Strathmore University, 2023) Nanshemeza, H.
Kenya has been facing a high number of natural disasters, having recorded various droughts in the last two decades. These are consequences of climate change. To mitigate the adverse impacts of this climate uncertainty, the government avers that farmers need to adopt various coping strategies. Among these is agricultural insurance, which is supposed to help low-income farmers reduce vulnerability. However, despite policies and initiatives being implemented to encourage farmers to adopt these insurance products, uptake remains low. The focus of this research was to investigate the influence of socio-economic factors on the uptake of weather-based agricultural insurance products in Narok County. The study specifically examined the effect of demographic factors, household income, household perception, household expectation, and crop insurance regulation on the uptake of weather-based agricultural insurance products in Narok County. The research was grounded on prospect theory and customer perceived value theory. A sample of 300 wheat farmers in Narok County was considered for the research. A structured research questionnaire was adopted for the examination with probit regression estimated to determine the marginal effects of socio-economic factors on the uptake of weather-based agricultural insurance products in Narok County. Analysis revealed that a majority, 53% (n = 159), were male farmers, with 47% accounting for female wheat farmers, which demonstrates inclusive participation in agricultural activities. The results revealed that, on average, the farmers had an income of KES 16,843 from farming activities. The research further focused on the rate of adoption of weather-based insurance products and the findings showed that 48% (n = 144) of the farmers have used weather index crop insurance, with 52% not using the product. The summary of the probit regression established that there was a positive but insignificant influence of 2.14% on the adoption of weather-based insurance products in Narok County that was predicted by the socio-economic factors. Overall, the research findings were that socio-economic factors do not have significant effects on the adoption of weather-based insurance products in Narok County. The first recommendation that can be drawn from the research findings is that the government needs to be more involved in the efforts to address the challenges facing agricultural insurance. The study also recognizes the role played by insurers in promoting crop insurance and the study recommends that insurers do more research on farmers’ needs and their perception about insurance. Finally, this study calls on the government to step up education efforts and partnerships with local and international partners to provide up-to-date insurance education programmes for farmers and training for insurance experts.
The Effect of budget implementation on budgetary control in Elgeyo Marakwet County
(Strathmore University, 2023) Kanda, M. J.
The Controller of Budget has raised concerns about implementation of budget by the county governments among them being Elgeyo Marakwet. The county government has been marred by problems of budget deficits since the beginning of county governments in 2013-14 Financial year. It has also been facing challenges of under absorption of the recurrent and development expenditures. This study sought to investigate the effect of budget implementation process on budgetary control of Elgeyo Marakwet County in Kenya. The study also investigated the relationship between the budgetary control and the independent variables which are the budget expenditure, resource allocation and the Own Source Revenue Mobilization. The study was guided by budget theory and allocation theory. Data was collected from secondary sources, data of approved reports from the office of the Auditor General. Analysis of the data was based on the descriptive statistics and regression model analysis. The study used the Vector Autoregressive analysis. The choice of the model was informed by stationarity of data in levels. A lag selection of 2 was adopted, to ensure that the model was well-specified and had enough degrees of freedom. From the estimation, the study established that expenditure has a negative effect on budgetary control in the first and second lag. Own source revenue had a positive effect in the first lag. On the other hand, recurrent absorption had a negative effect on budgetary control in both the first lag and second lags. Finally, development expenditure absorption had a negative effect on budgetary control in both lags. The study suggests that the Elgeyo Marakwet county government need to enhance its revenue stream while also improving revenue collection efficiency by blocking leakages. This will guarantee that the approved budget is adequately funded. Secondly, the county government need to prioritize development initiatives and ensuring that projects are begun on schedule and within the time frame specified.
The Effect of prudential regulation on non-performing loans in Kenyan commercial banks
(Strathmore University, 2023) Lunani, B.
The banking sector plays an important role in the economy and its growth prospects. In 2021, total assets in the banking sector contributed to an average of 65% of Kenya’s Gross Domestic Product (GDP). The high levels of Non-Performing Loans (NPLs) in Kenya is a major concern. This study sought to ascertain the effect of bank specific aspects of prudential regulation assessed by core capital, capital adequacy, liquidity and bank stability on NPLs. The study examined the controlling effects of profitability, bank size, operational efficiency, interest rate and credit quality on NPLs. The study drew upon the capital buffer theory, credit creation theory and the financial repression theory. The study followed the positivist research philosophy and employed descriptive correlational research design. The population of the study was commercial banks operating in Kenya between 2011 and 2021. Data was analyzed using panel regression analysis According to the findings, core capital had a significant positive effect on gross NPLs implying that an increase in core capital is associated with an increase in gross NPL. There was no significant relationship between capital adequacy and liquidity on NPLs. The effect of bank stability on NPLs was significant implying that a unit increase in bank stability is associated with a reduction in gross NPL. The study findings will assist regulators in developing more efficient policies and regulations for management of NPLs. It is anticipated that banks will benefit by enhancing their credit risk management practices. By adding to the existing literature on NPLs and policy interventions, the study will contribute to advancing discussions surrounding financial markets. As a result, the general public is likely to gain enhanced confidence in the banking system and the efficacy of policy interventions.
The Effects of financial inclusion on entrepreneurial venture formation in marginalized areas in kenya - a case of Chepyuk Ward, Mt. Elgon Sub-County
(Strathmore University, 2023) Kipnusu, T. K.
Financial inclusion has widely been touted as a vital tool in alleviating poverty and reducing income imbalance among the rural-poor in developing economies. The concept of financial inclusion (FI) has become popular and has been described as a means of easy and voluntary access to basic financial services. This study sought to determine the effect of financial inclusion on entrepreneurial venture formation in marginalized areas with focus on Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The highest financial exclusion of 29% is in marginalized areas compared to 2% in non-marginalized areas. Further, Commission for Revenue Allocation identifies Mt Elgon in Bungoma County, Western Kenya among 1,424 areas in 47 counties as most deprived and therefore marginalized. The overall objective of the study was to determine the effect of financial inclusion on entrepreneurial venture formation in marginalized areas with focus on Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The study had three specific objectives: The first specific objective was to establish the extent of access to financial services and its effects on entrepreneurial venture formation in Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The second specific objective was to establish the extent of usage of financial services and its effects on entrepreneurial venture formation in Chepyuk Ward, Mt. Elgon Sub-County in Kenya. The third specific objective was to investigate the level of awareness of existence of financial services and its effects on entrepreneurial venture formation among the marginalized areas of Chepyuk Ward, Mt. Elgon Sub-County in Kenya. This study used two theories; Capabilities theory and theory of asymmetric information. Descriptive research design was applied and a sample size of 379 households from a target population of 7,274 households from Chepyuk ward was used in this study. Two research assistants were trained and supported data collection process. The study adopted a spearman`s rank correlation coefficients and binary logit regression model. Results of the study indicated that there was a positive and not significant effect of access to financial services on entrepreneurial venture formation. There was an inverse and not significant effect of usage of financial services on entrepreneurial venture formation. Moreover, there was an inverse and significant effect of level of awareness of financial services and entrepreneurial venture formation in Chepyuk Ward, Mt. Elgon Sub-County. The study concludes that extent of financial access, access to financial training and financial literacy are catalysts of entrepreneurial venture formation. There is need for cost benefit analysis by financial services providers so as to examine the costs of credit facilities, use of mobile financial services and micro insurance so as to match the need with costs incurred by service seekers, especially the low income earners in the marginalized areas. There is need for deployment of strategies that may alter the inverse effect of access of financial services, access of financial training and financial literacy. There is need for development of policy programs that would mitigate against the levels of information asymmetry and ultimately increase uptake of financial products and reverse the trend of entrepreneurial venture formation.
The Effects of financial literacy on the performance of Agro processing companies in Nairobi County, Kenya
(Strathmore University, 2023) Mwirichia, D. N.
Globally, financial literacy has gained attention in the business industry due to its significant impact on the sustainability of a business. This study sought to assess the effects of financial literacy on the performance of Agro processing companies in Nairobi County. The specific objectives of the study were: to determine the effects of financial budgeting literacy on the performance of Agro processing companies in Nairobi County; to establish the effects of financial risk management literacy on the performance of the Agro processing firms and to determine the effects of debt management literacy on the performance of Agro processing firms in Nairobi County. The study was anchored on financial literacy theory and used a descriptive correlational research design. The study target population comprised of all the 112 Agro processing companies in Nairobi County with the target respondents being the financial officers, chief accountants and other senior individuals in the firms’ finance and accounting departments. The study used census survey approach to obtain information from the 112 Agro processing companies in Nairobi County. Data was collected using questionnaires which were online administered using Google Docs. Gathered data was cleaned and then analyzed qualitatively and quantitatively. Qualitative data was analyzed thematically while quantitative data was analyzed by the aid of statistical software SPSS version 24. The study found that is a significant positive relationship between financial budgeting literacy, financial risk management literacy and debt management literacy as evidenced by the positive correlation. Further the model of the study concluded that financial budgeting literacy has a statistically significant impact on performance of Agro processing companies. The study recommends that Agro processing companies should move with speed in enhancing their staff members’ knowledge on emerging and disruptive financial concepts in relation to financial budgeting in order to maintain steady financial growth
The Effects of partner-agent business model on business performance of microinsurance firms in Kenya
(Strathmore University, 2023) Birech, F.
Insurance is a form of protection from destruction of property, or life. However, majority of Kenyans have no access to insurance coverage. Despite tailor made solutions offered by microinsurance, its performance has been less than expected. This study examined influence of distribution channels on business performance of microinsurance by assessing effects of partner-agent dimensions of collaborative product design, information sharing, and transaction costs. The study was anchored on Core Competency, Transaction Cost, and Information Asymmetry theories. Adopting a correlational research design, the study targeted the 8 microinsurance firms as the units of analysis and 203 management staff as the units of observation from which a sample size of 136 was calculated. A structured questionnaire was used for collecting data and its reliability was tested using internal consistency measure of Cronbach Alpha from which the items were found to be reliable. Descriptive, correlation, and multiple linear regression analysis were conducted at the 95% confidence interval after performing diagnostic tests to determine assumptions for regression analysis were met. The mean scores show that product design had the highest scores followed by transaction costs, and information sharing respectively. Correlations coefficients indicated moderate positive and significant correlation between collaborating in product design, transaction costs, and information sharing with microinsurance business performance. The model explained 55.8 % of variation on microinsurance business performance; out of the three explanatory variables, collaborative product design had the greatest effect followed by information sharing, and transaction costs. The study concludes that collaborative product design had the greatest effect on microinsurance business performance followed by information sharing with transaction costs had the least effect. Based on this, the research recommends that that partners and agents should distribute products through a means that is convenient to clients by developing products that meet consumer expectations. Secondly, partners and agents should make a concerted effort to enhance continuous flow of information to facilitate better pricing of microinsurance products. Lastly, that microinsurance firms should make an effort to reduce the clients’ claims processing costs by lowering costs for distributing and reaching low-income clients.

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