MCOM Theses and Dissertations (2024)

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Factors influencing the level of preparedness to adopt IFRS 17 in insurance firms in Kenya
(Strathmore University, 2024) Mutuku, R. M.
Financial reporting by insurance companies has been a challenge for a long time and the initial proposal was to have IFRS 4 provide minimal guidelines on these reporting complexities. After a long duration of stakeholder engagement, IFRS 17 came into effect in 2023 although it was approved for implementation in 2018 to assist in accounting and reporting critical issues in complex insurance contracts and features. However, in the close of the year 2023 only 14 insurance firms had fully adopted IFRS 17. The main question of the study therefore was why are insurance firms taking too long to fully adopt IFRS 17? What were the impending factors affecting the level of preparedness to adopt IFRS 17?.The drive of this study was therefore to assess factors influencing the level of preparedness to adopt IFRS 17 in insurance companies in Kenya and the specific objectives were to assess the effect of board characteristics on the level of preparedness to adopt IFRS 17, to establish the effect of financial metrics on the level of preparedness to adopt IFRS 17, to evaluate the effect of type of insurance business on the level of preparedness to adopt IFRS 17 and to establish management views on the challenges and strengths facing the level of preparedness to adopt IFRS 17 on Kenyan insurance companies. The organizational readiness for change theory and the absorptive capacity theory functioned as the study's guiding theories. The population of the study comprised of all 56 licensed insurance companies in Kenya regulated by the Insurance Regulatory Authority of Kenya. It was through structured surveys that primary data was gathered. Secondary data was taken from the Insurance Regulatory Authority’s annual published supervisory reports and insurance companies final financial statements using a data collection sheet covering the five-year period from 2018 to 2022.Panel data regression analysis, correlation analysis and descriptive statistics were used to analyze the data. Inferential results showed that taking all factors, ceteris paribus (solvency ratios, liquidity ratios, earnings ratios, profitability ratios, board size, board composition, number of females in the board, board independence and type of business) the level of preparedness to adopt IFRS 17 in insurance companies in Kenya would be 0.637. The data results analyzed also showed that the seven independent variables had a positive influence, while two had negative influence on the level of preparedness to adopt IFRS 17 in insurance companies in Kenya. Additionally, the ANOVA analysis showed a significant difference between the groups confirming that all the nine variables were fit in the regression equation. Findings also indicated that unit growths in the seven variables (solvency ratios, liquidity ratios, earnings ratios, profitability ratios, board size, board independence and female in the board) would result in a positive growth on the level of preparedness to adopt IFRS 17. On the contrary, a unit growth in board composition and type of business would result in a negative growth on the level of preparedness to adopt IFRS 17. The study recommendations will assist insurance firms in the process of full implementation and assist regulators in promoting stability without reducing size of the industry.
Moderating effect of balance of payment position on the drivers of exchange rate volatility in Kenya
(Strathmore University, 2024) Kirianki, L.
The volatility of exchange rates is the source of exchange rate risk and has certain implications on the volume of international trade. Exchange rates influence decisions made by individuals, governments, and businesses. Collectively, this affects economic activity, inflation, and the balance of payments. The study sought to establish the effects of market sentiment, information asymmetry, and economic cycles on exchange rate volatility in Kenya, moderated by the balance payment position. The study was supported by the Purchasing Power Parity Theory. It applied a positivist research philosophy while its research design was correlational. Secondary data on the research variables was collected from the Central Bank of Kenya and Bloomberg for ten years between 2014 and 2023 using monthly data a total of 120 observations. This study used EViews12 to conduct descriptive and inferential statistical analysis. According to the findings of the study, Balance of payment was significant as a moderating variable for all the equations and reduced the effect of the independent variable on the dependent variable thus strengthening the Kenya shilling. All regression models indicate that the dependent variable of exchange rates was significantly affected by information asymmetry, economic cycles, and balance of payment. Inflation was introduced as a control variable and was found to be significant in all models. The study adds to the existing body of knowledge on drivers of exchange rate volatility by providing fresh insights through the focus on the moderating effect of balance of payments. Additionally, the interactions amongst market sentiment, information asymmetry, and economic cycles in one single study are unique in terms of their influence on exchange rate volatility, thereby offering useful references to scholars, professionals, and researchers. The study recommended that the Government needs to come up measures to reduced information asymmetry in the economy and find solution to high net imports by encouraging import substitution. These policies should be cognisant of underlying factors such as information asymmetry, economic cycles, and even balance of payments. Key Terms: Balance of Trade Position, Economic Cycles, Information Asymmetry.
The Effect of corporate restructuring on employee performance: a case of the NCBA merger
(Strathmore University, 2024) Makau, C.
Companies are implementing restructuring strategies to enhance their competitive position and boost shareholders' wealth in response to heightened competition and evolving operational conditions. Research has demonstrated that corporate restructuring not only improves financial performance but also enhances employee performance in terms of productivity, efficiency, effectiveness, and the creation of a positive customer experience. Corporate restructuring significantly improves performance, particularly in highly competitive areas, by increasing employee productivity and their contribution to corporate success. This could elucidate the reason behind NCBA's investment in employee learning hours experiencing a significant surge of 300% by 2022, subsequent to the initiation of its restructuring process. Hence, this study has a strong focus on examining the impact of corporate restructuring on employee performance, specifically in the context of the merger between NIC and CBA Banks. The study's specific objectives centred on examining the impact of cost restructuring, governance reformation, and downsizing on the employee performance of NCBA Bank. NCBA bank has a total of 42 branches in Nairobi. The focus of the analysis was on the employees, specifically the departmental managers. Given that each branch consists of six (6) departments, a total of six (9) departmental managers were examined in the firm. Therefore, the study's target population consisted of a total of 252 respondents. A total of 190 respondents were selected at random to compose the sample design for the study. Data collection from the appropriate respondents at the bank was conducted using structured questionnaires that contained closed-ended questions. The analysis involved the utilization of multiple linear regression in the SPSS software. The researcher ensured the participants' privacy and confidentiality, as well as the secure sharing of any sensitive data. The regression analysis revealed that implementing cost restructuring has a positive impact on employee performance in the merger between NIC and CBA banks. As a result of cost restructuring, which included reducing indirect costs, bringing in-house activities instead of outsourcing, and cutting operational costs after the merger, employees became highly productive, creative, efficient, quick learners, and self-driven. The findings also indicated that implementing governance reforms enhances employee performance in the merger between NIC and CBA banks. Consequently, the reformation of governance, which involved altering the top management, restructuring the management hierarchy, and modifying the remuneration system for top executives, resulted in employees displaying high levels of productivity, creativity, efficiency, adaptability, and self-motivation. The research discovered that downsizing enhances employee performance in the merger between NIC and CBA banks. As a result of downsizing during the merger, which involved reducing bank departments and the number of supervisors per managerial unit, employees became highly productive, creative, efficient and self-driven.
Effects of strategic capabilities on sustainable performance in commercial domestic airlines in Kenya
(Strathmore University, 2024) Mutua, F. N.
In an industry characterized by intense competition, volatile market conditions, evolving customer preferences, effective deployment of strategic capabilities has emerged as a critical determinant of a domestic commercial airline’s performance. Strategic capabilities encompass having tangible and intangible resources, threshold, and core competencies that enable organizations to align resources with their long-term objectives. Airlines that leverage strategic capabilities bolster their competitive positioning and financial stability. Compared to the rest of the globe, Africa’s airline industry performance is below average in market share and profitability. The competitive threats from multinational players globally have made African airlines aware of their precarious situation. That has incentivized the airlines to proactively engage in strategic capabilities to enhance their performance. In Kenya, several challenges face the commercial domestic airlines, including high fuel prices, cost control, fleet replacement, high taxes, and an unconducive business environment. To effectively compete in the global market, competitive strategies have gained traction as a way of enhancing performance, gaining market share, enhancing profitability, and brand loyalty. However, extant literature linking strategic capabilities adopted and influence on social, economic, and environmental performance of domestic commercial airlines is thin. This area has received little attention in academic inquiry. Therefore, the study closed the gap by investigating the effect of strategic capabilities, namely tangible and intangible resources, threshold, and core competencies, on domestic commercial airlines' economic, social and environmental performance in Kenya. This study used a quantitative descriptive research design to estimate the variables. The strategic balancing theory informed the study’s review and utilized positivist research philosophy. Purposive sampling was utilized to select 103 respondents. A questionnaire was utilized to collect primary data. Data was analyzed using descriptive and inferential analysis with SPSS. Ordinal regression was employed to determine the magnitude and nature of the relation between the variables. The result of the study demonstrated that tangible resources, threshold, and core competencies had a positive impact on economic performance of the airlines, while intangible resources had an adverse effect. Intangible resources, threshold, and core competencies positively impacted the airlines' social and environmental performance, while tangible resources were found to have an adverse effect. The study recommends that investment deepening by the national government to create a conducive environment and lower the cost of doing business and airlines to enhance the passenger experience and brand loyalty. Airlines are also encouraged to adopt measures to minimize their carbon footprint by investing in alternative fuels, efficient fleets, and green technologies, and support community initiatives to enhance their reputation and drive sustainable business. The main limitation of the study was that it was a cross-sectional study, hence it is difficult to establish trends or variable patterns over time.
Determinants of a saving culture in unit trusts among the young adults in Nairobi County, Kenya
(Strathmore University, 2024) Musyoka, M. M.
This study seeks to establish determinants of the adoption of unit trusts for savings among young adults aged 18-24 in Nairobi County, Kenya. The specific objectives include: to determine the influence of financial literacy; parental socialisation, peer influence, and level of income, on the development of a savings culture in unit trusts among the young adults aged 18-24 in Nairobi County, Kenya. This study seeks to address a number of knowledge gaps. Firstly, there have been few studies carried out on the determinants a savings culture in unit trusts among the young adults in Kenya. Secondly, there are studies which have been conducted on credit products rather than on savings which has rendered their findings completely inappropriate for this study given the different circumstances surrounding credit products. Thirdly, there has been limited research on the factors that influence the uptake of unit trusts for savings. The study was underpinned by the Consumer Socialisation Theory. The study applied a descriptive correlational research design since it purposed to arrange and explain the various attributes of the study items. The target population of the study was all the 36 licensed trust funds in Kenya. This study used questionnaires for collecting data so as to enable the collection of more thorough inquiries and because it offered the convenience of accessing individuals who have busy schedules. This study applied a 5-point Likert Scale then the Statistical Package for Social Sciences (SPSS) (version 20) was used to carry out descriptive and inferential statistical analysis. According to the results, the young adults have gained financial numeracy and financial knowledge which has improved their financial planning. As youth, they have trained in budgeting which has enhanced their debt management and boosted their ability to save. Their investment or savings practices reflect their level of financial literacy. The young adults have experienced challenges making enough revenue to save. They tend to have impulsive consumption behaviours, to alternate between brands, however, and are also knowledgeable about financial management. The study recommended that the Government needs to come up with funding initiatives for young adults so as to enable them acquire savings products such as unit trust funds. The managers of unit trust funds should come up with promotional strategies that reward individuals for referring others to acquire their products among the young adults since they tend to follow the recommendations of their peers. Given the dearth of local research on the adoption of unit trust funds in general, this study will set the tone for other local researchers and scholars to delve into this category of financial products so as to build on the body of knowledge. The study was limited by individuals who were unwilling to provide information; the 36 licensed unit trust funds, and the four determinants of adoption of unit trust savings. Key words: Financial Literacy; Level of Income; Parental Socialisation; Peer Influence; Saving Culture; Strategic Determinants; Unit Trusts; and Young Adults Aged 18-24.

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