BBSE Research projects (2016)

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    The Use of dupont analysis in equity valuation : empirical study of Kenyan market
    (Strathmore University, 2016) Kigima, Jacqueline Wanjiru
    The paper examined the stock market's association with the information in the DuPont components variables through long-window tests and found that the market recognized the future Return on Net Operating Assets, RNOA, and implications of these components. To test whether stock market returns were associated with the DuPont components, the study conducted both long-window association and short-window information tests .There are two parts to the model, a cross-sectional analysis and a time series analysis. The study found that DuPont Decomposition of RNOA had been derived from a theoretical and parsimonious framework of valuation.Moreover, it related to operational assets of the firm unlike other analyses. Consequentially, long window stock returns were positively correlated to changes in asset turnover. The investing Kenyan public has a great deal of interest in the stock market. Unfortunately it is recognized that majority of local investors are not able to fully maximize their returns due to financial illiteracy.The paper seeks to educate investors by improving their financial analysis knowledge as a means to making better decisions that will result to overall improved portfolio performance.
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    Determinants that influence financial performance of microfinance institutions in Kenya: case study of Nairobi County
    (Strathmore University, 2015) Momanyi, Brigid Agnes
    According to (Lafourcade, Isern, Brown, & Mwangi, 2005), microfinance institutions in Sub-Saharan Africa include a broad range of diverse and geographically dispersed institutions offering financial services to low income clients, non-governmental organizations, non-bank financial institutions, cooperatives, rural banks, savings and postal financial institutions and an increasing number of commercial banks. (Hartungi, 2007) States that microfinance institutions playa vital role in the economic development of many developing countries. He further mentions that they offer loans and technical assistance in business development to low income communities in developing countries. (Hoque, 2011), suggest that microfinance institutions offer a variety of products, which include: remittances and transfers, payment services, insurance services and other ' financial products or services that are not offered by commercial banks to low income clients.
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    The X-efficiency of insurance companies in Kenya
    (Strathmore University, 2015) Ngugi, Kelvin Mungai
    This project seeks to determine the X-efficiencies ofboth life and non-life insurance companies in Kenya. It also establishes whether the X-efficiency ofthese insurance companies is affected by the type of business (life or non-life insurance companies), size of the finn and the profitability of the company. The data set consists of reinsurance costs, total benefits paid, administrative expenses, other expenses which altogether constitute the inputs and gross premiums are the outputs for the companies. The model to be used in this study is the Data Envelope Analysis. Using the Data Envelope analysis, the study shall be restricted to analyze the. efficiency of insurance companies by use of output-oriented Constant Return-to-Scale (CRS) . It is expected that firms operating at optimal economies of scale are expected to have the lowest costs and the resulting higher profits lead to higher market concentrations (Hao, 2004) . The results of the mean X-efficiency scores for the full sample of the large and small insurance companies was also determined. The large insurance companies recorded high mean efficiency scores compared to the small insurance companies. This implies that the larger insurance companies are operating efficiently relative to the small companies. The large insurance companies recorded a mean X-efficiency score of 69% compared to 29% for the small insurance companies. This means that the large insurance companies are operating at 69% output-oriented constant returns to scale while the small insurance companies are operating at 29% output-oriented constant returns to scale.
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    Shariah-stock screening-procedure Shariah-compliant listed-equities in Kenya
    (Strathmore University, 2015) Baricha, Aliabdi S.
    Kenya vision 2030 is the country 's development blue print covering the period 2008 to 2030, it aims at transforming Kenya into an industrialized middle-income country, and among the priority sectors that will see to this vision is the creation of a vibrant and a globally competitive financial service sector. This will create jobs and promote high levels of savings so as to finance Kenya's overall investment needs and make Kenya the regional financial services hub. The capital markets has been identified as a pivotal driver of the financial service sector, along the dimensions of increasing the accessibility/ deepening of formal financial services, efficiency when it comes to boosting liquidity ratios and the ratio of bonds turnover to bond market capitalization and stability in terms of reducing the volatility in the stock exchange indices.
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    Testing for market efficiency in Nairobi stock exchange: a serial correlation analysis
    (Strathmore University, 2016) Mwaniki, Charles Ngubia
    The study examined the weak-form informational efficiency in the Nairobi Securities Exchange (NSE), using a sample of data of both the NSE 20 and All Share Indices, in the period between January 1999 and January 2013. The study adopted a serial auto-correlation and regression method of analysis to examine the informational efficiency. The variables used in the study were market return proxies. The Serial Correlation test revealed that the NSE exhibited informational inefficiency, and that returns did not follow a random walk.