EVALUATION OF FACTORS INFLUENCING SMALL AND MICRO ENTERPRISES’ CREDIT WORTHINESS BY COMMERCIAL BANKS IN NAKURU TOWN, KENYA

Small and Micro Enterprises play a vital role in job creation and make significant contributions to economic growth in developed and developing economies alike. However, one on the main challenges of small and micro enterprise has been access to finances and capital. This study therefore sought to evaluate the factors influencing Small and Micro Enterprises credit worthiness by commercial Banks in Nakuru Town, Kenya. The specific objectives looked at: firm’s ownership, firm’s financial performance, credit information sharing and central bank regulations to determine how they affect credit worthiness of Small and Micro Enterprises from the perspective of commercial banks. The study was conducted among commercial banks in Nakuru Town using the survey research design. The target population was 68 bank staff involved in Small and Micro Enterprise lending who comprised of 34 credit managers and 34 Small and Micro Enterprise loans/relations officers; a census design was used to select all the members of the target population for study. The study used questionnaire as a collection tool of primary data. Data collected was coded and analyzed with the aid of computer programs Statistical Package for Social Sciences (SPSS) and excel computer programs. Quantitative data was analyzed using descriptive statistics which include frequencies and percentages. Chi square (x2 ) analysis was then done to determine how individual factors affected creditworthiness. Influence of independent variables on the dependent variable was then computed using the multiple regression analysis. The findings of the study were that the firm ownership, financial performance and credit information sharing had statistically significant relationship with credit worthiness while CBK guidelines didn’t .The study therefore recommended that commercial banks should develop a guideline for their SME clients outlining their criteria for determining ownership characteristic and their respective scores

Empirical examination of appropriateness of profitability ratios model in predicting shareholder wealth of Nairobi securities exchange listed non-financial firms, Kenya

Financial statements based on requirements of international accounting standards and specific legislative requirements are considered by users to be objective indicators of performance, financial strength and shareholder value of an organization. Financial statement analysis is structured and scientific basis on which investment decisions of a firm are anchored. Studies on profitability ratios have mostly been carried out in developed capital markets with little emphasis on developing securities markets such as Nairobi Securities Exchange (NSE). The objective of this study was to evaluate appropriateness of profitability ratios model in predicting shareholder wealth of non-financial firms listed at NSE. Correlational research design was used. The study population was all firms listed at NSE during five financial years 2012 to 2016. A census of all non financial firms was conducted because study population was small. It was established that information provided by profitability ratios pre-tax margin (PTM), net profit margin (NPM), return on assets (ROA) and return on equity (ROE) were not statistically significant in influencing choice of shareholders of non financial firms listed at NSE. Also profitability ratios model was not statistically significant appropriate in predicting shareholder wealth of non financial firms listed at the NSE

Appropriateness of Liquidity Ratios Model in Predicting Shareholder Wealth of Non-Financial Firms Listed at Nairobi Securities Exchange, Kenya

accessioned on 21/3/2022It is necessary that efforts are put in place by the global investing public to address the ever increasing need to accurately measure performance and financial strength of firms (Pandey, 2013). Analysts of financial statements and investors at the stock market consider a multiplicity of factors and metrics when making decisions on what stocks to invest in. Not much is known on whether change in market prices of securities really reflects results of published financial statements. Whether liquidity ratios models is appropriate for predicting the market prices of shares of firms listed at the Nairobi Securities Exchange (NSE) is the sole question this study endeavours to address. Correlational research design was used. A census of all non financial firms listed at the NSE was conducted and secondary data collected through computation of average rate of change (AROC) in market price of shares, computation of current ratios (CR) and net working capital to total assets (NWCTTA) of non financial firms listed at the NSE for the financial years 2012 to 2016. Panel data was analysed using descriptive statistics, inferential statistics and diagnostic tests. Inferential statistics involved development and testing of predictive ability of liquidity ratios panel data regression model. It was established that announcement of annual financial statements led to a positive mean AROC in market price of shares. Liquidity ratios did not have statistically significant influence on AROC in market price of shares. CR had a statistically insignificant negative effect while NWCTTA ratio had statistically insignificant positive effect on AROC in market price of shares for non financial firms listed at NSE. Also the liquidity ratios model was found not to be statistically significant appropriate in predicting shareholder wealth of non financial firms listed at NSE