The Effect of Size on Financial Performance of Commercial Banks in Kenya

The question of whether size influences financial performance of commercial banks has not been conclusively settled empirically. The objective of the study was therefore to establish the effect size has on the profitability of commercial banks in Kenya. The study used an unbalanced panel of all commercial banks in Kenya for the ten year period 2007 to 2016 (the number ranged from 39 to 43). Regression analysis was used to relate size (proxied by log of total assets) against financial performance (Return on assets and return on equity). Size was found to have a positive effect on financial performance of commercial banks in Kenya. In addition, the effect was stronger the larger the commercial bank. The study recommends that policy initiatives geared towards increasing the size of the commercial banks be considered and shareholders/managers could also adopt growth strategies (internally generated, fund raising or mergers and acquisitions)

Dividend theory and empirical evidence : a theoretical perspective

Objective: The objective of this study is to theoretically review the existing theoretical and empirical literature on dividend policy to understand the status and applicability of the theory in different economies and to discover any potential knowledge gaps for further research. -- Study Design and Methodology: This is a descriptive analysis of existing theoretical literature and its application in different economies. The study used a sample of empirical studies to gather empirical evidence. -- Findings: Dividend policy has a significant role in the firm decision-making process, a uniform dividend policy for all firms may not be feasible because of the differences in firms’ ownership, investor’s preference and firm characteristics, firms maintain a consistent dividend policy to avoid giving wrong signals to investors. The study also confirms inconsistency in the application of existing dividend theory with empirical evidence in different markets. We find that the ownership structure of a firm has greater influence in the firm decision-making process and recommend future studies should explore the extent to which ownership structure influences dividend policy and firm value. -- Significance of the study: This study provides a framework for evaluating dividend policy practices between developed and developing countries, evaluate the relevance and applicability of dividend theory within the context of developing economies and identify the best dividend policy practices. The study will form part of the body of knowledge in the finance literature that will enable scholars to appreciate the critical issues involved in dividend policy decisions and provide a base for identifying knowledge gaps for further research.peer-reviewe

THE DETERMINANTS OF FINANCIAL PERFORMANCE IN GENERAL INSURANCE COMPANIES IN KENYA

The contribution of the general insurance industry in Kenya to the gross domestic product is at 2.08%. This is low and hence the need to establish factors that can influence improved performance of some of the key players – the general insurance companies. The study was therefore to establish the factors that affect the profitability of general insurers in Kenya. The study employed multiple linear regression, with return on assets as the dependent variable, and considered all the general insurance companies in Kenya for the period 2009-2012. Profitabilitywas positively related to leverage, equity capital, management competence index and negatively related to sizeand ownership structure. The study did not find a relationship between performance and retention ratio, liquidity, underwriting risk and age. The study recommends that for general insurers in Kenya to perform better they should increase leverage, equity capital and quality of staff

Effects of Underwriting and Claims Management on Performance of Property and Casualty Insurance Companies in East Africa

The insurance sector plays an important role in service economy of any country by underwriting of risks inherent in most sectors thus providing a sense of peace to most economic entities. Performance of general insurance companies is expected to be related to various factors, including optimal underwriting and prompt and efficient claims management functions. This study investigated the effect of underwriting and claims management practices on the performance of general insurance firms in East Africa. The study employed multiple linear regression analysis using primary and secondary data collected from 82 general insurers in Kenya, Uganda and Tanzania. The findings show that there is a significant positive relationship between underwriting and claims management practices employed by the firms and non-financial performance, but the relationship with financial performance was insignificant. The implication is that a profit oriented insurance firm should embrace a claims function that is closely related with the underwriting and pricing of the firm’s portfolio for meaningful results. It is recommended that general insurance companies focus on other important factors besides underwriting and claims management order to improve overall financial performance

Financial Literacy and Financial Wellbeing of Public Sector Employees: A Critical Literature Review

There is a great concern from researchers, government, and professional bodies about how consumers, households, students and employees manage their finances. A great number of people from both developed and developing countries are reported to be financially illiterate. Employees today are facing serious challenges in financial decision making that seems to emanate from the changes in financial markets and in social security pension schemes. They have access to financial literacy sessions at their workplaces yet this is not always reflected in the kind of lives they live. This provokes the question ‘does a more financially literate employee enjoy better financial wellbeing than a less literate person?’ The current study therefore seeks to critically review the literature to establish the documented relationship between financial literacy and financial wellbeing and possible intervening and moderating variables. The existing literature gaps are identified and recommended for further research. The results from the literature review indicate that financial literacy and financial wellbeing are defined and measured differently. Additionally, there seem to be a positive relationship between financial literacy and financial wellbeing but this relationship is intervened and moderated by financial decisions and demographic factors respectively

THE EFFECT OF CORPORATE GOVERNANCE PRACTICES ON EARNINGS MANAGEMENT OF COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE

The objective of the study was to establish the effect of corporate governance practices on earnings management of companies listed at the Nairobi Security Exchange (NSE). The target population consisted of the 49 companies that had been continuously and actively trading at the NSE between January 2010 and December 2012. Secondary data was used covering the period 2010 to 2012 and analyzed using linear regression to test the effect of the independent variables on the dependent variable. The study found that earnings management is negatively related to ownership concentration, board size and board independence but positively related to board activity and CEO duality. The study recommended the need for effective corporate governance practices in listed companies in Kenya to contribute to reduced earnings management and avert possible collapse of listed companies in Kenya

Effect of Technology Based Financial Innovations on Non-Interest Income of Commercial Banks in Kenya

Technology based financial innovation has had a great impact on the financial industry as a whole over the past few decades. It has presented the banking sector with an opportunity to increase the revenue base. This study intended to identify the impact of technology based financial innovation on non-interest income in Kenyan commercial banks. The study investigated how the adoption of ATMs and Cards, Internet and Mobile Banking and use of Funds Transfer Systems such as RTGS and EFT has impacted the non-interest income of commercial banks in Kenya. Descriptive research design was utilised. The study found that technology based financial innovation has significant effect on the non-interest income earned by commercial banks in Kenya. It recommends all stakeholders in commercial banks to take any investments made towards technology based financial innovation products as a strategy to improve non-interest incom

The Relationship Between Macroeconomic Factors and Mortgage Market Growth in Kenya

The mortgage market is the market for financing real estate assets. Mortgage financing is vital in financing the property market. This study seeks to determine the relationship between selected macro factors and mortgage market growth in Kenya. The study is based on the arbitrage pricing theory, capital assets pricing theory, title theory and lien theory of mortgages. The study utilizes descriptive research design and quarterly secondary data for a period of 10 years from 2007 to 2016. Analysis of data is carried out through descriptive and inferential statistical techniques. Inferential statistics such as linear correlations and multiple linear regressions are used to draw conclusions and make predictions on the relationship between the independent variables and the dependent variable. The research establishes that there is a positive and significant relationship between interest rates, inflation and the mortgage market growth. The research also finds that there is insignificant relationship between exchange rates, gross domestic product and the mortgage market growth. The research concludes that the mortgage market growth in Kenya is influenced by interest rates and inflation. The research recommends that the central bank of Kenya should ensure that interest rates are stable and inflation levels are low to ensure that they do not affect the mortgage market growth

THE EFFECT OF CORPORATE GOVERNANCE PRACTICES ON EARNINGS MANAGEMENT OF COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE

The objective of the study was to establish the effect of corporate governance practices on earnings management of companies listed at the Nairobi Security Exchange (NSE). The target population consisted of the 49 companies that had been continuously and actively trading at the NSE between January 2010 and December 2012. Secondary data was used covering the period 2010 to 2012 and analyzed using linear regression to test the effect of the independent variables on the dependent variable. The study found that earnings management is negatively related to ownership concentration, board size and board independence but positively related to board activity and CEO duality. The study recommended the need for effective corporate governance practices in listed companies in Kenya to contribute to reduced earnings management and avert possible collapse of listed companies in Kenya

Financial Structure and Operating Efficiency of Housing Cooperative Societies

Housing co-operatives contribute to the social-economic growth of a country. They are voluntary in concept and owner-user and based on members’ loyalty. Therefore, this study sought to establish the relationship between financial structure and operating efficiency on housing co-operative Societies in Nairobi City County, Kenya. The data collection form was used to record data of all the elements of financial structure and operating efficiency from audited financial statements. Housing co-operatives, which constituted 50.3% of response rate were analysed using a two-stage process: data envelopment analysis and regression analysis. The first stage involved the use of DEA model to compute the efficiency scores, which were regressed in the second stage using linear regression analysis. The results from DEA output indicate that most of the housing co-operatives were inefficient while the regression results indicated that a positive and significant relationship existed between financial structure and operating efficiency. Therefore, this study recommends that housing co-operatives should formulate strategies that would grow their operations to reduce operational costs and enhance management efficiency. Besides, there is a need for housing co-operatives' boards of directors to make prudent investment decisions that would help members’ maximize social and economic goals