The Nexus Between Gambling Tax and the Gross Domestic Product in Kenya

This study seeks to assess the relationship between the tax rates imposed on each sub-sector, i.e. betting tax, lottery tax, gaming tax and prize competition tax, and the gross domestic product. The target population for this study include all licenced gambling operators in Kenya. Secondary data was obtained via request from the relevant authorities in Kenya. Regression analysis was performed on the data to model the relationship between the variables. It was found that an increase in the monetary amount of gambling taxes levied from winning punters and gamers would likely lead to a decrease in the GDP, whereas the same increase in the monetary amount of gambling taxes levied from winning lottery players and monetary prize winners would likely lead to an increase in the GDP. The study recommends that a moderate gambling tax regime should be imposed on all other operators except lotteries. Lottery winnings and prize competition winnings tax rates should be increased whereas betting winnings tax rates should be decreased

Effect of Earnings Per Shares on Capital Structure Choice of Listed Non-Financial Firms in Nigeria

The main objective of this paper is to examine the effect of financial performance on capital structure of listed non-financial firms in Nigeria. This was guided by assessing the earnings per share on capital structure choice. The causal research design was adopted while a total of 87 samples was included in the study. The estimated results are statistically significant at all levels of Capital Structure. Based on the significance of these results it was concluded that both the efficiency risk and franchise value hypotheses of the reverse causality hypothesis are observable in the capital structure choice of the firms

Effects of Corporate Governance on Financial Performance of Listed Insurance Firms in Kenya

The main objective of this study was to investigate the effects of Corporate Governance on the financial performance of listed insurance companies in Kenya. Specifically, this study examined board size, board composition, CEO duality and leverage and how they affect the   financial performance of listed insurance Companies in Kenya.  Firm performance was measured using Return on Assets (ROA) and Return on Equity (ROE). This study adopted a descriptive research design. The study population was all those insurance Companies which were quoted on the Nairobi Securities Exchange as at December 2012.  The primary data were collected through the administration of questionnaires to the staff in these listed insurance firms. Stratified random sampling technique was used to obtain the sample staff for the purpose of administering questionnaires.  Secondary data were collected using documentary information from Company annual accounts for the period 2007 to 2011. Reliability test was carried out using Cronbach’s alpha model. Both descriptive and inferential statistics were used. Data was analyzed using a multiple linear regression model.   The study found that a strong relationship exist between the Corporate Governance practices under study and the firms’ financial performance. Board size was found to negatively affect the financial performance of insurance companies listed at the NSE. There was a positive relationship between board composition and firm financial performance. However, the most critical aspect of board composition was the experience, skills and expertise of the board members as opposed to whether they were executive or non executive directors. Similarly, leverage was found to positively affect financial performance of insurance firms listed at the NSE. On CEO duality, the study found that separation of the role of CEO and Chair positively influenced the financial performance of listed insurance firms. Keywords: Corporate Governance, Insurance firms, Financial Performance  

CAPITAL EFFICIENCY AND DEFAULT RISK, EMPIRICAL EVIDENCE FROM COMMERCIAL BANKS IN KENYA

The main objective of this study was to determine effect of capital efficiency on default risk in commercial banks in Kenya. According to the bank supervisory report, the interest rate spread widened to 13 per cent at the end of December 2011 from 10.3 per cent by December 2010 which the CBK Governor termed as a sign of inefficiency in the banking sector. Secondary data was used in the study and descriptive survey design was applied. The target population was 42 Commercial Banks in Kenya out of which 2 were under receivership and 1 was under statutory management. Panel data for 39 commercial banks for the six years period from 2014 to 2019 were obtained from the CBK and individual bank websites. The study was guided by Agency theory, Moral hazard theory and Stakeholders theory. Descriptive statistics, correlation analysis and random and fixed effects were used for secondary data using E-views software. The findings indicated correlation coefficients of capital adequacy and return on equity of -0.14 and -0.11 respectively signifying a negative correlation between capital efficiency and non-performing loans. It was recommended that capital efficiency be strengthened to reduce non perfuming loans. JEL: G10; G20; G21 Article visualizations

Does Monitoring Influence Financial Accountability? Answers from National Public Secondary Schools in Kenya

The general objective was to assess the effect of monitoring on financial accountability in national public secondary schools in Kenya.103 national public secondary schools in Kenya were used in the study. Agency theory, Fraud triangle theory and accountability theory guided the research. Survey research was used to collect data from a populace of; 103 principals, 103 bursars, 103 BOM chairs. Questionnaires and audited financial statements were used to obtain data. Reliability was tested through Cronbach’s Alpha.The association between monitoring and financial accountability was established through a bivariate simple linear regression model which was fitted to assess the influence of Monitoring on financial accountability.  The regression coefficient estimate of Monitoring was (β =0.616, t=5.020, p-value = 0.000). It was recommended that frequent external audits by county auditors be done. The principal and bursar should be allowed to evaluate the work done by the auditors and post to the central website. Keywords：Monitoring, auditing, BOM oversight DOI: 10.7176/RJFA/10-18-14 Publication date:September 30th 201

Do Bank Size Moderate Relationship between Banks’ Portfolio Diversification and Financial Performance of Commercial Banks in Kenya?

Purpose- It is complicated to efficiently manage the bank’s portfolio, simultaneously maximize returns and minimize risks while being subject to managerial and regulatory constraints. In the financial industry, the size of a bank is used to assist in capturing economies as well as diseconomies of scale. Design/Methodology- As in cases of most literature from finance, natural logarithms of banks' total assets were made use of to measure commercial banks’ size. The 43 commercial banking institutions having an official license from CBK by December 2017 were the target population of this study. The study analyzed Time-Series Cross-Sectional unbalanced secondary panel data obtained from all the 43 commercial banking institutions in Kenya for fifteen years ranging from 2003 to 2017. Findings- Study findings revealed a positive effect of bank size on ROE and ROA that was significant. Correlation analysis revealed a positive association of bank size on the financial performance of banks in Kenya, which was significant. Bank size had a significant moderating effect on the relationship of banks portfolio diversification and financial performance of banks in Kenya. Practical Implications- The findings on bank size insinuated that a higher size of entire asset of banks is most probable to accelerate the bank to diversify into feasible opportunities on investment, traverse more enhanced lines of business, increase capacity in market power and, produce increased value that boosts the firm to profit from economies of scale and wider scope and henceforth superior and increased financial performance

Cost Efficiency and Default Risk in Commercial Banks in Kenya

The purpose of this study was to evaluate effect of cost efficiency on default risk in commercial banks in Kenya. Many literature show that there have been an increased number of significant bank problems in USA, Brazil, India, Pakistan Indonesia, Ghana and even Kenya. In Kenya, the ratio of gross non-performing loans to gross loans increased from 6.8 percent in December 2015 to 9.2 percent in December 2016, subsequently increasing the default risk. The banking sector in Kenya has undergone several changes from the early 1990’s that was characterized by high level of bank failures, non-performing loans and inefficiencies to the current period that exhibits high levels of profitability, innovations like mobile and internet banking, agency banking, unsecured lending and the introduction of credit reference bureaus. The National treasury had hinted at introducing regulations to curb the high interest rate regime after commercial banks recorded huge profit margins in a high interest rate environment, even though depositors had been left dry. According to the bank supervisory report, the interest rate spread widened to 13 per cent at the end of December 2011 from 10.3 per cent by December 2010 which the CBK Governor termed as a sign of inefficiency in the banking sector. Secondary data was used in the study and descriptive survey design was applied. The target population was 42 Commercial Banks in Kenya out of which 2 were under receivership and 1 was under statutory management. Panel data for 39 commercial banks for the six years period from 2014 to 2019 were obtained from the CBK and individual bank websites. The study was guided by Agency theory, Moral hazard theory and Stakeholders theory. Descriptive statistics, correlation analysis and random and fixed effects were used for secondary data using E-views software. The findings indicated that cost efficiency highly reduces loan defaults. It was recommended that cost efficiency be improved in all commercial banks to reduce loan defaults. Keywords: Cost efficiency, Default Risk DOI: 10.7176/RJFA/12-22-06 Publication date: November 30th 202

DOES CAPITAL STRUCTURE HAVE A MEDIATION EFFECT ON OWNERSHIP STRUCTURE AND FINANCIAL CORPORATE PERFORMANCE? EVIDENCE FROM KENYA

The objective of this paper was to determine the mediating effect of capital structure on the relationship between ownership structure and financial performance of non-financial firms listed on the NSE. The target population was forty-two firms; however, only thirty-five firms had consistency of data for a balanced panel regression for the period 2008-2017. The study adopted longitudinal quantitative research design with random-effects GLS and fixed effects models. The ownership structure was measured using managerial, institutional, government and retail ownerships while capital structure was measured using leverage ratio. In addition, financial performance was proxed by ROCE and Tobin’s Q. The analysis revealed that the capital structure has no significant mediating influence on managerial, government, and retail ownerships and financial performance. However, the study confirmed that there is a significant partial mediating effect of capital structure on the relationship between institutional ownership and quoted firm’s financial performance. The study recommends that the government should introduce initiatives that are aimed at attracting more investors since the current market is dominated by institutional investors. Finally, the study confirms stakeholders, stewardship and pecking order theories and rebuts capital structure irrelevancy and agency theories. JEL: D24, O16, O16  Article visualizations

Trading Volume and Fama-French Three Factor Model on Excess Return. Empirical Evidence from Nairobi Security Exchange

The main objective of this paper is to examine the effect of Trading Volume on excess return using the Fama-French three factor model of listed companies in Kenya. The research study employed a Quantitative research design to analyses the effect of Trading Volume on excess returns in Nairobi Security Exchange (NSE) during the period 2006 to 2015. Secondary data was used for this study. The study utilized descriptive statistics, correlation, unit root test, Heteroscedasticity, and Autocorrelation test as diagnostic tests. The regression results revealed that Market premium and Value premium (HML) and Trading Volume have a high explanatory power while the size premium (SMB) has a low explanatory power

THE IMPACT OF PRIVATE EQUITY ON VALUE CREATION AMONG LISTED FIRMS AT THE NAIROBI SECURITIES EXCHANGE

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