Master Theses: Department of Economics
http://repository.embuni.ac.ke/handle/embuni/3870
2024-03-29T07:55:46ZCapital adequacy,income diversification,competition and liquidity creation of Commercial Banks in Kenya
http://repository.embuni.ac.ke/handle/embuni/4265
Capital adequacy,income diversification,competition and liquidity creation of Commercial Banks in Kenya
Kinini, Dennis Muchuki
Banks create liquidity which in turn improves capital allocation and accelerates
economic growth. Liquidity creation is essential and critical as it may lead to a stable
financial system and provide growth opportunities. Liquidity has been observed to be
more unstable in developing countries than in developed nations. Despite the rise in
minimum deposits, commercial banks in Kenya, a developing country, struggle to
optimize their profits due to reduced liquidity creation capacity. This study aimed to
evaluate how capital adequacy, income diversification and competition impacted
Kenyan commercial banks' ability to create liquidity. From 2001 to 2020, the study
employed unbalanced panel data from Kenya's 36 licensed commercial banks. Data was
extracted from published financial statements and reports from banks. The two-step
system generalized method of moments approach was used in the study. To increase the
robustness and prevent erroneous conclusions, cross dependence, serial correlation and
instrumental validity tests were carried out. Berger and Bouwman's method was used to
determine the liquidity creation levels of commercial banks. The capital adequacy liquidity creation link of commercial banks was found to be significantly negative,
supporting the financial fragility-crowding out hypothesis. The study found a positive
linkage between income diversification and liquidity creation of commercial banks,
implying that well-diversified banks have a high level of liquidity creation and vice
versa. The study also found a significant negative effect of competition on liquidity
creation, depicting competition's value-destroying effect. A tradeoff exists between
capital adequacy and liquidity creation, which must be carefully evaluated as changes in
capital requirements are considered. Due to this tradeoff, there is a need for an optimal
level of capital. The findings suggest that reinforcement of the diversification drive in
Kenyan commercial banks is necessary. The value-destroying effect on liquidity
creation by competition presented a case for policymakers geared toward consolidating
banks' operations through possible mergers and acquisitions. The study has important
implications for Kenya's financial sector, as it guides managers and other stakeholders
regarding measures that can be taken to increase commercial banks' liquidity creation
through capital requirements, diversification, and consolidation of banks
2023-08-01T00:00:00ZBUDGETARY CONTROLS, REVENUE MOBILIZATION, CORPORATE GOVERNANCE AND FINANCIAL SUSTAINABILITY AMONG PUBLIC UNIVERSITIES IN KENYA
http://repository.embuni.ac.ke/handle/embuni/4241
BUDGETARY CONTROLS, REVENUE MOBILIZATION, CORPORATE GOVERNANCE AND FINANCIAL SUSTAINABILITY AMONG PUBLIC UNIVERSITIES IN KENYA
KARITU, LINDA KAWIRA
The obligation of meeting current and future mandate of public universities remains a big challenge as the universities are required to work within very tight budgetary constraints. Thus, the objective of financial sustainability is to ensure an institutions goals are reached by ensuring there is sufficient income for investment in academic and research activities. The costs of universities activities are rising which leads to the financial sustainability of universities being a primary issue of concern to stakeholders. The declining allocation to public universities from government exchequer has led to inadequate facilities and stalled projects in many universities. As a result, public universities in Kenya need to diversify their revenue sources through commercialization activities and developing market-oriented programmes. Public universities in Kenya are currently in a deep financial crisis that could lead to a closure following the decline in revenues thus the need for the universities to identify ways in which they can continue to remain financially sustainable. The study sought to assess the effects of budgetary controls, revenue mobilization and corporate governance on financial sustainability among public universities in Kenya. The study was anchored on the resource dependency theory, stakeholder theory and agency theory. The target population was the 31 public universities in Kenya as at the year 2019. The study relied on secondary data which was collected from published audited financial statements from the auditor general’s report. Data was analyzed using both descriptive and inferential statistics. To determine the nature of the panel data and the best model for analysis, specification tests for multicollinearity, autocorrelation, Hausman, heteroscedasticity, and normality tests were carried out. The study established that the administration of the public universities was able to spend the universities funds in accordance with the budgets for the years 2014/15 and 2015/16, and this enhanced financial sustainability. However, for the years 2016/17, 2017/18 and 2018/19, the case was different, as the universities were operating on budget deficits as a result of low amounts of Module 2 funds, and thus the universities were financially unsustainable. Further, the management of the public universities were able to mobilize the resources for the universities, especially in the years 2014/15 and 2015/16. However, for the years 2016/17, 2017/18 and 2018/19, the universities resource mobilization went down, as a result of reduction in the number of students that enrolled into the universities. The study further concluded that the universities adhered to the stipulated rules of corporate governance and this contributed to the financial sustainability of the universities. Based on the findings, the study makes the following recommendations; the budgeting committee should readjust the budgets to cater for the amount of the funding that is available. This will reduce wastage, and ensure that the university runs on optimal budgets, thus enhancing financial sustainability. The administration of the public universities should embark on alternative revenue sources, so as to bridge the gaps in the shortfalls of the funding from the Government. Income generating projects should be geared at generating revenue to cater for the budget shortfalls. The universities should consider establishing strong alumni base that will help the universities in consultancy services, funding of research and sourcing for donor funding.
2021-01-01T00:00:00ZLiquidity Management and Financial Performance of Microfinance Institutions in Kenya
http://repository.embuni.ac.ke/handle/embuni/3709
Liquidity Management and Financial Performance of Microfinance Institutions in Kenya
Njue, Alex
Liquidity management is one of the most important duties in any company and thus it
cannot be overlooked. Sound liquidity management is integral for financial institutions
stability and profitability since deteriorating liquidity management is the most
recurrent cause of poor financial performance. In many financial institutions, the
biggest risk is lending money and not getting it back leading to liquidity problems as
most MFIs in Kenya have no access to a lender of the last resort which is the Central
Bank of Kenya. The study investigated the effect of liquidity management on the
financial performance of MFI's in Kenya. Secondary data on the study variables were
deduced from the audited financial statements of the MFIs under consideration. The
data was obtained from the CBK website, CBK’s Annual Supervision reports and also
the AMFI annual reports for 5 years from 2012-2016. The desired population of the
research consisted of all the twenty-six MFIs in Kenya that were members of AMFI
and available at the CBK website. Primary data was collected using questionnaires
whereas the secondary data involved analysis of the audited financial statements. The
study used both descriptive and inferential statistics to evaluate the data. In descriptive
analysis mean, and standard deviation of the responses was analyzed whereas, under
inferential statistics, Pearson correlation, panel power correlation and regression
analysis were adopted. The analysed data indicated that liquidity management
practices fundamentally influenced the financial performance of MFIs in Kenya. The
asset quality and maturity gap had a negative but insignificant effect on financial
performance whereas capital adequacy had a positive and significant effect on the
financial performance of MFIs. The study proposes that MFIs should strive to manage
their loan portfolio to reduce delinquent loans as they reduce the MFIs profits, bank
advances to customers should also be managed not to exceed customer deposits to
reduce the liquidity gap. Management should develop strategies for liquidity
management in MFIs. Similarly, capital adequacy enabled the MFIs to absorb shocks
that may occur within the financial markets and should be managed to prevent MFIs
from financial instability to improve financial performance.
Thesis
2020-12-11T00:00:00ZFinancial Factors Affecting Liquidity of Savings and Credit Co-operative Societies in Kirinyaga County, Kenya
http://repository.embuni.ac.ke/handle/123456789/2038
Financial Factors Affecting Liquidity of Savings and Credit Co-operative Societies in Kirinyaga County, Kenya
Githaka, John M.
Savings and Credit Co-operative Societies are quasi financial institutions that mobilize savings, provide loans as well as other products to their members. Liquidity is considered as one of the serious concern and challenge for the modern era SACCOs. A SACCO having good asset quality, strong earnings and sufficient capital may fail if it is not maintaining adequate liquidity. The general objective of the study was to assess the financial factors that influence liquidity of Savings and Credit Co-operatives Societies in Kenya. A cross-sectional survey research design was used in this study. The target population consisted of all the 60 registered SACCOs in Kirinyaga County from which a sample size of 18 SACCOs was drawn. The study employed stratified random sampling technique. Primary data was collected by use of self-administered semi-structured questionnaires, while secondary data was collected from audited financial statements of the SACCOs and regulator. A pilot test was conducted to ascertain the validity and reliability of questionnaire. The Cronbach’s alpha coefficient was used for reliability test while the content validity technique was used in validating the research instruments. The data was analyzed using descriptive statistics tools such as percentages, mean, standard deviation, mode and variances. Inferential statistics was done by use of Pearson’s product moment of correlation. Multiple regression analysis was performed to assess the relationship between study variables. R2 was used to assess the contribution of independent variable on dependent variable. Data was presented using frequency tables, charts and graphs. The F-test was used to evaluate the significance of the obtained results. The study findings is of great importance to the SACCO management to formulate proper policies. The study helps the regulator and the government to improve on the framework for regulation of SACCO’s. The study found the relationship between liquidity management, net cash flows, credit lending and investment in non-core business and liquidity of SACCOs to be positively correlated. The study concluded that SACCOs in Kirinyaga County mostly capitalized on liquidity management and as such it affected the SACCOs’ liquidity. In addition, the study concluded that it was critical for SACCOs to have adequate liquidity in order to ensure that they meet short term maturing obligations. The study also concludes that cautious credit lending in SACCOs would result to helpfulness in liquidity of SACCOs. The study recommends that the SACCO management must put in place financial strategies to ensure that liquidity is effectively managed on a regular and timely basis and that appropriate policies and procedures are established to limit and control material sources of liquidity risk. It also recommends that SACCOs should also reconsider their loan recovery strategies and collateral for their loans and advances.
2017-08-01T00:00:00Z