Articles: Department of Business

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Bandwidth selection in smoothing functions
(2006) Kibua, T.K.; Karuku, M.
A simple criterion for selecting a bandwidth parameter that controls the amount of smoothing in functions is described. The procedure is computationally inexpensive and, hence, worth adopting. We argue that the bandwidth parameter is determined by two factors: the kernel function and the length of the smoothing region. We give an illustrative example of its application using real data.
Influence of Budgetary Controls on Service Delivery in County Government of Nakuru in Kenya
(2010-10) Kimani, Elijah M.; Ojwang, B.O.
In spite of collecting revenue from their jurisdictions, none of the county governments is financially autonomous. They have to rely on the disbursements from the central government. The general objective of this study was to evaluate the influence of budgetary controls on service delivery in the County Government of Nakuru in Kenya. Of specific focus was the influence of revenue maximization and performance adjustment on service delivery. A crosssectional survey research design was adopted. All the 121 employees working with accounts/finance department of Nakuru County Government comprised the accessible population. Stratified random sampling technique was adopted to draw a sample of 66 respondents from the accessible population. This study used a self-administered, structured questionnaire to collect data. A pilot study was conducted before carrying out the main study. The collected data was analyzed with the aid of the Statistical Package for Social Sciences. Data analysis captured both descriptive and inferential statistics. The results of the analysis were presented in form of tables. The study revealed that budgetary controls influenced service delivery in the County Government of Nakuru. Performance adjustments were found to be the most important in influencing service delivery. The study inferred that the county government has been striving to maximize revenue collection. Revenue maximization and performance adjustments were concluded to be important parameters in improving service delivery. The study recommends that the county government ought to seal all loopholes that funds may be lost while automating revenue collection. These county governments are further advised to be flexible enough in order to adjust their budgets in the wake of unforeseeable macroeconomic effects.
Factors Influencing Sample Size for Internal Audit Evidence Collection in the Public Sector in Kenya
(IJAME Publication, 2012) Kamau, Guandaru C.; Kariuki, Samuel N.
The internal audit department has a role of providing objective assurance and consulting services designed to add value and improve an organization’s operations. In performing this role the internal auditors are required to provide an auditor’s opinion which is supported by sufficient and reliable audit evidence. Since auditors are not in a position to examine 100% of the records and transactions, they are required to sample a few and make conclusions on the basis of the sample selected. The literature suggests several factors which affects the sample size for audit purposes of the internal auditors in the public sector in Kenya. This research collected data from 32 public sector internal auditors. The research carried out simple regression and correlation analysis on the data collected so as to test hypotheses and make conclusions on the factors affecting the sample size for audit purposes of the internal auditors in the public sector in Kenya. The study found out that that materiality of audit issue, type of information available, source of information, degree of risk of misstatement and auditor skills and independence are some of the factors influencing the sample size determination for the purposes of internal audit evidence collection in public sector in Kenya
Impact of Financial Literacy on Access to Financial Services in Kenya
(2012-10) Wachira, Isaac M.; Kihiu, Evelyne N.
The main thrust of this study is to establish the impact of financial literacy on access to financial services in Kenya using the 2009 National Financial Access (FinAccess) survey data. Using a multinomial logit approach to explain access the the four major financial service access strands, the study found that financial literacy remains low in Kenya. Besides, regression results indicate that households’ access to financial services is not based on levels of financial literacy but rather on factors such as income levels, distance from banks, age, marital status, gender, household size and level of education. However, the study established that the probability of a financially illiterate person remaining financial excluded is significantly high calling for increased investment in financial literacy programs to reverse the trend. The study recommends the development of a curriculum on financial education and administer it in local, middle level and higher learning institutions.
Factors influencing development of financial derivatives markets: a survey of listed companies in Kenya
(2013-05) Matumo, Gabriel; Kimani, Maina E.; Ngugi, Nahashon
The Kenyan economy is becoming more and more open with international trading constantly increasing and as a result Kenyan firms become moreexposed to foreign exchange rate fluctuations. The relative price changes affect the firms’ competitive market position, leading to changes in cash flows and ultimately, in firms value. While it was observed that firms use a variety of instruments to manage financial risks, it was not clear whether the full potential of these instruments is being realized since not all firms use derivatives and notall firms use all types and more important, whether they are used appropriately. The study found out that the use of financial derivatives instruments by quoted companies in Kenya is mainly influenced by legal and regulatory framework, market environment, operational efficiency and the role offinancial market intermediaries. Hence the study concluded that there is need of building upon existing financial derivatives instruments so as to enhance efficiency and effectiveness in their use in Kenya as modern tools for financial risk management.
The impact of front office Sacco activity on Sacco performance in Kenya; A case study of Meru South and Maara district in Tharaka Nithi County in Kenya
(2013-05) Ngugi, Nahashon; Matumo, Gabriel; Kimani, Maina E.
While Savings and Credit Co-operative Societies (Saccos) are an autonomous Association of Persons united voluntarily to meet their economic and social needs, their performance has been affected by low capital base. Their capital base is low, thus limiting loanable funds to members. To cope with this problem, many Saccos have introduced Front Office Sacco Activity (FOSA), in order to strengthen their capital base and liquidity level. FOSAs offer simple banking services to members/customers, thus improving their working capital. This study is meant to find out the impact of FOSA operations on Sacco performance in Kenya; A Case of Meru South and Maara Districts in Tharaka Nithi County. The Research Design was descriptive in nature. The intended population of the study was the three Saccos with Front Office Sacco activity in the two districts. The county has four SACCOs with FOSAs but one started operation with FOSA since inception. The researcherused Secondary Data in this study for a period of six years. This included three years before and after operating FOSAs. Correlation analysis was used to analyze the data. The findings of the study revealedthat FOSAs can improve the performance for Saccos.
Effect of Government Regulations on the Relationship Between Return on Investments and Financing of Water Investments In Nairobi Peri-Urban Markets in Kenya
(2014) Kimani, Maina E.; Ngugi, Nahashon; Matumo, Gabriel
For any economic development it is important to finance infrastructure such as water and sanitation. Water has historically been viewed as public good not as a market commodity and thus water utilities have not been able to generate sufficient internal revenue to ensure sustainable financial investment. There is a low level of investment in the sector by both public and private players especially in peri-urban areas in Kenya. Many people in these areas still do not have access to basic water resulting to millions of illnesses and death every year from water related issues. Scarcity of water in peri-urban areas has created investment opportunity yet there is little participation of private players. The study explored effect of government regulations on the relationship between return on investments and financing of water investments in Kenya. The study adopted cross-sectional survey research design. The accessible population for this study was 1500 small scale water providers registered by Water Service Regulatory Board. A two stage sampling technique was used to obtain a sample population of 150 small scale water service providers. The study utilized self administered semi-structured questionnaire and content analysis for collecting data. Structure Equation Modelling (SEM) was used to measures the relationship between return on investments and financing of water investments. The findings of the study indicated government regulations influences financing of water investments, low return on investments, among small scale water service providers limits supply of water in peri-urban markets. It was therefore recommended that the government should enhance tariff reviews, performance monitoring and efficient metering and billing. This would lead to high return on water investments. Water utilities will thus be able to generate sufficient internal revenue to ensure sustainable financial investment. The results of the study will be of great importance to both public and private water utilities. This will contribute to greater understanding of various challenges that the utilities go through in trying to make water accessible to peri-urban population.
Analysis of factors influencing access to credit services by women entrepreneurs in Kenya
(IISTE, 2014) Karanja, John Gakuu; Mwangi, Anthony Kiragu; Nyakarimi, Samuel N.
The purpose of this study was to analyze the factors influencing access to credit services by women entrepreneurs in Kenya; a case of Isiolo town. Entrepreneurship has been regarded as a major contributing factor to the economic growth and poverty alleviation both in urban and rural areas. Organizations for Economic Co-operation and Development (OECD) reports indicate growing phenomena of women entrepreneurship both in developed and developing countries. In some countries, women-owned businesses are increasing at a very rapid pace in terms of both numbers and turnover. The scope of the study was selected from financial lending institutions in Isiolo County and women entrepreneurs targeting those who are members or have accounts in these financial institutions. There are 6 registered FIs operating within the Isiolo town which has a total of 18 management employees and 20 registered women entrepreneurs. The researcher conducted a census on the FIs managers and as well as women entrepreneurs in Isiolo town from the target population. To analyze the data, the researcher applied the chi-square testing the hypothesis of the study. The study recommends that the financial institutions should establish lending procedures which will attract women entrepreneurs and accommodate them in access of credit. It also recommended that the financial institutions should encourage the use of affordable collaterals that will ensure that women entrepreneurs are able to access credit. Lack of affordability collateral was one of the challenges that was highlighted as hindrances to women accessing credit. The financial institutions should ensure that they train women entrepreneurs on investment opportunities in order to increase purposes of credit for women entrepreneurs. This will ensure women entrepreneurs will always have a purpose to do with credit advanced to them by financial institutions.
Exploring internal auditor independence motivators: Kenyan perspective
(Science Publishing Group, 2014-03) Kamau, Guandaru C.; Kariuki, Samuel N.; Mutiso, Agnes N.
The institute of internal auditors expressed the role of internal audit as that providing objective assurance and consulting services designed to add value and improve an organization’s operations. In performing thisrole the internal auditors are required by the international standards to exercise professional independence and objectivity. Audit independence means freedom from conditions that threaten mental attitude which is unbiased. The literature suggests several factors which affect the audit independence in Kenya, which are explored in this study. The study collected its data using a self-made questionnaire which was distributed amongauditors in Kenya so as to establish the status ofinternal auditor’s independence in Kenya. The data collected was subjected to multiple regression analysis so as to testhypotheses and make conclusions on internal audit independence and its motivators in Kenya. The study established that that auditor’s involvements in management and audit committee effectiveness, among other factors have significant influence on the internal auditor’s independence in Kenya.
Remittances and Economic Growth in Kenya (1970-2010)
(2014-03) Ocharo, Kennedy N.
Statisticshow that remittances to Kenya have been increasing over the years. Studies on the effect of remittances on economic growthin Kenya are limited and have not included private capital inflows as one of the determinants of economic growth. This studyinvestigated the effect of remittances on economic growth in Kenya. Data was sourced for the World Bank's African DevelopmentIndicators and various Economic Surveys and Statistical Abstracts for the period 1970-20 IO. The study used the ordinaryleast squares estimation to determine the effects of remittances on economic growth. The study found that the coefficientof remittances as a ratio of gross domestic product was positive and significant. The Government of Kenya should putinplace policies that encourage remittances.
Private capital inflows and economic growth in Kenya
(2014-04) Ocharo, Kennedy N.; Wawire, Nelson W.; Ng’ang’a, Tabitha K.; Kosimbei, George
Most studies on private capital inflows and economic growth are cross-country and give more weight to foreign direct investment than the other components of private capital inflows. In addition, the question as to whether it is private capital inflows that promote economic growth or it is economic growth that attracts private capital inflows has not been investigated in Kenya. This study investigated the causality between foreign direct investment, portfolio investment and cross-border interbank borrowing and economic growth; and analyzed the effect of foreign direct investment, portfolio investment and cross-border interbank borrowing on economic growth in Kenya. The study found that there was a unidirectional causality from foreign direct investment to economic growth and from economic growth to cross-border interbank borrowing. The coefficient of foreign direct investment as a ratio of gross domestic product was positive and statistically significant, and the coefficients of portfolio investment as a ratio of gross domestic product and cross-border interbank borrowing as a ratio of domestic product were positive and statistically insignificant. Following these results, the Government of Kenya should work towards an environment that attracts foreign direct investment and pursue a high and sustainable economic growth rate so as to attract cross-border interbank borrowing.
Strategic Organisation Development and Project Performance of Not for Profit Organisations’ In Isiolo Sub-County-Kenya
(2014-06) Mucai, Gitau P.; Karani Frida W.; Murigi, Laureen M.
The study was conducted to establish the influence of strategic organization development strategies on the performance of not for profit organizations projects in Isiolo district. The study was developed from a problems facing sustainability of not for profit organization projects due to inadequate application of strategic methods of running their operations. As a result many projects after completion an handover fail to continue delivering the benefits they were intended to. The findings of the study were found to be of great use to not for profit organization programme managers who will have more information on the techniques they can apply to enhance project sustainability. The study revealed areas of further research for future researchers. The study was guided by the specific objectives to establish how resource mobilization, stakeholder participation and strategic partnerships influence the performance of not for profit organizations’ projects. Hypotheses were also tested and data analyzed using logistic regression. The survey research design was used, purposive, convenient sampling and the primary data collection technique was structured questionnaires. The number of respondents was fifty two not for profit organization programme managers. The findings of the research established that stakeholder participation and resource mobilization do not significantly affect performance of not for profit organization projects whereas there is a significant relationship between strategic partnerships and performance of not for profit organization projects. The researchers therefore recommend that more levels of stakeholder involvement be undertaken and financial resources be prioritized for projects under implementation.
Determinants of Corporate Capital Structure among Private Manufacturing Firms in Kenya: A Survey of Food and Beverage Manufacturing Firms
(Human Resource Management Academic Research Society, 2014-07) Kamau, Guandaru C.; Kariuki, Samuel N.
The purpose of this study was to investigate factors influencing corporate capital structure in private firms in Kenya. Although the capital structure issue has received substantial attentio n, it is noteworthy that most of the empirical work done focuses on data derived from developed economies that have many institutional similarities and their applicability in developing markets such as Kenya is not documented. Yet, the maintenance of an optimal capital structure is considered as one area where decision makers can influence the company’s value and risk. Specifically, the objectives of the study were to establish whether growth opportunities, firm size, firm profitability, and asset tangibility influence corporate capital structure. The study adopted a descriptive survey research design. The study population comprised 121 Food and Beverage private manufacturing firms registered with the KAM that are located in Nairobi and surrounding area. A sample of 36 firms was selected for the survey using stratified random sampling technique from which 30 questionnaires were returned. Primary data was sourced through personally administered questionnaires to the CFOs. Data was analyzed using descriptive statistics and inferential statistics. Multiple regression analysis was used to determine the interplay between the independent variables and dependent variable. Based on the findings, the study concludes that growth opportunities positively influence capital structure; firm size negatively influences the capital structure, there is an insignificant negative relationship between firm profitability and the capital structure, and there is insignificant positive interaction between asset tangibility and the capital structure of private firms in Kenya.
Socio-economic Effects of Mpesa Adoption on the Livelihoods of People in Bureti Sub County, Kenya
(HRmars, 2014-12) Njeru, Samuel Gitonga; Abura, Gilbert Odilla; Gikunda, Raphael Mwiti
MPesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007. Its adoption is country wide; both in the urban and rural areas. Mpesa enables the users to send money in electronic form, store money on a mobile phone in an electronic account and deposit or withdraw money in the form of hard currency at any of the Mpesa agents, pay bills and purchase goods and services. The purpose of the study was to identify socio-economic effects of Mpesa adoption on the livelihoods of people in Bureti Sub County. The study adopted a survey research design. The sample of study comprised of 105 Mpesa owners and operators selected purposively from three divisions: Roret; Cheborge, and Buret. Data for this study was obtained mainly from primary sources collected using a structured questionnaire. Data was analyzed using descriptive and inferential statistics. Spearman’s rank correlation coefficient was used to test hypotheses. Among the respondents 54% were male and 46% were female. The results indicate that majority (45%) of the Mpesa shops had been in operational between 2 and 3 years. The study established a positive correlation between Mpesa and creation of employment (correlation coefficient of 0.334), Mpesa and access to credit facilities with a coefficient of 0.141 and, Mpesa and income generation with a coefficient of 0.356. This shows that Mpesa operation had improved peoples’ livelihood in Bureti Sub County by creating employment opportunities, increasing income generation, access to credit facilities and social capital between families and friends. In order to fully tap the benefits of Mpesa in the area, its services should be extended to all parts of the Sub-County, as well as widening the scope of banking services to include provision of micro credits to customers.
Research Paradigms
(2015) Tubey, Ruth J.; Rotich, Jacob K.; Bengat, Joseph K
This paper reflects on the ontological, epistemological and methodological underpinnings of the two major research approaches i.e the quantitative and the qualitative approaches. Their differences, occasioned by these philosophical foundations are discussed and practical implications examined. It is our view that this paper will have positive impact on the work of researchers and students undertaking courses in research studies
Stakeholder Management Strategies and Deposit Taking SACCOs’ Bottom Line in Kenya
(2015) Kinyua, Jesse M.; Amuhaya, Mike; Namusonge, Gregory
This study sought to establish the relationship between stakeholder generic strategies and the financial performance of deposit taking Savings and Credit Co-operatives societies in Kenya. The SACCO subsector is part of the Kenyan Co-operative sector comprising of both financial and non financial cooperatives. Saving and credit co-operative (SACCO) are the financial cooperatives. They are an important part of the financial sector in Kenya, providing savings, credit and insurance services to a large portion of the population. Stakeholder management is paramount in creating trust and confidence to key stakeholder especially in deposit taking SACCOs, and in keeping them satisfied. It has been argued that stakeholder management is decisive in determining whether or not a company is or remain successful and that it has direct environment and bottom line result of an organization. Systematic attention to all parties who affect or may be affected by the organization’s behavior is critical to that organizations success. Stakeholder management studies have mostly concentrated on normative branch of stakeholder management theory. It is however important to extend the study to member - based cooperatives. Descriptive research method was employed in this study. Questionnaires ware used to collect primary data. To ensure that the research instrument yields valid data, the researcher engaged expert in the relevant field in scrutinizing it. Pilot study was carried out to check on the reliability and validity of the instrument and a Cronbach’s Alpha of 0.915 was obtained. Data was collected from a sample of 64 Deposit taking SACCOs out of a population of 180 licensed DTS. This made a sample of 130 respondents Data analysis was done using Statistical Package of Social Science (SPSS) Version 20.
Influence of Entrepreneurial Management on the Growth of Small and Medium Tour Firms in Kenya
(2015) Kinyua, Jesse M.; Kimani, Anthony
This study focused on proprietors and business development managers of the 367 tour companies in Kenya members of Kenya Association of Tour Operators (KATO). The sample size was 256 proprietors and business development managers who were selected randomly from the population. To collect primary data a semi-structured questionnaire with both close-ended and open-ended questions was used. A pre-test was conducted to increase the reliability and validity of the data collection tool. The data collected was then analyzed using descriptive statistics. The researcher further employed a multivariate regression model to study the relationship between entrepreneurial management and growth of small and medium tour companies in Kenya. The study established that entrepreneurial management influences growth of business in the tour companies to a great extent. The study has also illustrated that resource gap identification, opportunity commitment, and social capital development and growth orientation influences growth of business of the small and medium tour companies in Kenya to a great extent. The study recommends that firms should in place mechanism to seek to establish slack in performance as a result of resources inadequacies, seizes any promising business opportunity, develop social capital to ensure business growth and continuity, and effect changes in the management systems employed in search of growth.
Information Technology Innovation and Organizational Policy
(2015) Joseph, Bengat K.; R. J 2, Tubey; Rotich3, Jacob K
Issues relating to workplace privacy and how organizations address privacy have sparked a lot of public debate in recent years. Research reveals that potential employers have exploited employees seeking job opportunities by asking information to do with: disclosure of confidential information about the past employer’s work, financial background, and family intimate issues not relevant to the job being sought among others. This paper establishes the implications of information technology innovation on organization policies with emphasis on employees’ privacy. The study was done in two organizations and it adapted a case study approach. Data was collected from 74 respondents using questionnaires. Respondents were sampled using purposive technique. Frequency distribution tables were used in data presentation followed by discussions. The findings of this study are critical in informing the policy makers in organizations on procedures and strategies of inclusive policy formulation and implementation as well as provide HR managers with insight on managing privacy issues in dynamic organizational setups
PERFORMANCE MANAGEMENT AND PUBLIC SERVICE DELIVERY IN KENYA
(2015) Korir, Salome C.R.; Rotich, Jacob; Bengat, Joseph K
Performance management aims at attaining operational effectiveness which in a broader sense refers to a number of practices that allow an organization to better utilize its resources. The need for productivity, quality and speed has spawned a remarkable number of management tools and techniques; total quality management, benchmarking, re-engineering and change management. All these, if pursued from the strategy point of view may lead to emphasis being put on the wrong place. Lack of clarity can be attributed to the fact that most public agencies have to deal with multiple principals who have multiple interests (Triveldi 2000). This leads to fuzziness in what is expected from implementing agencies. Performance management is therefore gaining momentum in many public sector organizations. Reforming the public sector in developing countries has come a long way with the progressive shift towards operational effectiveness, which entails doing what one is doing better. With defined outcomes and appropriate benchmarks to measure the outcomes, the rampant lack of focus is brought into the open. This paper addresses the issues related to performance management in public sector organizations in Kenya and its contribution to the service delivery process
The Effect of Credit Information Sharing on Loan Performance in Commercial Banks in Nairobi County
(2015) Gachora, Susan
Information remains a crucial input in the banking industry. Banks are confronted with asymmetric information problems because of borrowers' informational opacity. Banks overcome this problem by accumulating information about their borrowers' creditworthiness, using their superior ability to collect and process information. Obtaining useful unique information about their borrowers can be costly for banks, but it provides a competitive advantage and a source of rents over the lifetime of the relationship. Commercial banks play a pivotal role in the economy in the intermediation process by mobilizing deposits from surplus units to deficit units. The surplus is channeled to deficit units through lending. Lending is the main activity of commercial banks in Kenya. The Kenyan banking sector was in the 80’s and 90’s saddled with a momentous Non-Performing Loans (NPLs) portfolio. This invariably led to the collapse of some banks. One of the catalysts in this scenario was “Serial defaulters”, who borrowed from various banks with no intention of repaying the loans. Undoubtedly these defaulters thrived in the “information asymmetry” environment that prevailed due to lack of a credit information sharing mechanism. Credit Reference Bureaus complement the central role played by banks and other financial institutions in extending financial services within an economy. CRBs help lenders make faster and more accurate credit decisions. They collect, manage and disseminate customer information to lenders within a provided regulatory framework – in Kenya, the Banking (Credit Reference Bureau) Regulations, 2008 was operationalized on 2nd February, 2009. The Regulations govern licensing, operation and supervision of CRBs by the Central Bank of Kenya. The development of a sustainable information sharing industry is therefore recognized as a key component of financial sector reforms in almost all developing and emerging economies. It is on this background that this study was carried out to establish the effects of Credit Information Sharing (CIS) on performance of loans in Commercial Banks in Nairobi County in Kenya. Specifically, the study aimed to investigate the effects of Credit Information Sharing (CIS) on loan uptake, interest rates, default rates and the use of collaterals as security to loans. The study was carried out on 35 commercial banks in Nairobi County. The results indicate that improved screening effects from the CIS system caused the level of loan portfolio arrears to decline after it was implemented in most banks. The Researcher also observed an even more substantial and significant effect of the information system in reducing late payments that occur during the loan cycle.The researcher also found out that when information is shared by an information exchange institution, such as credit bureaus and public credit registers, the higher competition drives down interest rates and reduces benefits derived from otherwise monopolistic information. Credit Information Sharing allows banks to better distinguish between good and bad borrowers and over time, potential borrowers with a "Good Credit Report" or "Good Credit History" are able to access loans more cheaply and easily than high risk defaulters.

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