European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals


Effects of Working Capital Management On Profitability of Manufacturing Firms Listed in Nairobi Securities Exchange, Kenya (Published)

This study examined effect of working capital management on profitability containing twenty manufacturing firms listed in Nairobi securities exchange. Kenya’s manufacturing sector has been hit by poor working capital management leading to unstable profits. Despite various scholars conducting studies concerning Kenyan manufacturing firms’ working capital, lack of consistence revenues require further examination on what causes these deviations. Current study was piloted by following specific objectives; Influence of inventories, receivable, payable, and cash managements on profitability of manufacturing firms. Theories that guided this study were: agency, transaction cost, and cash conversion cycle. Descriptive statistics was used on analysis especially, minimum, maximum, mean and standard deviation. Mathematical data evaluation involved inferential statistics. In addition, study model quantitative data was presented in tables. The study accepted census sampling method for collecting secondary data from population of 20 companies listed for five years from 2016 to 2020. Secondary details were found in financial statements of manufacturing firms and Nairobi Securities Exchange. Data was collected using checklist. The study recommended that manufacturing companies should estimate desirable quantity of working capital and concluded that increased working capital should match increased expenses, sales and revenue.

Keywords: Kenya, Manufacturing Firms, Nairobi Securities Exchange, Profitability, Working Capital Management

Agent Banking and Sustainable Competitive Advantage for Commercial Banks in Kenya (Published)

Most Kenyan banks with the exception of a few tire one banks have not yet fully exploited agent banking practices. This paper draws upon the Bank Led theory to examine the relationship between agent banking and sustaining competitive advantages for commercial banks in Kenya.The study targets head of departments and branch managers from commercial banks in Nairobi County using a census approach.  Questionnaires were used for data collection and a combination of descriptive and inferential statistics for data analysis.As depicted in this paper, Agent banking (r=.575, p=0.000) has a linear relationship with sustainable competitive advantage. In addition, the regression model indicated that agent banking had coefficients of 0.292 with corresponding p=0.042<0.05. The positive coefficient implies that agent banking significantly contributed 29.2% of the commercial bank’s competitive edge at 5% level of significance. This would however reduce to 20.5% significant at with the intervention of bank regulations which play a part in ensuring that the stability and safety of banks is maintained. Agent banking is positively related with sustainable competitive advantage and can be significantly influenced by bank regulation. The paper recommends that commercial banks ought to explore agent banking as a tool in advancing sustainable competitive advantage. Tier 1 commercial banks should include budgets specifically for agent banking services in order to move with the technology use.Competitive advantage, agent baking, retail agents, commercial banks, bank regulation, strategy.

Citation: Mwaiwa F., Kwasira J., Boit R., and Chelule J. (2022) Agent Banking and Sustainable Competitive Advantage for Commercial Banks in Kenya, European Journal of Accounting, Auditing and Finance Research, Vol.10, No. 4, pp.36-51


Keywords: Agent banking, Commercial Banks, Kenya, Sustainable Competitive Advantage

Income Smoothing and Financial Performance of Tier 11 Commercial Banks in Kenya (Published)

The most commonly used Income smoothing practices are attributed to bad corporate governance. Bank managers and bank accountants use strategies that seek to erode profit mechanisms that amount to severe consequences for the entire banking and finance industry. Therefore the purpose of this study was to determine the effect of income smoothing practices on financial performance of Tier II commercial banks in Kenya. The study was based on information theory, agency theory and positive accounting theory. This study adopted an exploratory research design in explaining the relationship between the independent and dependent variables. The target population for the study included10 CBK licensed tier II commercial banks in Kenya where 40 respondents were included:  purposive sampling technique was used to select Finance managers, internal auditors and accountants. The researcher obtained sample from all the 10 tier II commercial banks in their head offices in Nairobi, Kenya. Primary data was collected using a structured Questionnaire while complimentary data was collected from published financial statements from CBK Supervisory reports. The data was analyzed using the Statistical Package for Social Sciences (SPSS) version 20, by use of both descriptive and inferential statistics. The study results revealed that Income Smoothing had an insignificant coefficient of 0.296 with the Financial Performance of tier II commercial banks in Kenya.. According to the findings, exclusion of liabilities activities are the source of funds for the banks. Based on these findings, the study recommended that watchdogs of the accounting practices need to exercise strict oversight on the extent to which Commercial bank adopt income smoothing issues. The study findings would form a timely and solid foundation that the banking industry pundits and policy makers would base most of their policy priorities in responding to the volatile accounting situation in Kenya today. 

Keywords: Financial Performance, Income Smoothing, Kenya, tier ii commercial banks


Public transport in Kenya and, especially in urban areas, is dominated by Matatu vehicles. This venture involves substantial capital outlay and, therefore, requires sound financial management. A proper balance between return and risk should be maintained to maximize the market value of an investor. The current study investigated how cost of capital affected returns and the impact of capital structure on returns in the public service vehicle Matatu industry in Nakuru Municipality in Kenya. The findings indicated that most respondents preferred equity (μ = 4.25; SD = 0.907) to debt (μ = 3.47; SD = 1.030) as a source of capital. A major hindrance to the use of debt is its high cost. However, debt was invariably used because of its security and access. Capital structure consisted of shareholders and non-shareholders. In conclusion, MSL should seek alternative ways for members to access loans at lower rates; for instance entering into funding commitments with the financial institutions. Additionally, it should plan to access a wider pool of equity financing by listing in the capital markets

Keywords: Capital Structure, Kenya, Public transport; Matatu; Cost of Capital


This paper examines the impact that lending methodology on the performance of loan portfolio based on a study of microfinance institutions in Kenya. The specific objectives of the study were to establish the effect of group and individual lending on performance of loan portfolio in micro-finance institutions, and to establish the effect of moderating factors on performance of gross loan portfolio. Secondary data was used in the study of 8 out of 56 microfinance institutions under umbrella Association of Microfinance Institutions of Kenya (AMFI). This was motivated by availability of data. Panel data analysis was applied to test hypothesis that there is no relationship between group lending on performance of loan portfolio. After running a regression in which loan portfolio performance is the dependent variable, the study found a positive significant coefficient of 0.79 and (p=0.42) on group lending without moderating factors. When moderating factors were included the coefficient becomes 0.38 and (p=0.19). The null hypothesis was therefore rejected. There was no significant relationship of individual lending on performance of loan portfolio in the regression despite finding a positive coefficient of 0.41 and (p=0.27) without moderating factors and 0.16 and (p=0.58) when moderating factors were added. Therefore, the author accepted the null hypothesis which states that there is no effect on individual lending on performance. The third hypothesis which stated that moderating factors do not affect performance of loan portfolio was also rejected, since the study found significant relationship between moderating factors and lending methodology on loan portfolio. From the regression results, transaction cost and credit risk have a negative relationship on the performance of gross loan portfolio/assets. The researcher recommends to MFIs to use group lending as a result of security/collateral as it reduces adverse effects. Furthermore managers should improve business performance through cost minimization strategies. It is further recommended that MFIs managers should consider diversifying their revenue generating activities rather than concentrating on only one source of income

Keywords: Kenya, Lending Methodology, Loan Portfolio, Microfinance Institutions, Performance

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