Financial Risks and Financial Performance of Deposit-Taking Saccos in Mt. Kenya Region, Kenya (Published)
This study investigated the relationship between financial risks and the financial performance of deposit-taking SACCOs in the Mt. Kenya region. Specifically, the research sought to determine the effect of liquidity risk, credit risk, and operational risk on the financial performance of DT-SACCOs in the Mt. Kenya region. The research was embedded on the liquidity preference theory, asymmetric information theory, and dynamic capabilities theory. The descriptive research approach and target population of 56 DT-SACCOs with head offices in the region were espoused. Primary data was collected using structured questionnaires administered to heads of risk management and secondary data from financial statements were considered. The findings revealed that liquidity risk has a negative and insignificant effect (β=-0.093, p=0.317), credit risk has a positive and significant effect (β=0.159, p=0.023), and operational risk has a negative and insignificant effect on the financial performance (β=-0.140, p=0.463) of DT-SACCOs in the Mt. Kenya region. DT-SACCOs should strive to maintain optimal liquidity and tighten their credit risk and operational risk management practices.
Keywords: Credit risk, Financial Performance, Liquidity risk, Operational Risk, financial risks
The Influence of Financial Support Services on the Financial Performance of Women-Owned Enterprises in Eldoret, Kenya (Published)
Micro-credit services target low income clients who lack access to banking and related services. The study sought to establish the influence of micro-credit services on financial performance of women-owned enterprises in Eldoret. The financial performance measures were the net profit, current, inventory and times interest earned ratio. Based on the research, this paper discusses the influence of financial support services on the financial performance of women-owned enterprises which are funded through micro-credit. The study targeted a population of 1721 which constituted of women who owned enterprises and were registered with the county government of Uasin Gishu County. Study samples were drawn through purposive random sampling. A sample size of 313 was obtained using the Krejcie and Morgan formula. Questionnaires were used to collect data. Descriptive and inferential statistics were used to present and analyse the data obtained. Data was then presented in form of tables, and explanations provided. There results showed that there was no significant influence of financial support services on financial performance of women-owned enterprise (p=0.00). From the study, it was observed that the financial performance of the women-owned enterprises in Eldoret improved due to the increase in the net profit, current, inventory turnover and times interest earned ratio. The study concluded that multiple loan products and favourable loan terms helps boost the financial performance of women owned enterprise. The study recommended that microfinance institutions should restructure the collateral and interest requirements by the women entrepreneurs by using credit scoring and business history as alternatives to asset-based security. This paper underscores the need to carry out more research on factors affecting women-owned enterprise in other areas of similar socio-economic patterns to ascertain whether or not financial support services have had a positive impact on the financial performance of women-owned enterprises. Moreover, a study should be conducted on the influence of micro-finance lending on financial performance of women-owned enterprises in Eldoret town.
Keywords: Eldoret, Financial Performance, Financial Support Services, Influence, Kenya, Women-Owned Enterprises
The Effects of Deposits Mobilization on Financial Performance in Commercial Banks in Rwanda. A Case of Equity Bank Rwanda Limited (Published)
This study is about to establish the effects of deposit mobilization on the bank financial performance in commercial banks in Rwanda. A case study of Equity bank Rwanda limited. Deposits are an indispensable tool commercial banks use to enhance its profitability through advancing deposits mobilized to its customers in form of loans which make in return interest to commercial banks. The lending activity is made possible only if the banks can mobilize enough funds from their customers. Specific objectives of this study are to determine the effect of marketing strategies on the financial performance of commercial banks in Rwanda, to establish the effect of interest rate changes on the financial performance of commercial banks in Rwanda and to determine the effect of banking technology introduced on the financial performance of commercial banks in Rwanda. The target population for the study was the bank managers involved in deposit mobilization namely the marketing team and the branch management team in Equity bank Rwanda. The research used a census to study a population of 27 staff. The main source of data was the primary and secondary data. The documentary method, the questionnaire as research instruments were used to get the data needed for the research. Data were processed by use of descriptive statistics after editing have been done. The computer software SPSS version 20 was used as a device to accommodate analysis. Pearson and Spearman’s correlation analysis was used to test the nature of relationship. The findings indicated that majority of the respondents (85%) confirmed that the brand name of the Equity Bank is recognized in the public this has made able overcoming challenges mostly facing high competition with other banks. The marketing strategy used made the bank to increase in terms of customers and it has led to the increase in deposits over the years. The findings also indicated that a positive change in deposits interest rate affects the level of deposits received and later on the profitability of the bank. The study revealed that the introduction of innovative banking technology has led to the increase in deposits at a low cost as opposed to the usual way of getting deposits through term deposits and made financial services accessible in the unbanked people. This also made the ROA, ROE, net profit increasing due as the loans volume increases. The statistical correlation revealed that there is a positive relationship between deposits mobilization and financial performance of commercial banks in Rwanda, the case of Equity Bank. The study recommends the bank to develop other strategies towards marketing and mobilize more deposits as they are indispensable tools towards the profitability of the bank.
Keywords: Banking Technology, Commercial Bank, Deposit Interest Rate, Deposit Mobilization, Financial Performance, Marketing Strategies
Effect of Corporate Governance on the Financial Performance of Banking Industry in Rwanda: (A Case Study-Commercial Banks in Rwanda) (Published)
This study investigated the effect of corporate governance on Financial Performance of commercial banks in Rwanda. The study has four objectives which determined how board size, CEO duality, institutional ownership, board composition affect financial performance of commercial banks in Rwanda. The study adopted a descriptive research design which assisted to examine the effect of corporate governance on financial performance of commercial banks. The population of the study was 120 composed by the senior managers of the commercials banks operating in Rwanda; and the sample size was 92 but only 76 responded to the questions asked which represent 84%.The key findings for this research were showing that board independence, board composition, institution ownership do not have an effect on financial performance since the majority of respondent have disagreed the effect of corporate governance variables on the financial performance of commercial banks. The analysis of variance has shown that corporate governance variables are not significant predictors to explain the increase of profitability represented by return on asset and return on equity since the p value was 0.447 and 0.186 respectively. This research has concluded that there is no effect between corporate governance using board size, board composition CEO duality as well as institutional ownership are not predictors of financial performance and recommended the regulatory body of commercial banks in Rwanda to provide a guidance on the use of corporate governance practices which may impact positively the financial performance of commercial banks
Keywords: Commercial Banks, Corporate Governance, Financial Performance
GREEN PROCUREMENT STRATEGIES AS DETERMINANTS OF FINANCIAL PERFORMANCE: EVIDENCE FROM SMALL AND MEDIUM ENTERPRISES IN UASIN-GISHU COUNTY, KENYA (Published)
Owing to strong influence on economic and social issues, environmental impact attributed by SMEs activities is significant, not only for their magnitude but also in diversity. However SMEs are often unaware of their environmental impact and lack the resources to implement environmental initiatives and since their environmental footprints are small and localized they easily go unnoticed. Nevertheless the cumulative environmental impacts of countless SMEs constitute major environmental challenges to both regulators and stakeholders. Environmental issues is now considered strategic and there has been debate all over the world concerning environmental issues (Green procurement).Many SMEs are reluctant to adopt green procurement strategies until they find financial benefit for themselves. Thus the general objective of the study was to determine if green procurement strategies had an effect on SMEs financial performance. The specific objectives were to determine the extent to which recycling of waste, use of non pollutants, waste management and use of energy saving products determined SMEs financial performance in Eldoret town, Kenya. The study area was Eldoret town, Kenya and the research design adopted was explanatory research design (bivariate analysis) because it compares two variables, the dependent variable being financial performance and independent variable is green procurement strategy. The research used stratified and simple random sampling and Hotels, restaurants, bars and supermarkets were the study units. There are more than 8175 SMEs in Eldoret town and the researcher used stratified sampling and targeted 80 respondents in supermarkets and 197 respondents in hotels/restaurant/bars. Data collection instruments used was five point likert scale questionnaire and structured interview. Data analysis used was descriptive statistics, explanatory factor analysis, Pearson Moment correlation and regression model analysis. Data was presented using tables, figures and in prose form. The study showed that there is a relationship between green procurement strategies adopted by SMEs on their financial performance and it found that most SME’s in Eldoret have an understanding of what green products are, recycling of wastes, what pollution is and what needs to be done to curb pollution and lastly about waste management and the need to use energy saving products to reduce on the cost of energy. From multiple regression tests the study findings; r=0.509 and r2=0.740, which shows that 74% of the growth of financial performance can be explained by the adoption of green procurement. The findings show that the null hypotheses were rejected in each hypothesis and thus there was a relationship. The study recommends that an awareness programme should be organized in schools, offices, through multimedia houses to educate the masses on the need to recycle waste and thus save on their costs and as a way to generate income. The study further recommends that SMEs require greater access to financial services and investment capital. The study will be useful to various stakeholders such as the government, policy makers and purchasing managers who will benefit on knowing that green procurement strategy is an important aspect in any organizations and it can impact environmental and financial performance of SMEs as well as all organizations.
Keywords: Energy saving products, Financial Performance, Non-Pollutants, Recycling of Waste, SMEs, Waste Management