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The Quality of Financial Information Disclosures and its Contribution to Financial Stability of Commercial Banks in Kenya
No full textThe purpose of this study was to explore the impact of the quality of financial information disclosures on the financial stability of commercial banks in Kenya. This study employed an unevenly balanced panel dataset, including 43 commercial banks in Kenya over the period from 2000 to 2021, which resulted in 789 observations based on bank years. The approach focused on disclosures related to stability, specifically analyzing risk, liquidity, and profitability. The study employed self-created measures for disclosures, assigning scores from 1 to 5 on an ordinal scale for each disclosed item. The awarding of scores was based on the assessment of usefulness of information provided by the financial information disclosed. The study findings established that risk related disclosures and liquidity related disclosures are positively related with financial stability while profitability related disclosures are negatively related with financial stability. The study findings underscore that high quality of financial information disclosures relating to risk and liquidity provide information to the management of commercial banks who finds value on the evaluation of financial stability for their banks. Research results provide important implications for regulators, bank managers and policy makers on the importance of financial information disclosures especially those relating to credit risk as per the requirement of IFRS 7 and IFRS 9
Audit Committee Characteristics and Fraudulent Financial Reporting
No full textPrior research has shown that audit committee characteristics influence the incidence of financial statement fraud in both developed and emerging economies. To explore this relationship in a developing region, this study analyzed a sample of 672 firm-year observations from 56 firms listed in East African Community member countries over the period 2012–2023. Logistic regression analysis was employed to test the hypotheses using panel data, and ordinary least squares (OLS) were used to validate the baseline regression results. The findings reveal that both audit committee size and meeting frequency are positively associated with the likelihood of financial statement fraud (FSR). Conversely, audit committee gender diversity and financial expertise are negatively associated with FSR. In other words, greater financial expertise and higher female representation on the audit committee are associated with a reduced likelihood of FSR. These insights may guide regulators in enhancing corporate governance codes, particularly those related to audit committee characteristics.
Keyword: Audit committee, financial statements fraud, East Afric
Credit Risk Management Practices and Profitability of Regulated Digital Credit Providers in Kenya
No full textThe profitability of digital credit providers in Kenya is a concern, as many firms lend unsecured personal loans, increasing credit risk. The decrease in loan amounts extended by these providers reflects lower profitability. The purpose of this study was to determine how credit risk management practices affect the profitability of Kenya's regulated digital credit providers. The specific objectives were to explore the effect of borrowers' screening, credit scoring, credit reminder practice, and credit risk control on profitability. The study focused on all 22 digital credit providers licensed and regulated by the Central Bank of Kenya as of January 2023. A census was necessary due to the small population. This study was based on the credit risk theory and the profit innovation theory. An explanatory research design with a quantitative methodology was used. Data was gathered using questionnaires. The data were analysed using descriptive statistics (mean, frequencies, standard deviation, and percentages) as well as inferential statistics (correlation and regression analyses). Before proceeding with inferential analysis, diagnostic tests such as normality, multicollinearity, heteroscedasticity, and autocorrelation were performed. The results were presented using tables, charts, and graphs. The study found that borrowers' screening had a significant positive impact on profitability (β = 0.146, p < 0.05). Credit scoring had a significant positive impact on profitability (β = 0.327, p < 0.05). Credit reminder had a significant beneficial effect on profitability (β = 0.298, p < 0.05). Credit risk control practices significantly increased profitability (β = 0.357, p < 0.05). The regression model accounted for 81.2% of profitability variation, and ANOVA confirmed the significance of credit risk management practices (F = 42.204, p < 0.05). All individual regression coefficients were positive and statistically significant, indicating a positive impact on profitability. The study concludes that digital credit providers improve their borrowers' screening processes, invest in sophisticated credit scoring techniques, optimize credit reminder practices, and strengthen credit risk management measures.
Keywords: Credit Risk, Management Practices, Profitability, Regulated Digital, Credit Provider
Strategic Records Management Practices and Small Enterprises at Kenyan Coast
No full textStrategic Record Management is a crucial element in the future growth and development of any organization yet researchers have established that not all organizations pay close attention to this key element. Globally, the growth of small enterprises has been adopted by countries to improve their economies, create wealth and reduce poverty. However, small enterprises have been facing many challenges with reference to strategic record management which have thwarted their efforts towards sustainability and long-term growth. The study sought to establish the influence strategic record management and Small Enterprise Growth in Kenyan Coast. It specifically investigated the types and procedures of strategic records as well as the perceptions of enterprise owners towards strategic records management. A semi structured questionnaire was administered to 384 businesses that were sampled through simple random sampling. Reliability and validity of the questionnaire was done using Cronbach’s Alpha whose results were reliable at above 0.7. Data was analyzed using descriptive as well as inferential statistics with the help of Statistical Package for Social Scientists. Particularly noteworthy was the strong positive linear relationship between Growth of SMEs and TSR (R= 0.645, p-value= 0.000). However, the dependent variable showed a moderate correlation with PEO (R= 0.228, p-value= 0.000). These Pearson correlation coefficients indicated the individual impact of each variable on a unit increase in Growth of SMEs. It was further revealed that a one unit increase of TSR was associated with a 0.021 unit increase in growth of small enterprise. Besides, a unit increase in PEO yielded a 0.400 unit increase in growth of small enterprises. The findings of the study revealed that there was a significant relationship between strategic records management and the growth of small enterprises in Kenyan coast. The study identified certain key strategic record management records that were necessary for growth of SEs such as financial records, customer records and procurement records among others. The study also established that SE owners had a positive attitude towards strategic record management but variety of tools which can provide and generate the required info to meet managerial needs. The study concluded that there was need for creation of awareness, training and continuous improvement with reference to the uptake of strategic records management practices by small enterprises in Kenyan Coast.
Key Words: Strategic Records Management, Growth of Small Enterprises, Kenyan Coast
Financial and Non-Financial Information on Strategy Management Process; A Systematic Literature Review
No full textThis paper focused on the role of both financial and non-financial information on strategy management processes using a PRISMA framework on existing literature. Specifically, this paper sought to determine the recent trends on financial and non-financial information, the varied financial and non-financial information constructs, the financial and non-financial information theories, and finally, the influence of financial and non-financial information on strategy management process. Financial ratios of liquidity, solvency and profitability are useful in assessing the impact of financial information on strategy management process. Organizations are coming to the realization that financial metrics alone do not address the needs of informed stakeholders who are keen to on a comprehensive picture of the organization and the impacts of their operations. Recent technological advances in Artificial intelligence, cloud computing and machine learning have had significant impacts on real time big data processing with accompanying realization that stakeholders will continuously demand for more information that impact the strategy management processes and success. These technological advances have also led to amplification of algorithmic trading, credit scoring and risk assessment. This study hinges on stakeholder theory, Resource Based View Theory as well as information asymmetry theory. A significant finding of the study is on the pivotal role played by non-financial information in shaping strategic decision-making processes whereas financial information has historically driven strategic planning. The study revealed the very interdependent nature of both financial and non-financial information on strategy management processes
Influence of Process Innovation on Performance of Civil Registration in Kitui County
No full textThe public sector plays a very significant role in modern economies. The ability of the public sector to innovate is therefore increasingly seen as a critical element of economy-wide innovation performance. However, innovation policies and strategies relating to the public sector are far less developed than those targeting the business sector. It is less clear to what extent entrepreneurial action is possible or advisable in the public sector as a mechanism for driving innovation. This study sought to determine the influence of process innovation on the performance of civil registration. The theory that informed the study was diffusion innovation theory. The study's target population was the five (5) civil registration offices in Kitui County, which also served as the unit of analysis. The unit of observation was the managers (Civil registration officers) and the line staff (clerical officers, office administrators, registration assistants) working in the Kitui County Civil Registration Department. The accessible population was 63 line staff and 8 managers. The study adopted a descriptive research design. Regression was used to test the significant relationship of the independent variables against the dependent variable. The study findings indicated that process innovation had high correlation with performance (0.742, p=0.000), revealing a strong positive relationship between innovating procedures and methods used in civil registration and the overall system performance. Regression results showed that process innovation positively influenced civil registration performance (coefficient=0.165, t=3.191, p=0.002). The study concludes that process innovation positively influences civil registration performance in Kitui County. Streamlined processes, elimination of redundant steps, and effective procedures significantly improve the quality and efficiency of civil registration services. The study recommends that Kitui County actively pursue process innovation by reviewing existing processes, identifying bottlenecks, and simplifying procedures. Removing redundant steps and introducing efficient alternatives can contribute to a smoother and more effective civil registration system, improving user experience and operational efficiency.
Keywords: Process Innovation, Performance, Civil Registration Kitui Count
Influence of Intellectual Capital on Performance of Large Manufacturing Firms in Kenya
No full textIntellectual capital has been gaining increased attention in competitive industries due to shortened product life cycles, globalization, rapid technological progress, deregulation and accelerated diffused rates for technology–based products. In addition, only 46 percent of the large manufacturing firms operate a full 8 hours while 47 percent of the businesses run between 6-8 hours a day. Majority of the firms use outdated technology; 83 percent are semi-automated while a measly 11 percent are fully automated. Therefore, this study sought to establish the effect of intellectual capital on performance among large manufacturing firms. This study was guided by positivism philosophy and used a deductive approach. The study adopted a descriptive survey. The population of interest comprised all the 124 large manufacturing firms in Kenya that are members of the Kenya Association of Manufacturer (KAM) as at December 2019. Data was gathered using a questionnaire. The questionnaire targeted CEO, director of human resources and finance. To test the stated hypothesis and correspondingly address this objective, the factor variable, intellectual capital was indicated by 3 sub-constructs, including human capital, structural capital and relational capital while the outcome variable. The study concluded that intellectual capital is a significant predictor of performance among large manufacturing firms in Kenya. By enhancing human capital, large manufacturing firms in the country benefit from a skillful, productive, effective and an efficient workforce which results in performance improvements through more efficient and innovative production processes and products. The study recommends that, for superior performance, large manufacturing firms in the country should invest in their intellectual capital by investing in employee training and development to build skills, expertise and capabilities; and enhancing human resource management systems and programs, improving their reward performance programs in relation to task and promote a supportive firm culture.
Keywords: Human Capital, Structural Capital, Relational Capital, Intellectual Capital, Performance & Large Manufacturing Firm
Organization Stakeholders’ Participation and Performance of Social Security Investment Fund Project: A Case of Rwanda Social Security Board, Kigali, Rwanda
No full textThis research focuses on stakeholder participation and its impact on the performance of Social Security Investment Fund (SSIF) projects at Rwanda Social Security Board (RSSB).Stakeholder theory, introduced by Edward Freeman, guides the study, emphasizing the importance of considering diverse stakeholder interests in decision-making. The specific objectives include assessing how organizational stakeholders influence project performance, exploring the role of effective communication in project collaboration, and examining the impact of stakeholder participation on project service satisfaction at RSSB. The study will play role of relevant information and library increase at Mount Kigali. The study employs both descriptive and correlational statistics, using a mixed-methods approach with a target population of 810 stakeholders. Data analysis involves SPSS software, and questionnaires, distributed to 80 respondents, support empirical findings. The research is significant for Rwanda's economic development and contributes insights into global good governance practices. The findings highlights positive stakeholder engagement, with a mean rating of 4.42 and a moderate standard deviation of 0.807, signifying active involvement and reasonable level of agreement among respondents. Stakeholders are notably engaged in resource allocation and risk management, receiving a high mean score of 4.62 with low standard deviations, indicating consensus and well- received participation. Additionally, stakeholder involvement positively impacts company members' satisfaction and acceptance, with a mean score of 4.12, emphasizing their vital role in enhancing overall project performance. However, challenges in conflict resolution need significant improvement to maintain this positive trajectory. In the second part, the results reveal favorable financial trends, such as Bralirwa's increased market capitalization to Rwf 4.323 billion and Bank of Kigali's fair value gain on equity investment. RSSB should provide training and awareness programs can help stakeholders understand their roles and contributions better, and the establishment of clear roles and responsibilities ensures accountability and regular performance evaluations.
Keywords: Organization, Stakeholders’ participation, social security investment, fund project, Rwand
Political Instability Nexus Inflation & Unemployment Trade off: Reexamination of Philips Curve and its Stability in Sub-Saharan Africa
No full textThe general objective was to conduct an empirical study on political instability nexus Inflation & Unemployment Tradeoff: Reexamination of Philip Curve and its Stability in Sub-Saharan Africa.The study conducted in 40 Sub-Saharan Africa member countries. This research design used panel data from the World Bank databank records related to Sub-Saharan Africa, which span 37 years (1986–2022), serve as the foundation for this study's analysis. This study's findings will benefit a wide range of parties, including academia, continents, and the economy, and will add to existing knowledge. The STATA software was used to perform the analysis on all of the data and estimation tests such as Unit root test, Kao cointegration, regression, lag selection and (Dynamic) Common Correlated Effects Estimator - Mean Group. Results confirmed the presence of a long-run relationship between the dependent variable (Inflation) and independent variables (Unemployment rate, GDP, Foreign Direct investment, Political instability and Population growth). The findings of this study indicate that the trade-off Phillips curve exists in Sub-Saharan Africa, and the relationship is stable over the long-run. Results revealed that unemployment, political instability, and foreign direct investment, exhibit a detrimental positive influence on inflation. Recommendations, policy makers in Sub-Saharan Africa should prioritize the development of policies aimed at effectively addressing inflation and unemployment, while also striving to stabilize the Philips curve. Additionally, Sub-Saharan Africa should implement economic policies that can enhance the likelihood of economic growth within the region's population. To achieve this, it is crucial for Sub-Saharan Africa to adopt fiscal and monetary policies that effectively mitigate economic issues especial during the period of political instability, as well as establish mechanisms that can effectively slow down population growth rates
Analysis of Exchange Rate Volatility on Trade Balance in Sub-Saharan Africa (SSA): Stochastic Frontier Approach
No full textThis study assessed the exchange rate variables and trade balance covering the period from 1990 till 2022 in SSA. The exchange rate variables shall be included in the study are the population growth, The Gross Domestic Product, Real Effective Exchange Rate and the inflation rate. The data was collected from World Bank Group. In this study theories used are theory of efficiency market hypothesis developed by lyke (2020), the Marshall-learner condition developed by (Mahmud & Yucel 2004), J-Curve and Exchange rate pass-through theories. An econometric approach was used to find out answers to the research objectives and hypothesis. A regression analysis was used to find out relationship among variables while a panel VAR and Panel Granger was used to find out the long and short-run relationship among them. Several tests such as stochastic frontier models for panel data , Stationarity, post estimation test like normality, heteroscedasticity, autocorrelation and multicollinearity were conducted in this study. The results of the causality test using the standard Granger causality test demonstrate that there is unidirectional causality from trade balance to population growth , gross Domestic Product , inflation and Real effective exchange rate `.The estimation techniques including the fully modified ordinary least squares (FMOLS), Dynamic ordinary least squares (DOLS), and Canonical cointegration Regression (CCR) were used to test the consistency and Robustness of the results that were generated using the ARDL bounds testing method. This study will help the policy makers, the government authorities, the researchers and scholars to understand the exchange rate volatility on the trade balances of SSA’s economies