Department of Economics and National Development

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Agricultural Imports, Agriculture Productivity and Economic Growth in sub-Saharan Africa: A Bootstrap Granger Noncausality Analysis in Heterogeneous Panels
(Journal of African Trade, 2020-09-08) Mwangi, Esther N.; Chen, Fuzhong; Njoroge, Daniel M.
This study investigates the causal links among agricultural imports, agriculture productivity, and economic growth in 40 sub-Saharan African countries over the period 1990–2015. Granger noncausality tests are applied to infer direction of causality, whereas the generalized two-stage least squares instrumental variable technique estimates the effects while controlling for endogeneity. The bootstrapping procedure is used to deal with cross-sectional dependence. The results reveal bidirectional causality between agricultural imports and agriculture productivity in the full sample, and in middle- and low-income non-oil-exporting countries. The relationship between agricultural imported inputs and agriculture productivity is positive and significant. In addition, unidirectional causality from agricultural imports to economic growth is seen in the full sample and middle-income non-oil exporters. Growth elasticity of agricultural imports is about 0.98 in the full sample and about 1.3 in the middle-income group. Therefore, agricultural trade policies in the region should be reexamined to promote international trade for economic development
Analysis of Post Loan Disbursement Allocation and Performance of Non-Prime Household Loan in Microfinance Banks in Kenya
(2017-08) Wachira, Bernard Ndirangu
The part played by non-prime household loans in improving the lives of many people who cannot afford collateral glob-ally cannot be ignored. Many Microfinance Banks in many economies worldwide have tried to maintain the Grameen Bank Model of granting microloans, mainly non-prime household loans. However, the credit risks associated with this initiative hamper the pace at which the granting of this credit facility is expected to grow. This study intends to explore the relationship between the post loan disbursement allocation and the performance of non-prime household loans in the Microfinance Banks in Kenya. The theory associated to this study is the Credit Risk Theory. This theory, which is regarded as credit structural theory, was developed by Merton in 1972. The descriptive survey research design method was applied, and the sample size was 150 respondents. The data-collection tool used was a questionnaire. A logistic regression analysis was conducted for the purpose of predicting non-prime household performance in the Microfinance Banks using training budget, recoveries budget, percentage of training budget, and percentage of recoveries budget as predictors. The Wald test shows that training budget, recoveries budget, and percentage of training budget were good predictors, making a significant contribution to prediction. The percentage of budget on recoveries was not a significant predictor. The Microfinance Banks should enhance the performance of non-prime household loans through capacity building to the borrowers and educate the borrowers on dangers of enforced loan recoveries. The government, through the Central Bank of Kenya, should have a training policy for the Microfinance Banks so that they can enlighten the borrowers on proper financial management to avoid conflicts with borrowers during loan recoveries.
Assessment of Farmers’ Adaptation to the Effects of Climate Change in Kenya: the Case of Kyuso District
(Journal of Economics and Sustainable Development, 2012) Ng’ang’a, S. I; Ndambiri, H. K; Ritho, C; Mbogoh, S.G; Muiruri, E. J; Nyangweso, P.M; Kipsat, M. J; Ogada, J. O; Omboto, P. I; Kefa, C; Kubowon, P. C; Cherotwo, F. H
The study was carried out to assess how farmers in Kyuso District have adapted to the effects of climate change. Survey data was collected from 246 farmers from six locations that were sampled out through a multistage and simple random sampling procedure. The probit regression model was fitted into the data in order to assess factors influencing farmers’ adaptation to the effects of climate change. The analysis revealed that 85% of the farmers had adapted in various ways to the effects of climate change. In this regard, the age of the farmer, gender, education, farming experience, farm income, access to climate information, household size, local agro-ecology, distance to input/output market, access to credit, access to water for irrigation, precipitation and temperature were found to have significant influence on the probability of farmers to adapt to climate change. The study suggests that more policy efforts should thus be geared towards helping all the farmers in the district to adapt to climate change.
Credit Management Practice, SACCO Size and Financial Sustainability of Deposit Taking Saving and Credit Co-Operatives in Kenya
(Journal of Accounting, Finance and Auditing Studies, 2020-06) Maina, Justus Nderitu; Kiai, Richard Muthii; Kyalo, Teresia Ngina
Purpose:Deposit Taking Saving and Credit Co-operatives facilitates financial intermediation, inclusion and deepening. In spite of this, 30 percent do not operate with prudent credit management practices attributed to unremitted deductions by employer institutions or borrowers’ default and unskilled employees. This makes them prone to de-licensing for being financially vulnerable thus, putting members’ funds at risk. This is still a puzzle even with the investment by the government on an oversight authoritythat can ensure they are compliant to the regulations so as to maintain financial sustainability. This study was conducted to establish the moderating effect of SACCO size on credit management practice and financial sustainability. The information asymmetry theory was adopted where the study population was the Kenya Deposit Taking Saving and Credit Co-operatives. Design and Methodology:A descriptive cross-sectional survey design with a positivism philosophical paradigm where the sample size was 119 respondents out of which 95 percent responded. Emailed questionnaire and data collection sheet were used in data collection. Findings:A binary logistic regression was carried out where it was established that with presence of a moderator for the independent sub-variables, the strength of relationship between variables didn’t change (Nagelkerke R2 = 20.1 percent) but with introduction of interaction term, the strength of relationship between variables changed (Nagelkerke R2 = 27.2 percent). However, the relationship strength between variables didn’t change with presence of a moderator for the independent variable (Nagelkerke R2 = 19.9 percent). Conclusion and recommendation:This study thus, concluded that SACCO size had a significant moderating effect on the independent sub-variables but the overall independent variable did not show any significance. This study recommended that SACCO size should only be considered while addressing credit risk mitigation and staff competence of DT-SACCOs in an effort to improve their financial sustainability.
The Effect of Business Environment on Investment among Financially Included Youth in Kenya
(HRMARS, 2016-10) Kiai, Richard Muthii; Ng'ang'a, Stephen I.; Kiragu, David N.; Kinyanjui, Josphat K.
Equity Unit Trust Funds Flow and Stock Market Returns: Evidence from Kenya
(Journal of Finance & Banking Studies, 2019-04-27) Ndei, Caroline Michere; Muchina, Stephen; Waweru, Kennedy
This study sought to evaluate the relationship between equity unit trust fund flows measured as purchases and sales and the Nairobi Securities Exchange (NSE) stock market return. The study employed Vector Autoregressive model and tested for Granger causality using monthly data for the period starting January 2010 to December 2017. The granger causality results showed that equity fund sales contain information that can explain stock market return and stock market return contain information that can explain equity fund purchases thus unidirectional causality. Impulse response results showed that equity fund purchases have a predominantly positive relationship with NSE stock market return and NSE stock market return have a positive relationship with equity fund purchases. This implies that an increase in stock market return will lead equity fund managers to purchase more securities and as the equity fund purchases increase, the demand for those stocks will increase causing the stock prices to increase and consequently increase stock market return. In contrast, equity fund sales are predominantly negatively related with stock market return and stock market return is also negatively related to equity funds sales. As the stock market return increase, the equity fund managers will decrease their sales. As the sales increase, the supply for those stocks will increase causing a decrease in prices and consequently a decrease in stock market return. Equity fund sales explain the variation in stock market return more than equity fund purchases while stock market return is a determinant of equity fund purchases and equity fund sales.
Financial control and growth of private primary schools in Kenya
(International Journal of Research in Business and Social Science, 2020-10) Kiambati, Kellen; Njiri, Julius; Mwenja, Dominic; Mbugua, Levi
Proper management of finances in private primary schools is very imperative to their operations. There are, however, serious financial challenges in these private schools in Kenya as characterized by unprecedented high fees charged on students. The objective of this study was to assess the role of financial control in the growth of private primary schools in Kenya. The study was guided by the Cash Management Theory that gives emphasis to reasonable ways to deal with organizational finance management and efficient utilization as well as the Endogenous Growth Theory which stipulates that, in the long-run growth rate depends on a stable business environment. The study employed both quantitative and qualitative study design, which targeted 7,418 private primary schools in Kenya. Accessible population constituted of 3,431 heads of schools in four regions of Kenya namely: Nairobi, Central Kenya, Northeastern, and the Coastal regions. A random sampling method was used to draw a sample of 320 respondents who were either the principals’/Head teachers or deputy principal of the schools. A structured questionnaire was used to collect data. Structural Equation modeling using Analysis of Moment Structures was used to analyze the data. The fitness of the hypothesized structural and measurement models was tested using the Normed Fit Index and the Root Mean Squared Error. The overall path coefficients obtained were positive and significant at a 0.05 level of significance. The study established that financial control positively and significantly influenced the growth of private primary schools. The study recommended that private primary schools should have effective budget management mechanisms and strong financial controls
IFRS Adoption, Value Relevance and Conditional Conservatism: Evidence from China
(Emerald Publishing Limited, 2018) Isaboke, Cyrus; Chen, Yan
Purpose – This study sought to evaluate the relationship between value relevance of financial information and conditional conservatism of non-financial companies listed in China. Design/methodology/approach – Using panel data comprising of 28,723 firm years, the authors determine the value relevance of financial information before and after mandatory International Financial Reporting Standards (IFRS) adoption while incorporating the relationship with conditional conservatism. The authors further examined how this relationship varies between state and non-state owned companies. Findings – Conditional conservatism is positively (negatively) related to value relevance prior (post) to mandatory IFRS adoption while it makes no difference as to whether a company is state or non-state owned, as IFRS has a positive and significant effect on value relevance. Conservatism, on the other hand, has a negative and insignificant relationship with market value of both state and non-state owned firms during the pre- and post-IFRS period. Originality/value – By exploring an emerging economy, the authors provide evidence on the variations in value relevance amongst state and non-state owned firms. In particular, the authors establish the positive effect of IFRS on the value relevance of non-state firms as compared to stateowned institutions.
Implications of basel iii accord adherence on financial distress status of commercial banks in Kenya
(2016-07) Maina, Justus Nderitu; Muriithi, Maitai Jedidiah; Meeme, Mario M; Kinyariro, Dickson Kamau
The Implications of Collaborative Industrial Attachments for Kenya Vision 2030 Development Programmes
(African Journal of Education and Technology, 2013) MUTHONI, David Mutahi; MUCHEMI, Allan Kuria; MUTAHI, Irene Wairimu; GUNGA, Samson Okuro; ORIGA, Japheth O.
The purpose of this study is to establish the influence of industrial attachment on instructors’ and students’ competence in creative innovations for improved industrial output. The study also attempted to determine the influence of TSIA activities on the quality of students’ industrial output in Kenya. The study found that TSIA plays an important role in establishing the link with social-industrial partners, relating teaching and learning processes to the latest development in the industries, providing opportunities for working with most current echnology, machinery, equipment, tools and systems, contributing to product and industrial processes through creative innovations, involvement of industrial staff in students’ competence development, reducing cost of recruitment and hence improving industrial savings. The study conclude that if collaborative industrial attachment between instructors and students is adopted and strictly followed, there is the possibility of an improved students' competence in creative innovations leading to globally competitive industrial out-put. The study recommend the involvement of industrial and social partners in standardized assessment of collaborative supervised industrial attachment for students and academic staff
Influence of support service linkage strategies on sustainability of donor funded livelihood projects in Kilifi County, Kenya
(Research in Business & Social Science, 2020-07-03) Ndombi, Cornel Likale; Kyalo, Dorothy Ndunge; Mulwa, Angeline Sabina
Donor agencies have heavily funded livelihood programs in Kilifi County but these projects struggle with sustainability with some dying immediately the funding is withdrawn. The objective of the study was to establish how to support service linkage strategy influence sustainability of donor-funded livelihood projects in Kilifi County. The study was guided by Discovery Learning theory; Diffusion of Innovation theory; Lippitt’s theory of planned change; and Theory of Stakeholder Management. A descriptive correlational research design was used. A sample size of 170 was selected from a population of 295 from three livelihood projects using Slovin’s formula. 7 interviews and 3 focus group discussions were carried out. Prior to data analysis, statistical assumptions were tested. Standard deviations, standard error of means and arithmetic means were used for descriptive analysis while Pearson’s Product moment correlation and linear regression, F-tests, and t-tests were used for inferential analysis using statisticalpackage for social sciences. The mean perception of sustainability did not differ significantly with projects (p=0.192), gender (p=0.669), age (p=0.724), and marital status (p=0.284). However, there was a significant difference in mean perception of the sustainability of donor-funded livelihood projects among the different groups based on the highest level of education attained (p=0.011) and duration of stay in the project (p=000162). H0, r=0.383, p=0.000027<0.05 was rejected and concluded that support service linkages significantly influenced the sustainability of donor-funded livelihood projects. Therefore, policies should be reviewed to provide an enabling environment and culture that will support access to support services such as affordable extension services, affordable and readily available credit, markets. Future studies should use simple and direct Likert items with diverse projects...
Influence of financial innovations on financial performance of Savings and credit co-operative societies in Nyeri county Kenya
(2015-09) Opiyo, Humphrey O.; Njenga, Salome M.; Kiragu, David N.
Influence of Motivation and Training on Labour Turnover in State Corporations in Kenya
(The Strategic Journal of Business & Change Management, 2018-08) Macharia, S.; Mugambi, H.; Kapsandoy, J.
The study was guided by one general objective and two specific objectives: To establish how employee training, and employee motivation influence staff turnover in NWCPC. The study adopted descriptive research designs with NWCPC staff being the target population. Simple random sampling was used to select a sample size of 30% of the target population of 461 employees. Self-administered questionnaires were used as data collection instruments. The questionnaires were pre-tested for reliability and validity. Qualitative and quantitative data was analyzed by the help of Statistical package for social scientists software (SPSS). Data was analyzed using descriptive statistics. The results were tabulated using frequency distribution tables and pie charts. The study was able to establish possible solutions to the problem of labor turnover. The study also concluded that labor turnover is spread throughout the year and impacts negatively to the organization. 54.47% of the respondents agreed that motivation is a factor that determines how long an employee stays in the organization. 54.47% of the respondents agreed that motivation is a factor that determines how long an employee stays in the organization. In addition to the study established that training and employee motivation contributes immensely in influencing employee turnover.
Influence of Stakeholder Participation in Utilization of Monitoring and Evaluation Results on the Performance of Fish Farming Projects in Kenya
(IOSR Journal Of Humanities And Social Science, 2018-09) Kiumbe, Paul; Wambugu, Lydiah; Luketero, Stephen
This study, sought to establish the influence of stakeholder participation in utilization of Monitoring and Evaluation results on the performance of fish farming projects in Kenya, a case of Economic Fish farming projects Nyeri County. This study was guided by a pragmatic research paradigm for a mixed research method in a concurrent parallel research design. The study targeted the eight fish farming projects funded by the Economic Stimulus programme in Nyeri County. The target population was1198 project participants. The sample size was 271 respondents comprising of 247 farmers, 4 project managers and 24 committee members obtained through purposive and stratified random sampling techniques. Structured questionnaires were administered to collect quantitative data while focus group discussions were conducted to collect qualitative data. The instruments were tested for validity and reliability through the content validity index (CVI=0.833) and the Cronbach Alpha‟s index (a=0.795) for reliability. Regression models were used to analyse quantitative data while qualitative data was analysed using content analysis. The study found out that the level of stakeholder participation in utilization of Monitoring and Evaluation results was average (M=3.43).The study established a significant influence of stakeholder participation in utilization of M&E results (t=14.20, p<0.05) on performance of fish farming projects. The study recommends that fish farming projects should increase utilization of M&E results so as ensure better performance of fish farming projects. The study provides a stakeholder participation model for strengthening the performance of fish farming projects
Interaction between Financial Risk Management and Value of the Firm among Private Equity Firms in Frontier Markets: A Theoretical Perspective
(Journal of Accounting, Finance and Auditing Studies, 2019-05) Waitherero, K. Florence; Wanyoike, Muchina S.; Muriu, Macharia S.
Purpose: The study attempts to establish a theoretical basis for the interaction between financial risk management and value of the firm among private capital firms. Design and Methodology: The study was based on a theoretical review of the interaction between financial risk management and value of the firm focusing on the applicability of agency theory, trade-off theory and credit metrics model in anchoring capital management risk, liquidity risk and credit risk Findings: The study shows that although private equity firms are not publicly listed, they face financial risks associated with defaults on loans advanced, volatility of interest rates, liquidity management and capital management. The agency theory explains the role of capital management risk and liquidity risk by incurring agency costs to deter the management from engaging in activities hindering achievement of wealth maximization goal. Similarly, companies balance between threat of bankruptcy and tax benefits of debt by finding an understanding between the advantages and the disadvantages that come with debt as outlined in the trade-off theory while credit metrics model help firms to quantify credit risk on loans, fixed income instruments, commercial contracts. Practical Implications: Private equity firms must constantly be engaged in risk mitigation activities by extensively evaluating their financial, legal and business environments. The management of private equity companies must also always try to balance between the threat of bankruptcy and the tax benefits of debt in the formulation of capital structure by finding a compromise between the benefits and costs of raising debt. The management should also carefully consider credit risks during the credit appraisal and credit awarding process by using appropriate credit appraisal models such as credit metrics model. The Significance of the Study: The conclusions reached in this study significantly impacts the perspective of the management with regard to risk management particularly in the banking sector which is predominantly adversely affected by credit risk, liquidity risk and capital management risks. Consequently the management would be in a better position to manage their risks using appropriate models and improve organizational efficiency and performance.
Moderating Effect Of Bank Size On Nexus Between External Equity Capital And Financial Performance Of Lower-Tier Commercial Banks In Kenya
(2023) Kinyua, Patrick Karuki; Kiai, Richard; Muriu, Stephen
The Kenyan banking sector is categorized into three tiers, tier I, II and III based on bank size. The profitability of tier II and III has been declining begging the question as to whether the size of the bank has any influence on the performance of the banks. This study determines the influence of internal equity capital on the financial performance of lower-tier commercial banks in Kenya. The study employed a descriptive and explanatory research design. The study population was 26 commercial banks in Tier II and III commercial banks in Kenya from 2016 to 2020. The average internal equity for lower-tier commercial banks in Kenya was .364 in 2016 and .400 in 2017. In 2018, the internal equity sharply rose to 8.299, which was followed by a small decline to 7.782 in 2019 signifying that in 2018 and 2019, lower-tier commercial banks in Kenya employed more internal equity financing to finance their operations. Through the hierarchical regression, it was established that internal equity has a positive and significant influence on the financial performance of lower-tier commercial banks in Kenya. Bank size does not moderate the effect of internal equity on the net profit margin of lower-tier commercial banks in Kenya (p = .202>0.05; R2 change of 0.07). The study recommends that lower tier commercial banks need to encourage its shareholders to re-invest back their earnings rather than consuming them as dividends as internal equity is affordable and readily available when the bank is in urgent financial need.
Moderating effect of financial technolgy on institution innovation and performance of licensed capital market intermediaries in kenyan securities market
(2016) Wanjau, Kenneth Lawrence; Muturi, Willy; Teya, Nyangenya Japheth
Moderating effect of government Regulations on the relationship between Cost recovery and financing of water Investments in nairobi peri-urban markets in Kenya
(2015) Wanjau, Kenneth Lawrence; Geoffrey, Mouni Gekara; Maina, Kimani E.; Mung’atu, Joseph K.
Over the last 200 years, most water utilities have been publicly owned and managed. For this reason, public utility firms have been getting financial support from the government in form of subsidies in addition to the revenue they generate internally. However these water utilities have not been able to generate sufficient internal revenue to ensure sustainable financial investments. There has been low level of investment in the sector especially in peri-urban markets mainly due to poor cost recovery. The study explored moderating effect of government regulations on the relationship between cost recovery and financing of water investments in Kenya. The study adopted descriptive survey research design. A two stage sampling technique was used to obtain a sample population of 150 small scale water service providers. The study utilized self-administered questionnaire and content analysis for collecting data. SEM was used to analyse the relationship between cost recovery and financing of water investments.The findings of the study indicated that factors inhibiting cost recovery includes poor water pricing, low users’ charge and externalities. The recommended remedies to cost recovery includes cross-subsidization, gradual increase of user fees, and service improvement. The results of the study will be of great importance as it will contribute to greater understanding of various factors that inhibits cost recovery among water utilities and how these factors can be improved.
Moderating Role of Entrepreneurial Orientation on the Relationship between Relationship Lending and Financial Performance of manufacturing SMEs in Kenya
(2015) Wanjau, Kenneth Lawrence; Rotich, Abraham Kipkemboi; Namusonge, Gregory
The purpose of this study was to determine the moderating role of entrepreneurial orientation (EO) on the relationship between relationship lending and financial performance of manufacturing SMEs in Kenya. Relationship lending has gained a lot of interest worldwide as it is seen as an avenue to help bridge the information gap between SMEs and the banks thus ultimately helping SMEs access credit. Further, although credit is important to SMEs, entrepreneurial orientation (EO) is key as it determines the success or failure of SMEs. There is little research that has been done to determine if EO moderates the relationship between relationship lending and SME performance in Kenya. The study used a crossectional survey research design with the population being the 620 manufacturing SMEs involved in relationship lending arrangements with commercial banks in Kenya. Stratified random sampling was used to pick a sample of 160 from which the proprietors / CEOs of the respective companies filled the questionnaires. The main data collection instrument was a semi structured questionnaire. The hypotheses in this study were tested using structural equation modeling and hierarchical moderated multiple regression (MMR). The study found evidence that EO moderates the relationship between relationship lending and financial performance of manufacturing SMEs in Kenya. Further the study determined that relationship lending positively impacts on financial performance of SMEs. It also found
Motivation and retention of teachers in private secondary schools in Kenya
(International Journal of Research in Business & Social Science, 2020-10) Kariuki, Anne
Employee retention has become a key focus of the human resource professional agenda. Organizations and schools have come to the conclusion that money could be saved by reducing employee turnover. However, studies have been inconclusive on motivating factors that lower employee retention. The main objective of this study was to determine the influence of motivation on the retention of employees in secondary schools in Kenya. Based on an exhaustive review of literature, three constructs of motivation were taken into consideration namely management. The major hypothesis of the study was that motivation significantly influences the retention of teachers in private secondary schools. To test the hypothesis, three sub-hypotheses were developed; compensation significantly influences employee retention; supervision significantly influences employee retention and psychological contract significantly influences employee retention. A mixed methodology approach was adopted and data was collected using a structured questionnaire and a structured interview guide. Descriptive statistics including frequencies, correlation analysis, and linear regression were applied to test the research hypotheses. The regression results indicate that motivation is causing a 7.0 percent variation in retention, implying a weak relationship. The weak relationship can be explained by poor salaries, authoritarian supervision, and breach of the psychological contract