scholarly journals EFFECT OF INFORMATION SHARING FUNCTION ON FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES

2017 ◽  
Vol 1 (5) ◽  
pp. 49 ◽  
Author(s):  
Jackson Mnago Ndungo ◽  
Dr. Olweny Tobias ◽  
Dr. Memba Florence
Keyword(s):  
Financial Performance ◽  
Information Sharing ◽  
Financial Institutions ◽  
Positive Relationship ◽  
Secondary Data ◽  
Target Population ◽  
Primary Data ◽  
Top Managers ◽  
Sharing Function ◽  
Business Entities

Purpose: The objective of the study was to establish effect of credit information sharing on financial performance of SACCOs in Kenya. Studies have indicated that countries are establishing credit registries to reduce defaults, caused by information asymmetry, which have been a crisis for most financial institutions. Various financial institutions including SACCOs which have the business of lending are currently subjecting their customers in credit reference bureaus. Literature indicates that credit defaults have continued to pose financial crisis for financial institutions. Many studies done indicate that credit default is caused by lack or inadequate accurate credit information. In Kenya, through the Banking Act of 2009 saw the establishment of the first credit reference bureau in 2010 where individuals and business entities were to be subjected to CRBs. This study sought to establish the effect of information sharing on financial performance of SACCOs in Kenya. The study adopted a descriptive research design which was both quantitative and qualitative. The target population was 181 and a sample of 135 (74.5%) licensed deposit taking SACCOs as at 31st December 2014 was used. The choice of the licensed deposit taking SACCOs in Kenya was very objective since they offer employment opportunities for our youth. In most cases SACCOs deal with a larger group of clients from the informal sector as opposed to other financial institutions like banks and so it was possible to obtain information that is representative of Kenya. Secondary data was collected from published financial records and CRBs while primary data was collected through questionnaires which were administered to the top managers of the SACCOs. The study established that credit information sharing has a significant and positive relationship with financial performance of the sampled SACCOs. The study highlights effect of credit information sharing with possible recommendations for improvement on financial performance.Findings: The study concluded that there was a significant and positive relationship between information sharing function and financial performance thus the existence of credit reference bureaus was suitable for improving financial performance of SACCOs. Thus Credit reference bureaus have led to share of negative credit reports; Credit reference bureaus have led to improved defaults rate of borrowers, improved lenders response rate on credit lending and have reduced existence of privacy on borrowers’ credit history.Recommendation: Credit information sharing should be addressed through networking of all credit information amongst lenders so that lenders can have readily available credit information, both positive and negative, on the borrowers which would be shared across all lenders.

scholarly journals Credit Information Sharing Practices and Financial Performance of Commercial Banks in Kenya

2019 ◽  
Vol 3 (VI) ◽  
pp. 67-82
Author(s):  
Felix Ouma Odhiambo ◽  
Fredrick Ndede
Keyword(s):  
Financial Performance ◽  
Information Sharing ◽  
Data Sharing ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Secondary Data ◽  
Target Population ◽  
Primary Data ◽  
Loan Default

The banking sector in Kenya suffered increased non-performing credits which prompted collapse of certain banks with an upsurge of loan defaulters. This was mainly attributed to the continued information asymmetry in the industry because of absence of a credit data sharing component. Commercial banks in Kenya have continued to encounter a number of challenges in obtaining information on customers’ payment history that helps guide on determining their ability to access and re-pay loan advancements. This has made more commercial banks to subscribe to credit reference bureaus since its establishment in 2008. As a result, commercial banks in Kenya have been experiencing high rates of Non-Performing Loans advanced to customers. The general objective of the study was to determine the effect of credit information sharing practices on financial performance of commercial bank in Kenya. The study specific objectives were to determine the effect of information accuracy, volume of lending and customer credit reports on financial performance of commercial bank in Kenya. The study was anchored by adverse selection theory, moral hazard theory and asymmetry theory. The researcher used a descriptive research design. The target population was five banks within Nairobi County including KCB, Equity Bank, Family Bank, Cooperative Bank and Barclays Bank. Primary data was collected using questionnaires and secondary data using financial statements of the commercial banks performance for the past 5 years. Data was analysed using descriptive statistics and inferential statistics. The study found that information accuracy, volume of lending and customer credit reports were positively and significantly related to the financial performance of the commercial banks. The study concludes that information accuracy increases the banks ' understanding of the applicants’ features and allows a more precise forecast of their probabilities of repayment, it decreases the information rents that banks could otherwise obtain from their clients and it can function as a borrower discipline tool. Lending volume enhances business banks ' enhanced operations, which in turn leads to banks’ enhanced economic results. Sharing of credit information has made commercial banks grant more loans on the basis of their reputation to deserving clients, thereby improving their profitability. When extensive consumer credit history information are easily accessible, it considerably decreases the cost of entering loan markets for fresh lenders, enhances competition and lowers credit rates. The research recommends that for enhanced results, all financial institutions in Kenya need to protect the precision of their platforms for data sharing. Regular site visits should offer credibility to the precision of the borrowers’ data. The data supplied by CRB should be used efficiently by commercial banks to lend to prospective borrowers. Only borrowers with a strong history of credit should be permitted access to the loans. The research also proposes that Kenya's commercial banks should base credit awards on the borrowers’ reputational assets, ensuring that the loan default rate is small, thus enhancing commercial bank performance.

Effects of Financial Innovations on Profitability for Deposit Taking Microfinancing Institutions in Kenya

2018 ◽  
Vol 9 (6) ◽  
pp. 529-536
Author(s):  
Martin Khoya Odipo ◽  
Keyword(s):  
Financial Institutions ◽  
Positive Relationship ◽  
Financial Institution ◽  
Secondary Data ◽  
Financial Statements ◽  
Descriptive Statistics ◽  
Primary Data ◽  
Microfinance Institutions ◽  
Financial Innovations ◽  
Strong Positive Relationship

Recent studies have documented that innovations improve profitability of firms. This article documents that deposit taking micro financial institutions that have adopted financial innovations have increased their profitability. The study covered five years between 2009-2013. Both primary and secondary data were used in the study. Primary data was obtained through administration of drop and pick questionnaires to selected employees of the institutions. Secondary data was obtained from financial statements and management reports of these deposit taking microfinance institutions. Data was analyzed using descriptive statistics, return on asset and multi-liner regression model to determine the effect of each financial innovation applied on profitability on the micro-financial institution. The results showed that most deposit taking microfinance institutions adopted these financial innovations in their current operations. There was strong positive relationship between individual innovations and profitability. In line with profitability ROA also showed improvement each year after the adoption of these financial innovations.

scholarly journals INFLUENCE OF FINANCIAL LINKAGES ON GROWTH OF INFORMAL FINANCIAL INSTITUTIONS IN HOMA BAY COUNTY OF KENYA

2020 ◽  
pp. 19-27
Author(s):  
Benard Odhiambo Obop ◽  
Alphonce Juma Odondo ◽  
Nelson Obange
Keyword(s):  
Developing Countries ◽  
Information Sharing ◽  
Financial Institutions ◽  
Financial Training ◽  
Negative Relationship ◽  
Secondary Data ◽  
Sampling Technique ◽  
Primary Data ◽  
Credit Access ◽  
Access To Credit

Financial linkage is an emerging form of partnership widely practiced between NGOs, formal and informal financial institutions in developing countries. The existing forms include but not limited to financial training, Savings products and Credit Information Sharing (CIS). Informal financial institutions enter into such linkages with an aim of growing the volumes of credit accessed. In Homa Bay County, various forms of financial linkages have emerged with statistics indicating unstable growth in volumes of credit accessed by informal financial institutions. According to Homa bay Women Sacco, the loan disbursed grew by 88.46% between 2015 and 2017. This is in tandem with the institutional theory of complementarity adopted by this study. However, studies on formal-informal financial institutions’ relationship and contribution of financial linkages to credit access in developing countries have elicited divergent views. Some reveal that financial linkages offer the best solution to promoting credit access while others indicate that the linkages may reduce access to credit and impact negatively on growth of the institutions. It is on this basis that the study sought to establish the influence of the emerging linkages on growth of informal financial institutions in Homa Bay County. The study was based on the positivists approach to conceptualization and was guided by correlational research design. A total of 300 respondents were selected using stratified sampling technique. Both open and closed-ended pre-tested questionnaires were used to collect primary data. Secondary data were from relevant documents of the institutions. The desired relationships were established through multiple regressions while bivariate associations were determined using Correlational analysis. The study revealed that volumes of group savings and Credit information sharing both had significant relationships with the growth of informal financial institutions. On the other hand, financial training had an insignificant negative relationship with access to credit by the institutions, the negative relationship suggests that through training, the informal financial institution’s managers strengthen their internal management mechanisms, thus become less dependent on borrowed funds for their activities. The study thus recommends that the three forms of linkages be strengthened to enhance growth of the institutions in Homa Bay County. KEY WORDS: Financial Linkages, Growth, Institutions, County, Kenya

scholarly journals INFLUENCE OF ETHICAL INVESTOR RELATIONS ON THE FINANCIAL PERFORMANCE OF LISTED FIRMS IN KENYA

2017 ◽  
Vol 2 (6) ◽  
pp. 28
Author(s):  
Manduku Daniel Ogwoka ◽  
Dr. Juliana Namada ◽  
Dr. Damary Sikalieh
Keyword(s):  
Financial Performance ◽  
Information Disclosure ◽  
Secondary Data ◽  
Strong Relationship ◽  
Target Population ◽  
Primary Data ◽  
Corporate Ethics ◽  
Investor Relations ◽  
Social Scientists ◽  
Listed Firms

Purpose: The objective of the study was to investigate the influence of ethical investor relations on the financial performance of listed firms in Kenya.Methodology: The study adopted a causal research design to establish the relationship between ethical leadership and financial performance of companies listed in the Nairobi Securities Exchange using correlation and regression analysis. Primary data was collected through a semi-structured questionnaire. Secondary data was collected from both the listed firms in the Nairobi Securities Exchange (NSE), and information from the sector regulator, the Capital Markets Authority (CMA). The target population of this study was 64 companies listed in the Nairobi Securities Exchange (NSE) with consistency being evaluated between the years 2011 to 2015. Data analysis was done using the Statistical Package for Social Scientists (SPSS).Results: The study found out that there exists a strong relationship between ethical investor relations and financial performance. The study established that information disclosure, the practice of corporate ethics and vetting of board members being based on ability to achieve the firms’ vision is essential for the listed firms.Unique contribution to theory, practice and policy: The study recommends truthful disclosure of information, especially regarding financial statements of the firms.

scholarly journals EFFECT OF CASH RECONCILIATION ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

2017 ◽  
Vol 2 (7) ◽  
pp. 13
Author(s):  
Mactosh Onwonga ◽  
Prof. George Achoki ◽  
Dr. Bernard Omboi
Keyword(s):  
Financial Performance ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Multiple Linear Regression Model ◽  
Secondary Data ◽  
Primary Data ◽  
Multi Stage ◽  
Handling Practices ◽  
Comparison Of The Results ◽  
Descriptive Survey

Purpose: The main aim of the study was to examine the effect of cash reconciliation on the financial performance of commercial banks in Kenya.Methodology: The research was carried out through a descriptive survey research design. The study population was all the 43 commercial banks registered and licensed to operate in Kenya. A multi stage sampling approach was used. In the first stage, a census of all the 43 commercial banks was conducted, that is, the units of analysis were the commercial bank. In the second stage, purposive sampling was used where two respondents from every organization were taken. The study used both primary and secondary data for analysis. Primary data was collected using questionnaires while secondary data was obtained using secondary data collection template. A multiple linear regression model was used to link variables.Findings: The study findings indicated a positive correlation between cash reconciliation and financial performance of commercial banks. Cash reconciliation was positively and significantly related to both ROE and ROA. The study concluded that cash reconciliation is positively and significantly related to financial performance of commercial banks in Kenya.Unique contribution to theory, practice and policy: The study recommends that commercial banks and other financial institutions involved in handling of cash should put in place proper reconciliation practices. The commercial banks should focus on increasing the number of times books are reconciled, increase the regularity of auditing the cash books, put in place and implement a policy on cash reconciliation, training its staff on conducting cash reconciliation and segregating the duties of cash reconciliation other duties so as to evolve specialization. The study recommended further studies to establish the effect of cash handling practices on financial performance of other financial institutions other than commercial banks. This will be crucial in comparison of the results and identification of more research gaps for future studies.

scholarly journals Impact of Bancassurance on Financial Performance of Private Commercial Banks in India

2019 ◽  
Vol 8 (6S3) ◽  
pp. 2027-2034
Keyword(s):  
Financial Performance ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Secondary Data ◽  
Primary Data ◽  
Best Management ◽  
Regulatory Policies ◽  
Private Banks ◽  
Current Scenario ◽  
The Impact

In order to get competitive advantage, many Financial Institutions are sharing resources in the current scenario. To ward off competition Financial Institutions have tied up with the banks which is termed as bancassurance. The present study is focused on studying the impact of bancassurance on the financial performance of the privately owned commercial banks in India full stop the data was collected from 180 respondents working in 6 private banks of India. With the help of a questionnaire the primary data is collected and the secondary data was collected from the respective Bank sites. It was found that banks should come up with optimum optimal regulatory policies that won't allow them to compromise with the banks performance. And they have to recruit the best management talents so that right decision, smooth handling of the risk can be done by the banks

scholarly journals INFLUENCE OF INTEREST RATE ON THE FINANCIAL PERFORMANCE OF AGRICULTURAL FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE

2017 ◽  
Vol 1 (3) ◽  
pp. 19
Author(s):  
Dr. Samuel Kanga Odalo ◽  
Dr. George Achoki ◽  
Dr. Amos Njuguna
Keyword(s):  
Interest Rate ◽  
Financial Performance ◽  
Interest Rates ◽  
Financial Institutions ◽  
Secondary Data ◽  
Primary Data ◽  
Multivariate Regression Model ◽  
Interest Rate Spread ◽  
Using Data ◽  
The Interest Rate

Purpose: The purpose of this study was to establish to establish the influence of interest rate on the financial performance of agricultural firms listed at the Nairobi Securities Exchange.Methodology: The research design adopted was descriptive and causal (explanatory). A census approach was adopted and all the seven listed agricultural companies were taken as the population. The respondents’ sample was from finance departments at all levels and 220 questionnaires were administered. Primary data was collected using questionnaires while the secondary data was collected using data collection sheets from the firms as well as from the Nairobi Securities Exchange and CMA records. The particular inferential statistic was regression and correlation analysis. Panel data methodology was employed using a multivariate regression model to test the hypotheses and link the variables.Results: The findings revealed that interest rate has a positive and significant relationship with ROA, ROE and EPS. In addition, the findings from the interaction of the independent variables and the interest rate revealed that interest rate moderate the effect of financial performance of agricultural firms listed at the Nairobi Securities Exchange.Unique contribution to theory, practice and policy: The study recommends that financial institutions and banks in Kenya should assess their clients which include agricultural firms listed in NSE while setting up interest rates policies, as ineffective interest rate policies can increase the level of interest rates and consequently cost of borrowing and negate financial performance of the borrowing firms. The study also recommends that the Central Bank should apply stringent regulations on interest rates charged by financial institutions so as to regulate their interest rate spread.

scholarly journals Competitive Intelligence Practices And Performance Of Firms Listed On The Nairobi Securities Exchange, Kenya

2016 ◽  
Vol 12 (19) ◽  
pp. 107
Author(s):  
Paul Waithaka
Keyword(s):  
Financial Performance ◽  
Secondary Data ◽  
Target Population ◽  
Business Environment ◽  
Competitive Intelligence ◽  
Annual Reports ◽  
Primary Data ◽  
Financial Measures ◽  
Listed Firms ◽  
And Performance

Performance is critical for every listed firm, as it enhances shareholder’s value and capability to generate earnings from invested capital. Some of the firms listed on the Nairobi Securities Exchange (NSE) have been performing poorly as indicated by the rising number of firms issuing profit warnings. The competitive business environment is continuously working to drive down the rate of return on invested capital. To counter these competitive forces, firms have resorted to gathering information at their disposal and converting it into competitive intelligence through analysis and human judgment. This study sought to determine the effect of competitive intelligence practices on performance of firms listed on the NSE. Firm performance was evaluated using both financial and non-financial measures. The non-financial measures used in the study were goal achievement and customer satisfaction, while Return on Assets (ROA) and Return on Equity (ROE) were the financial measures used. The target population was the sixty firms listed on the Nairobi securities exchange. Primary data was collected using a semi-structured questionnaire; while secondary data was obtained from the firm’s published annual reports available at the NSE using a document review guide. Quantitative data was analyzed using both descriptive and inferential statistics. The findings indicate that competitive intelligence practices have a positive and a statistically significant effect on the non-financial performance of firms listed on the Nairobi Securities Exchange. The intelligence practices were found to have a positive but statistically insignificant effect on the financial performance of listed firms. Managers of listed firms should raise the utilization level of competitive intelligence practices to enable the firms to make accurate predictions on changes in the business environment, compete better in the marketplace against rivals, improve on innovation and automation, track competitors’ activities and improve the competitiveness of their firms by identifying threats and opportunities before they become obvious. The study suggests that future researches should focus on extending knowledge on competitive intelligence practices to non-listed corporate sector firms to support the generalization of the findings to all sectors in the economy.

The Effect of Product and Service Innovations on the Financial Performance of Commercial Banks in Kenya

2020 ◽  
Vol 2 (1) ◽  
pp. 56-68
Author(s):  
Gladys Chepngetich Tonui; Patrick Kibati; John Kipkorir Tanui
Keyword(s):  
Financial Performance ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Banking Sector ◽  
New Technology ◽  
New Products ◽  
Secondary Data ◽  
Internet Banking ◽  
Primary Data ◽  
Product Service

The objective of this study was to establish the effect of product /service innovations on the financial performance of commercial banks in Kenya. The 40 commercial banks was the population of this study which were in operation in Kenya as at December, 2017. Both primary and secondary data were used in the study. Explanatory research design was used. Questionnaires were used to gather primary data. Secondary data was collected from Central Bank annual report to validate communicative and validity of primary data. Quantitative analysis in the research was facilitated by Statistical Package for Social Sciences (SPSS), the completed questionnaires was examined and the information for each item was further processed and analysed. The results obtained was further presented in charts and tables. Regression and correlation analysis were used to study the relationship between the dependent and the independent variables of the study. These were employed to analyze the data and find out whether financial performance of commercial banks was influenced by banks innovations. The results showed that most commercial banks have concentrated on their profits by creating new products and services which have minimized their operational costs. This study used Cronbach Alpha test of internal consistency to analyze the accuracy of the research tool based on pilot data.  The study recommended that banks should consider incorporating the new technology as it will increase the firms’ performance and to ensure their new products and services, are readily available in the market. The study recommended that the banking sector ought to continue investing on more innovative delivery channels since this improves banks capability to regulate expenditure. These will in turn, facilitates reduction in cost in every unit of service thus improved return on assets to financial institutions effective monitoring of accounting and auditing. Financial institutions should ensure that the banking innovations are well secured for customers to have confidence in using mobile banking and internet banking.

scholarly journals ELECTRONIC BANKING ADOPTION AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA, NAIROBI CITY COUNTY

2019 ◽  
Vol 4 (2) ◽  
pp. 19
Author(s):  
Priscah Jepchumba ◽  
Dr.Eddie Simiyu
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Secondary Data ◽  
Target Population ◽  
Primary Data ◽  
Unique Contribution ◽  
Electronic Banking ◽  
Descriptive Research ◽  
General Managers ◽  
Positive Effect

ELECTRONIC BANKING ADOPTION AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA, NAIROBI CITY COUNTY   1*Priscah Jepchumba 1Post Graduate Student: Kenyatta University *Corresponding Author’s Email: [email protected] 2 Dr.Eddie Simiyu Lecturer: Kenyatta University   Abstract Purpose: This research was done to establish how e- banking adoption has improved the financial performance of commercial banks in Kenya. Methods: The study used descriptive research design and structured questionnaires to collect data.The target population was all the 41 commercial banks in Nairobi. The sampling design was census where general managers and credit managers were targeted in Nairobi headquarters. The source of data was primary and secondary data; Primary data was collected from source through questionnaires while secondary data was sourced from annual central bank reports, bank financial statements as well as periodical journals and reports. Results: The findings of the study has indicated that most of the respondents had served the banking industry for a period of at least five years and education level of at least a college diploma.  The study also rejected all the null hypotheses and concluded that electronic banking has positive effect on financial performance of commercial banks.  The study has contributed to knowledge through provision of scholarly literature on electronic banking and financial performance of commercial banks in Kenya. Unique Contribution to Theory, Practice and Policy: The study’s recommendation to management is to implement strategies which: increase Speed in Electronic Services, increase investments in Electronic banking,  promote training programs to employees and adopt suitable techniques to reduce  threats to e-banking.  The study’s recommendation is that a similar research should be conducted with a moderating or mediating variable in the same industry.

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