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CREDIT MANAGEMENT STRATEGIES AND SUSTAINABILITY OF DIGITAL LENDING APPLICATIONS IN KENYA

Margaret Wangechi Njenga - Department of Business Administration, Kenyatta University, Kenya

Lucy Kavindah - Department of Business Administration, Kenyatta University, Kenya


ABSTRACT

The sustainability of the rapid emergence and uptake of Digital Lending Applications in Kenya is worrying; Majority of Digital Lending Applications in Kenya deal with personal loans which are unsecured and therefore lenders charge a higher interest rate because of the higher risk nature of their customers and thereafter use aggressive debt collection techniques, this have led to calls from the general public, policy-makers and the CBK for the regulation of Digital Lending Applications. If the current status continues where millions of Kenyans are listed with CRB it will be to the detriment of Digital Lending Applications investors who will lose their investments and it will eventually lead to closing down of Digital Lending Applications which will be a backward trend to the innovative and inclusive idea Digital Lending Applications bring to Kenyans in comparison to the traditional financial institutions. The main objective of this study was to look at the credit management strategies of Digital Lending Applications in Kenya and how they affect the sustainability of Digital Lending Applications in Kenya. This study employed descriptive research design techniques in collecting, analysing, interpreting and presenting the information. Descriptive research design showed the relationship between credit management strategies and sustainability of Digital Lending Applications in Kenya. The study’s population was the Digital Lending Applications listed in the android software that are operating in Kenya. The study collected both primary and secondary data based on the objectives of the study. Data collection started by obtaining a letter from the Kenyatta University introducing the researcher to the lending firms. The letter was used to accompany the questionnaires and interview guides for data collection, the respondents were the loan appraisal officers, credit staff and accounting staff employed by the Digital Lending Applications in Kenya. The collected data was analysed using Statistical Package for Social Sciences (SPSS) and Microsoft excel programs, inferential statistics were applied, and multiple regressions employed to test the relationship between credit management strategies and sustainability of Digital Lending Applications in Kenya. Figures and tables were used to present the data. The study found that credit appraisal strategies positively and significantly influences sustainability of Digital Lending Applications in Kenya; pricing strategies positively and significantly influence sustainability and that debt collection strategies positively and significantly influence sustainability. The recommendation of the study is that Digital Lending Applications in Kenya should improve their client appraisal techniques to lower their non-performing loans. Having a well-performing loan portfolio will improvement their financial performance and hence their sustainability. Digital Lending Applications in Kenya have incurred loan losses through lenient standards of lending. The study thus recommends Digital Lending Applications in Kenya to improve the way they deal with risk accruing from credit by improving their credit risk controls; this can be done by having an updated assessment database with a profile of prospective and current borrowers and guarantors, it should show a of history repayment patterns and cash flow records of the borrower. The database can be shared among financial institutions and other lending companies to be used during the credit appraisal process; this can improve the quality of their loan books.


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DIVIDEND POLICY AND FINANCIAL PERFORMANCE OF INSURANCE COMPANIES LISTED IN NAIROBI SECURITIES EXCHANGE, KENYA

Kiruja Vincent Murimi - Department of Accounting and Finance, Kenyatta University, Kenya

John Mungai - Department of Accounting and Finance, Kenyatta University, Kenya


ABSTRACT

The profit of a firm can be paid out as dividends or be re-invested. There are a number of reasons why the firm should pay dividends or not. Investors pay attention to dividends and therefore the dividend policy behaviour is still an issue of concern in finance literature. Whereas some of the insurance companies have been performing well in terms of assets growth and profitability, there are other listed insurance companies whose return on assets has been dwindling over the years under study. This was partly attributed to poor dividend policy. The research aimed at filling the research gap by establishing the importance of effective dividend policy and the link existing between dividend policy and insurance companies’ financial performance. The goal guiding the study are; to determine the influence of dividend payout ratio, retained earnings, and dividend yield on financial performance of insurance companies listed in the Nairobi Securities Exchange. A descriptive design was adopted. Secondary data from4financial4statements of the Nairobi Securities Exchange listed insurance companies4for4the period 2013-2018 was collected. Descriptive statistics and regression model using SPSS software version 2 was used for the data analysis. The study concluded that dividend payout does not affect the performance of insurance companies listed in Nairobi securities exchange, retained earnings has a positive significant effect on financial performance of insurance companies listed in Nairobi securities exchange, and that dividend yield has a positive effect on1 the performance of insurance companies listed in Nairobi Securities Exchange in financial terms. The study recommends that Insurance companies listed in Nairobi securities exchange should ensure that they have a good and robust dividend policy in place that can enhance their level of profitability and also attract investments. The study recommends that Insurance companies listed in Nairobi Securites Exchange should develop policies and laws governing dividend payment and should be strengthened and enforced to ensure a more frequent dividend payment in order to increase their market values through share price increases. It is also recommended that and investment policy should be developed and implemented; this will ensure that the management is not left to decide on how to use the little surplus left but would rather be guided by the investment policy. The board of directors of insurance firms should be prudent in declaring dividends as higher dividend yield could mean that the share price is underpriced which could affect future dividends.


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INTEREST RATE RISK AND VALUE OF THE FIRM AMONG PRIVATE EQUITY FIRMS IN FRONTIER MARKETS: INSIGHTS FROM DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVES IN KENYA

Kariuki Florence Waitherero - Department of Business and Economics, Karatina University, Kenya


ABSTRACT

Savings and credit cooperatives (SACCOs) form an integral part of the financial sector across the globe. However, in pursuit of their wealth creation goals, these cooperatives are exposed to numerous risks that threaten their performance and survival. One such risk is interest rate risk arising from variations in interest rates as a result of unpredictable movements in interest rates. This variation in interest rates may adversely affect the value of such institutions. In spite of the critical role played by deposit taking SACCOs and the relevance of interest rate risks management on their value, the relationship existing between the variables has not been given due attention by previous scholarship. Majority of scholars focus on commercial banks and others concentrating on other elements of financial risk such as credit risk, default risk, and exchange risk. The study therefore sought to establish the effect of interest rate risk on the value of the firm among deposit taking SACCOs in Kenya. The study was anchored on the Trade-off theory which opines that firm management must trade-off between the risk of bankruptcy and agency cost and the interest tax shield benefits associated with utilisation of debt in the capital structure. Positivism research philosophy was deployed with descriptive research design and causal research design being adopted. The target population for this study consisted of all the 164 deposit taking SACCOs licensed by Sacco Societies Regulatory Authority (SASRA) from which a sample size of 115 deposit taking SACCOs were selected using stratified sampling technique. The study exclusively utilized secondary data obtained from audited financial statements and Sacco offices using a data collection sheet. Descriptive statistics such as means, standard deviation, skewness and kurtosis were used. Inferential data analysis was conducted using Pearson correlation coefficient and panel regression model involving cross-sectional data. In testing the fitness of the model, the coefficient of determination R2 was used. F-statistic was also computed at 5% significance level to test whether there is any significant relationship between interest rate risk and SACCO value. The study concluded that interest rate risk has a significant effect on the value of the firm among deposit taking SACCOs in Kenya. The study therefore recommends that the management should seek to increase fixed rate assets so as to reduce fixed interest rate gap as well as variable rate assets to increase variable rate gap. This study was based on deposit taking SACCOs and therefore the findings may not be applicable in other forms of organisation such as among non-deposit taking SACCOs, commercial banks, and Microfinance institutions. The study thus suggests that other studies be conducted among non-deposit taking SACCOs, commercial banks, and Microfinance institutions to establish if the findings in this study would concur.


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STRATEGIC INNOVATIONS AND COMPETITIVENESS OF SACCOS IN SOUTH IMENTI SUB-COUNTY, MERU COUNTY, KENYA

Carolyne Kanyua Wallace - School of Business, Kenyatta University, Kenya

Dr. James Kilika - School of Business, Kenyatta University, Kenya


ABSTRACT

The survival of SACCOs in a rapid market depends on their capability to align strategies and competencies with prospects in the external environment for the sake of achieving market leadership status. Innovation is one of key element that ensures that competitiveness is achieved. Innovation in business means doing things differently from Competitors, changing, altering or coming with a new way/process to a product in order to increase its productivity and improve its value. SACCOs in Imenti South Sub-County, Meru County are no exception as innovation significance increases, which is a key requirement for them in achieving competitive advantage. The study focused on the effect of product innovation, technological innovation, market innovation and process innovation strategies on competitiveness in Imenti South Sub-County, Meru County. The objective of this study was affected by two approaches: Resource based view strategy and Schumpeter Theory of Innovation. The study adopted a descriptive Design. The population of the study involved census of all the 46 Saccos in South Imenti Sub-County. The study also purposively selected 46 CEOs and senior managers. This lead to selection of 92 respondents. Questionnaire was the main instrument used in data collection. The instrument was tested for reliability using Cronbach’s Alpha Reliability test while content validity was assessed using expert opinion. The Statistical Package for Social Sciences (SPSS) Version 23.0 was used to capture and edit data from the completed instruments. Then, the process of testing data was initiated. Descriptive statistics was derived from the data, which included frequency data (mean, standard deviation and measures of relative frequencies). The results of the study were represented using tables and figures. Furthermore, the study undertook statistical testing, where hypotheses between the dependent variable and the independent variables were tested. The findings of the study indicated that all the study variables (product innovation, technology innovation, process innovation and market innovation) have a positive and significant relationship on competitiveness of Saccos in South Imenti Sub-County, Meru County. In conclusion, innovation is a very important tool for SACCOs since it protects them against imitability of key competitive elements in the market by identifying results which seems difficult to recreate for other competitors within the same market. The study recommended that innovation should involve all stakeholders in SACCOs, that is including Directors of the , Members, Senior Management and all other members of staff in the SACCOs, as a major tool to promote competitiveness and it should not be perceived as a management function alone but it should be adopted as bridge towards effective communication within the organization and as a strong key for the organization to remain at the top of the rest.


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IMPLEMENTATION OF OPERATIONAL MANAGEMENT PRACTISES IN THE PUBLIC SUGAR SECTOR IN KENYA

Barasa Khanda Benson - School of Business, Department of Accounting and Finance, Kenyatta University, Kenya

Dr. Ambrose Jagongo - School of Business, Department of Accounting and Finance, Kenyatta University, Kenya


ABSTRACT

Operations management is the administration of business practices aimed at ensuring maximum efficiency within a business, which in turn helps to improve the firm’s performance and profitability. According to Amit Kothari, (2016), it involves resources from staff, materials, equipment, and technology, converting these inputs into efficient and effective outputs on both day-to-day and strategic levels within an organization. The Kenyan sugar sector has had many perennial challenges. Despite the governments’ efforts to revive the sector and help it stabilize, the efforts have not borne any fruits. Many hypothesis have been raised, about the factors that have contributed to the state of the sugar sector in the country. Among them is the implementation of operational management. This is what necessitated this study. This study aims to analyze the factors influencing of the operational management practices in the public sugar sector in Kenya. These factors include of employee competence, availability of functional infrastructure and operation environment and framework. The study will be carried out in all public sugar cane companies in Kenya. The population of the study will include all departments of Mumias Sugar Company, the researcher will carry out a simple random selection of the respondents from all the 8 departments of the company. Both primary and secondary data will be used in the study. The research study will use a questionnaire as a key instrument for primary data collection due to convenience and reference. Secondary data will include online data, information collected by company agricultural authority, government archive, department records and publications made. The data will be analyzed using SPSS and presented in tables and charts.


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