Commercial banks’ role of intermediation between borrowers and lenders plays a critical role in money creation process. The taking of deposits and lending it to borrowers makes banking industry a special business. However, this unique banking characteristic exposes banks to risk-taking. Lending may lead to accumulation of risky loan portfolio that may eventually affect the stability of the whole banking industry. Banks performance can be measured using different key performance indicators t...
Current account is one of the components in the Balance of Payment of a country. It covers all the transactions that involve the real sources (goods, services, income).It comprises the international balances of transactions in trade of goods and services, factor income and current transfers. Current account balance is significant because it is key economic indicator of country’s external performance. Despite this voluminous literature, there is hardly any consensus as regards the determinan...
Since the global financial turmoil in 2008, which led to the fall down of financial institutions, there is an increased focus on risk management practices in financial institutions globally. Being an essential tool for risk management and investment reasons, the usage of derivatives has grown speedily lately. Interest rate and currency risks represent the key forms of risks faced by the banks due to their volatility. While several empirical studies have been conducted in the developed financi...
External reserves are recognized as key ingredients for financing international trade. The fall in Nigeria's external reserves has been of great concern as this has caused panic in both the economic and political environment. This is because Nigeria greatly depends on its external reserves for import cover, exchange rate stability and for international ranking. In 2014, external reserves for Nigeria went below three months import cover, which is the International Monetary Fund, stipulated opt...
Information technology has changed the traditional ways of doing business to a digital and electronic way that has led to globalization. The banking industry has been forced by the wave ofelectronic payment system in the business environment to change from its traditional ways such as: long queues as customers waited to be served, delay in the clearing house as representatives of different banks waited to settle their dues and manual work that resulted to errors. The main purpose of the s...
In the recent past there has been failure of some of the largest commercial banks in the Kenya. This trend puts into question the ability of the internal control systems and the Central Bank of Kenya prudential guidelines to steer the commercial banks stability and performance. However, the recent failures have put pressure on the industry regulators and players to rethink how best the institutions can align their internal control systems and compliance as tools of ensuring stability and...
ABSTRACT There has been a declining trend in the performance of companies in Nairobi Securities Exchange in the recent past with seventeen companies issuing profit warnings to investors in the year 2019, fifteen in 2018, while eighteen firms issued in 2015. Most of the firms reporting inadequate profits were listed in the Commercial and Services sector of the Nairobi Securities Exchange. It raises concern whether companies listed in this sector were more exposed to financial risks in the bus...
ABSTRACT Kenya is seeking to meet the Sustainable Development Goals-2030 agenda. The serious challenge to this course remains the soaring debt obligations, capturing a significant portion of the national budget. Kenya has been borrowing externally at higher rates and continually expanding the debt ceiling. The government will therefore in future spend a significant portion of its revenue repaying the debts at the cost of important local investment. The government is therefore limited to full...
ABSTRACT Financial performance of commercial banks dwells entirely on generated returns of assets from operations whereas loan portfolio falls as a critically valuable asset that unfortunately exposes the institution to financial risks. Business Process Reengineering is a management practice that aims to improve the efficiency in the business processes. Commercial banks seem to have slowed down in Re-engineering making business processes still to be costly and slow. Commercial banks across t...
ABSTRACT Group based lending has been synonymous with most borrowers of the lower economic end in the developing world and this is no exemption to borrowers in Kenya. For a long time low income earners had been left out and were previously unbanked. The microfinance model through group lending has ensured inclusion of these players to the economy. Group lending is done through self-organised groups of individuals mostly between 5 and 20 who lack mainstream collateral but can co guarantee eac...
ABSTRACT The purpose of this study was to establish impact of compliance review audits on financial performance of donor funded organizations in Nyeri County, Kenya. Donor funded organizations are supposed to conform to grant and loan conditions established by donor organizations and communities. One shortfall that has greatly affected the implementation and success of the donor funded projects is accountability and poor information relays to the donors which in the end demoralizes the donor...
ABSTRACT The performance of commercial banks in Kenya has been declining in the recent years evidenced by decline in return on assets and return on equity from 3.99 percent and 24.7 percent in 2016 to 3.5 percent and 22.5 percent in 2018. This trend indicates a challenge in the entire banking industry regarding profitability. Agency banking was introduced to increase the reach of banks to enable banks to reach the unbanked. Agency banking can therefore enhance market share and performance of...
ABSTRACT Most SOEs are faced with a challenge of poor financial management as reflected in misuse of financial resources and inefficiencies in internal control systems. At the same time, most state-owned enterprises (SOEs) have consistently been making losses and some of the reasons cited are lack of sound financial management, poor reporting and tracking systems, lack of internal control systems and audit teams. These challenges result into the need of determining the interaction between fi...
ABSTRACT A stable banking sector is significant in ensuring economic growth as well as sound, efficient and stable financial system. However, the banking sector has been considered fragile and this is evident from the increasing trend of non-performing loans, fluctuating deposit trend of some commercial banks and increasing trend of foreign liabilities held by commercial banks in Kenya which is associated with financial stability. Furthermore the collapsing of commercial banks and some being...
ABSTRACT Financial performance of insurance companies has been declining due the decrease in profitability as a result of the rise in competition, changes in technology, deregulation and as well as globalization. The collaboration between insurance companies and financial institutions to distribute or cross-sell insurance products, through Bancassurance which provides a one-stop-shop platform whereby customers can access insurance services among other financial solutions, is the only platfo...