This study investigated the influence of ownership structure on financial performance of privatized companies in Kenya for the period of 2007 to 2013. The study was informed by the property rights, the agency and the resource based theories. Data was extracted from prospectuses and financial reports of privatized companies, obtained from the Capital Markets Authority (CMA) and the Nairobi Stock Exchange (NSE). A unit root test was used to examine stationarity of data while a Hausman test determined the appropriate regression model. This study used a Fixed Effects (FE) regression model with a robust standard error option to control for heteroskedasticity and contemporaneous correlation which may lead to spurious results. The study found that ownership structure has a significant relationship with financial performance. Among individual variables, government ownership has a positive influence on Return on Assets (ROA) and the Tobin's Q; but a negative effect on cost efficiency. Institutional shareholders have a positive influence on ROA and technical efficiency. Large individual investors have a positive influence on cost efficiency. Dispersed shareholders have a positive influence on ROA but a negative effect on cost efficiency. This study recommends that the Privatization Commission of Kenya should restructure ownership of privatized companies to reduce government and dispersed ownership further to pass more control and decision making to private investors. However, the government should retain some ownership in privatized firms to enhance shareholders confidence, protection of investments and managerial monitoring. A strategic institutional investor in each company should be identified and be allocated adequate ownership to enable privatized companies attract managerial and technical expertise crucial to improve governance and financial performance.
Since 2009, Kenya's financial system has experienced remarkable financial innovation with possible implications on financial performance of commercial banks in Kenya. Increase in financial literacy in Kenya has increased the use of payment cards and also infrastructural expansion of commercial banks led to increase in the number of points of sales. However, later with the adverse effect of financial crisis since 2008, most banks were forced to close down some of their branches and points of sales as a cost cutting measure, some became victims of mergers and acquisitions. This led to decrease in the number of payment card transactions. Though ATMs have contributed a lot in improving the efficiency of banking to customers, they have a high fixed and maintenance cost. The study sort to establish the relationship between payment cards and financial performance of commercial banks in Kenya. Cross-sectional descriptive survey research design was used. The population of this study was 42 commercial banks licensed by the Central bank of Kenya from 2011 to 2020. The study used secondary data obtained from the 42 banks' annual financial reports for a ten years' time period from 2011 to 2020. The study was guided by Coase Theorem, Constraint Induced Financial Innovation Theory, Circumvention Innovation Theory and Innovation Diffusion Theory. Data was analysed using descriptive statistics and panel model. The results indicate that Debit card on ATM had a positive significant relationship with ROA at 5% significance level. The Credit Cards on ATM and POS Machines were also positively related to ROA but were not statistically significant while Prepaid Cards ATM was negatively related to ROA and non-significant. The study recommends that commercial banks should continue investing in innovation delivery channels because they are able to control their costs much better as compared to investment on physical branches. The findings contributed to new knowledge to literature and theory.
From previous studies, the effects of expenditure on economic growth appear to provide mixed results. Despite this uncertainty, theory suggests that expenditure induce growth. In Kenya, economic growth has been fluctuating despite the devolved expenditure increasing over time. It is against this background that this study was carried out to investigate empirically the short-run and long-run effect of components of county spending on growth in Kenya using panel data set over the period 2013 to 2017. Employing Harris-Tzavalis test, the study tested for the panel unit root and found that all variables were non-stationary at their level except gross county product (GCP). To check if the variables have long-run relationship, this study applied F bounds test. The result for this test revealed that there exists a long-run relationship among the GCP growth and regressors in the model. Once co-integrating was confirmed using F-bound, the long-run and ECM estimates of the ARDL model were obtained. The ARDL results revealed that spending on recurrent expenditure exerts a positive and significant effect on economic growth both in short-run and long-run hence confirming Keynesian theory in Kenya. However, capital expenditure was insignificant during the study period. From a recommendation standpoint, this study submits that the policymakers need to put in place policies that will improve budget allocation and execution so as to improve expenditure increase to capital infrastructure. This is necessary since counties lack infrastructures that help promote private capital accumulation and consequently county GCP.
The region has lost an immense amount of capital that has led to sluggish regional integration in terms of capital formation and productive capabilities. Albeit most of these countries are in the ranking list of the huge volumes of capital flight, East Africa has never been considered as a sub-region in the capital-related studies. Cognizant of this, this paper intends to contribute to this body of knowledge by filling a noticeable gap. This paper examined the determinant of capital flight from East African Community countries that include Kenya, Tanzania, Uganda, Rwanda, and Burundi using panel data for the years 1988 to 2018 using the real gross domestic product, interest rate differential, external debt, corruption index, and exchange rate as explanatory variables. Secondary data obtained from EAC member countries National Bureau of Statistics. Levin-Lin-Chu panel unit root test was carried out and capital flight and Exchange rate found to be stationary at level. The fixed effect regression results showed that corruption, external debt, and the exchange rate had a positive and statistically significant effect on capital flight while real GDP had a negative and statistically significant effect on capital flight. Thus, policymakers should endeavor to achieve a broad investor base for its domestic and foreign obligations, with due regard to cost and risk, and should treat investors equally. In addition, there is a need to harmonize the judiciary and the executives in EAC to facilitate the fight against corruption which is a major concern for a capital flight.
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