Financial Risk and Financial Performance: Evidence and Insights from Commercial and Services Listed Companies in Nairobi Securities Exchange, Kenya

Onsongo, Susan Kerubo; Muathe, Stephen M. A.; Mwangi, Lucy Wamugo

doi:10.3390/ijfs8030051

Cited by 31 publications

(32 citation statements)

References 20 publications

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“…This means that the higher the credit risk led the higher the Financial Distress. The results of this study have also shown a consistent with the research of Brownbridge (1998), Rahman et al (2004), Fukuda et al (2007, Zaki et al (2011), Kargi (2011), Keffala (2018, Gadzo et al (2019), Onsongo et al (2020), Ledhem and Mekidiche (2020), Asutay and Othman (2020), Kablay and Gumbo (2020). Results also found a positive effect of Credit risk on Financial Distress, so the hypothesis statement in thi study is accepted.…”

Section: Hypothesis Testingsupporting

confidence: 91%

“…Banks in financial stress condition and even on verge of bankruptcy will disrupt payment system activities and will disrupt the distribution of credit loans to local communities (Gilbert and Meyer, 1991). Researchers who still pay attention to financial stress, including Keffala (2018), Gadzo et al (2019), Ledhem and Mekidiche (2020), Onsongo et al (2020).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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Indicators of financial distress condition in Indonesian banking industry

Haris¹,

Ghozali²,

Najmudin³

2022

10.5267/j.ac

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This study conducts the theme of The Causes of Financial Distress conditions by samples from Indonesian banking sector registered in the Financial Services Authority of Indonesia within the period of 2015-2019. The title of this study: "Indicators of Financial Distress condition in Banking sector in Indonesia” during the period of 2015-2019" with a multiple correlation approach. The purpose of this study is to determine the effect of leverage of Credit Risk, CAR, ROA, and LDR to the Financial Distress conditions. The sample of population in this study are all conventional commercial banks in Indonesia registered in the Financial Services Authority of Indonesia. The number of samples in this study were included 37 commercial banks that their profitabilities were being declined, with a total number 146 observations. The method carried out in determining the sample is “Purposive” sampling. Based on the results of study and data analysis using the panel data method, it shows that capital, credit risk, profitability and liquidity have a positive effect on Financial Distress. The implication of the above conclusion is that it required further research to perform preventive actions to anticipate the measures of financial performance of the Bank, and it is expected to select a larger population of samples and variables that might have not been included in research on banking Financial Distress in Indonesia.

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Section: Hypothesis Testingsupporting

confidence: 91%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Indicators of financial distress condition in Indonesian banking industry

Haris¹,

Ghozali²,

Najmudin³

2022

10.5267/j.ac

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“…According to research conducted by Widajatun & Ichsani (2019) OEIR has a negative and significant effect on ROA. In contrast to research conducted by Onsongo et al, (2020) where the results of OEIR have a positive effect on ROA.…”

Section: Introductioncontrasting

confidence: 85%

Risk Management and Banking Performance With Corporate Governance as Moderating Variable

Hikmawati

Sutrisno

2021

BSE

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This research aims to analyze the effect of risk management on bank financial performance with corporate governance as a moderating variable. The independent variables used in this research are risk management, consist of credit risk (NPL), liquidity risk (LDR), and operating risk (OEIR). The dependent variable used is financial performance (ROA). Meanwhile, corporate governance as a moderating variable and firm size as a control variable. The regression model used are multiple linear regression analysis and moderated regression analysis. The sample was selected through purposive sampling method and 43 banks were selected as research sample. The result of this research showed that NPL and OEIR have a negative and significant impact on financial performance. Meanwhile, LDR has not significant effect on financial performance. Corporate governance was able to moderate the relationship between NPL and OEIR on financial performance, but unable to moderate the relationship between LDR on financial performance.

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“…This means that a decrease in foreign exchange risk results to increase in financial performance of listed investment firms. In agreement, a study by Onsongo, Muathe, and Mwangi (2020) found a negative significant relationship between foreign exchange risks and financial performance (ROA and ROE). However, the results contradict a study by Panda and Leepsa (2017) that found that foreign exchange risk had positive significant relationship with financial performance.…”

Section: Regression Analysissupporting

confidence: 65%

“…However, the study used GLS which is difficult to interpret. In another study, Onsongo, Muathe, and Mwangi (2020) assessed the implications of financial risk on the performance of commercial and services companies. The study collected secondary data for the period 2013-2017.…”

Section: Financial Risks and Financial Performancementioning

confidence: 99%

Financial Risks and Its Effect on Financial Performance of Investment Firms Listed at the Nairobi Securities Exchange in Kenya

Gacheru

2021

JOFA

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The study investigated financial risks and its effect on the financial performance of investment firms listed at NSE. The study was guided by three research objectives; to determine the influence of foreign exchange risk, liquidity risk, and interest rate risks on the financial performance of investment firms listed at the NSE. The study used secondary data for the period, 2011-2018. The study employed a descriptive research design. The target population was the four investment companies listed on the NSE. Secondary data was collected from the financial annual reports of the firms. Statistical Packages for Social Sciences (SPSS) version 20.0 was used for data analysis. Descriptive statistics, regression analysis, and diagnostic tests were employed. The study concludes that a decrease in liquidity risk results to increased financial performance. A decrease in foreign exchange risk exposure could lead to improved financial performance. The study concludes that interest rate risk was negatively and significantly related to financial performance . Further, the study concludes that firm size had a positive and significant relationship with financial performance. The study recommends that the listed investment firms should increase the current ratio to minimize exposure to financial risks and the firms should also ensure they invest the idle cash to diversify investment portfolio. The study recommends that the management of investment firms should introduce a robust efficient and effective strategies that can assess, identify, and manage foreign exchange risks. Investment firms can also use various financial derivatives to reduce the effect of exchange rate risk. The study recommends that the firms can explore means they can use to improve capacities to manage interest rate risks exposure. For instance, interest rate risks can be mitigated by using financial derivatives and also through securitization of assets to minimize interest rate risks.

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Financial Risk and Financial Performance: Evidence and Insights from Commercial and Services Listed Companies in Nairobi Securities Exchange, Kenya

Cited by 31 publications

References 20 publications

Indicators of financial distress condition in Indonesian banking industry

Indicators of financial distress condition in Indonesian banking industry

Risk Management and Banking Performance With Corporate Governance as Moderating Variable

Financial Risks and Its Effect on Financial Performance of Investment Firms Listed at the Nairobi Securities Exchange in Kenya

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