http://41.89.164.27:8080/xmlui/handle/123456789/1816 2026-04-09T12:04:13Z http://41.89.164.27:8080/xmlui/handle/123456789/2556 MACROECONOMIC EFFECTS OF FINANCIAL DEEPENING BETWEEN 1990 TO 2023 ON ECONOMIC GROWTH IN KENYA MOREKA, MARTHA KERUBO Financial deepening has been found to stimulate economic growth by its capability to mobilize investments, thereby making financial resources readily available and, hence, raising efficiency. However, the reviewed empirical literature on the relationship between financial deepening and economic growth is not very clear in Kenya. The primary objective of the study is to examine the macroeconomic effect of financial deepening on economic growth in Kenya. The specific objectives are to determine the effect of credit to the private sector, stock market capitalization, commercial bank liquidity liabilities, broad money supply, and commercial bank deposits on the growth of the economy in Kenya. The study employed the following theories: the Endogenous Growth theory, the Neoclassical theory, Financial Liberalization Theory, Supply Leading theory. The study employed an explanatory research design and used secondary data from the World Bank and KNBS, with data spanning from 1990 to 2023. The data was subjected to stationarity and cointegration tests to test if the time series has stationary and long-run properties. Autoregressive Distributed Lag (ARDL) model estimation technique was used to achieve the research objectives. The ARDL regression results show that in the long run credit to the private sector 0.41(p-value 0.00&lt;0.05), stock market capitalization 0.04(p-value 0.00&lt;0.05), bank deposit 1.419(p-value 0.00&lt;0.05), liquidity liabilities 0.004(p-value 0.00&lt;0.05), broad money 1.55(p-value 0.00&lt;0.05) and deposit interest rate 0.08(p-value 0.00&lt;0.05) have significant positive effect on economic growth. In contrast, inflation rate -0.08(p-value 0.00&lt;0.05) has a negative impact. In the short run, credit to private sector 0.15(p-value 0.01&lt;0.05), stock market capitalization 0.02(p-value 0.03&lt;0.05), bank deposit 0.84(p-value 0.00&lt;0.05), broad money 0.30(p-value 0.02&lt;0.05) and interest rate 0.03(p-value 0.00&lt;0.05) are positively related to economic growth while inflation rate -0.03(p-value 0.00&lt;0.05) has a negative impact. Liquidity liabilities - 0.0004(p-value 0.15&gt;0.05) is negatively related to economic growth but statistically insignificant in the short run. Further, the results show a relationship between financial deepening and GDP growth in Kenya. Thus, the policymakers should improve the money supply in the economy to stimulate economic growth. This could be achieved through policies encouraging savings and investment and broadening the financial instruments available to the public. Financial institutions should be incentivized to innovate and offer various attractive savings and investment products to different population segments. By doing so, they can mobilize more funds from the public, which can then be channeled into productive investments that drive economic growth. 2025-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2504 Income Inequality And Economic Growth in Kenya Chemwok, Christopher Kipruto; Siele, Richard; Saina, Ernest K. Kenya aimed to achieve an economic growth of 10% annually by the year 2012. However, the 10% economic growth rate has not been achieved as at the end of the year 2022. This is an indication that the economic growth rate has been lagging the target for the vision 2030. The gap between the richest and poorest has reached extreme levels in Kenya. Less than 0.1% of the population owns more wealth than the bottom 99.9%. The findings of this research indicate high levels of income disparity are affecting the economyʹs growth process as well as contributing to the rise in poverty. The increase in economic growth has the tendency to lessen income inequality after a certain point. The process of changing a countryʹs economy from an agrarian society to an industrial society was responsible for the significant income inequality during the early stages of economic expansion. Kuznets also highlighted the fundamental adjustments made in economic growth. A negative relationship was observed which meant that a rise in income inequality would have a deteriorating effect on economic growth. This study therefore recommends that Kenya should devise appropriate measures such as deregulating the economy, setting up strong and accountable institutions to ensure the principle of equity is observed in the allocation and distribution of resources. This can be made possible through development of inclusive political and economic institutions that would promote the principle of equity as enshrined in the constitution of Kenya. 2023-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2489 Assessing the Impact of Financial Inclusion on Financial Performance of Micro, Small and Medium Enterprises in Baringo County, Kenya Cheruto, Alice; Ng’eno, Elijah; Mose, Naftaly Financial sectors that effectively mobilize savings and allocate resources play a crucial role in promoting financial inclusion, which in turn enhances resource allocation and risk management, ultimately influencing financial performance. However, financial institutions in Baringo County, Kenya, are currently underperforming, which hinders micro, small, and medium enterprises (MSMEs) from benefiting from financial inclusion. This study explores the impact of financial access, usage, and awareness on the performance of MSMEs, guided by theories of financial inclusion and credit access. Data were collected from 111 MSMEs across six sub-counties using a simple random sampling method and analysed through both descriptive and inferential statistics. The findings reveal that increased access to lending institutions and higher levels of entrepreneurial literacy improved the performance of MSMEs by 0.46% and 0.95%, respectively. Conversely, higher interest rates hurt performance, reducing it by 0.33%. While an increase in savings balances and the frequency of daily bank transactions enhanced performance by 0.98% and 1.08% respectively. Equally, financial awareness especially through credit access guidance and risk management training increased the performance of MSMEs by 0.25% and 0.14%, respectively. To bolster the performance of MSMEs, policymakers should focus on improving access to financial institutions and enhancing entrepreneurial literacy, while also regulating interest rates to promote sustainable growth and development. Promoting savings and increasing financial awareness will further support the sustainable growth of these enterprises. 2025-09-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2477 Macroeconomic Drivers of Subnational Debt: Evidence from Kenyan Counties after COVID-19 Kiprop, Ruth Jepchirchir; Ng’eno, Elijah; Odwori, Paul This study examined how economic growth, tax revenue, government expenditure, and corruption levels affect the indebtedness of county governments in post-COVID-19 Kenya. It was based on the theory of debt accumulation and employed a fixed effects regression model. The model's results revealed that government expenditure (coefficient = 0.1724, p < 0.01) and the corruption rate (coefficient = 0.2611, p < 0.01) had significant positive effects on indebtedness. Tax revenue also had a significant positive impact (coefficient = 0.2982, p < 0.01), while economic growth was statistically insignificant (coefficient = -0.0284, p = 0.099). The study concludes that excessive government spending and corruption are the primary drivers of county indebtedness in the postCOVID-19 period. It recommends enhancing fiscal discipline, enforcing strict controls on expenditure, strengthening anti-corruption measures, and improving the mobilization of own-source revenue to reduce reliance on debt and ensure sustainable financing for counties. 2025-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2476 Effect of Inventory Management on Competitiveness of Food and Beverage Manufacturing Firms in Uasin Gishu County, Kenya Kiptoo, Rachel Jerotich; Keittany, Pauline; Tanui, Emmanuel The food and beverage processing sector in Kenya is vital to the national economy due to its role in job creation and its contribution to GDP. However, its competitiveness has faced challenges stemming from high operational costs and inefficient supply chain processes. This study examined the effect of inventory management on competitiveness of food and beverage manufacturing firms in Uasin Gishu county, Kenya. The study was guided by the Resource-Based View Theory. An explanatory research design was adopted, targeting 924 departmental staff across 22 food and beverage firms. A sample of 279 respondents was selected using Yamane’s formula and simple random sampling employed. Data was collected through structured, closed-ended questionnaires, and a pilot study in Nakuru County was conducted to validate the research instrument. Data analysis was performed using SPSS version 25, incorporating both descriptive and inferential statistics, including correlation and hierarchical regression analyses. Findings revealed that inventory management (β1=0.152, p=0.004) significantly and positively influenced competitiveness. The study concluded that effective inventory management greatly contributes to the increase in competitiveness among food and beverage manufacturing firms in Uasin Gishu County. The study recommends that food and beverage firms should enhance their inventory management systems by integrating advanced tools and practices such as regular audits, forecasting, and lean inventory strategies. The study's findings will be valuable to food and beverage manufacturing firms by informing managers on optimizing limited resources for competitive advantage through inventory management, guiding the Ministry of Trade in policy formulation within Kenyan borders, and contributing to the broader academic discourse. 2025-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2466 Moderating Effect of Financial Literacy on The Relationship Between Clan Culture and Financial Performance of SMEs in Nandi County, Kenya Kemboi, Philiph Kimutai; Simiyu, Gabriel; Tarus, John The main aim of this study is to examine the moderating role of financial literacy on the relationship between clan culture and the financial performance of Small and medium-sized enterprises. The study employed the Resource-Based View Theory, an explanatory research design, and cluster sampling techniques to collect data using a closed-ended questionnaire from a sample of 376 Small and Medium-Sized Enterprises. A Hierarchical regression model was used to test the study's hypotheses. The study findings indicate that Clan culture (β = 0.605, p = 0.000) and financial literacy (β = 0.456, p = 0.000) positively influence financial performance. In addition, the results reveal that financial literacy moderates the relationship between clan culture (β = -0.100, p = 0.000) and financial performance. Managers and owners of SMEs should recognize the importance of organizational culture in a firm's performance. They should create and implement an appropriate culture that fosters joint effort and mutual trust, ensuring high and sustainable performance for their SMEs. In addition, the moderation results reveal that managers in financially savvy businesses shouldn't depend entirely on clan culture for determining financial performance. On the contrary, they should combine data-driven practices or information with culture to enhance performance. The originality of this research paper lies in the moderation hypothesis. The moderation results contribute to theory and literature, as there are minimal studies that have been tested. 2025-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2456 Macroeconomic Drivers of Exchange Rate Volatility: Evidence from Kenya Kinuthia, Joseph Ngigi; Chepng’eno, Winrose Chepng’eno; Ng’eno, Elijah This study examined the macroeconomic determinants of exchange rate volatility based on evidence from Kenya from 1971 to 2024. The study employed Autoregressive Distributed Lag (ARDL) bounds testing for co-integration and estimated the error correction model. Furthermore, ARCH and GARCH models were analyzed to measure the volatility of a time series by fitting an autoregressive model to the squared residuals of the time series. The ARCH and GARCH results suggest the volatility of the exchange rate markets in Kenya is not random. The speed of adjustment of the volatility in the Kenyan economy's exchange rate is 59.7%. The study found that in the long run, a unit increase in foreign direct investment (FDI) and government expenditure reduced exchange rate volatility by 36.4% and 341.5%, respectively, while inflation and money supply increased by 55.2% and 239.7%, respectively. Short-run results showed that a 1% increase in FDI, money supply and inflation rate increased volatility by 18.31%, 19.26%, and 111.83%, respectively, while government spending and public debt reduced volatility by 90.65% and 42.18%, respectively. To reduce or stabilise exchange rate volatility, the study recommended a combination of monetary policy interventions to policymakers. These included foreign exchange operations, interest rate adjustments, hedging strategies, and export diversification. Additionally, the central bank is advised to regulate the growth of the money supply to prevent excessive inflation and currency depreciation, which could exacerbate exchange rate fluctuations. 2025-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2448 Effect of Financial Deepening on Economic Growth in Kenya: Evidence from ARDL Modelling Approach Moreka, Martha; Chepng’eno, Winrose; Naftaly, Mose Financial deepening has proven to enhance economic growth by mobilizing investments and boosting productivity in developing countries. However, the empirical literature regarding its relationship with economic growth in Kenya remains inconclusive. This study examines the long-run and short-run effects of financial deepening indicators on Kenya's economic growth from 1990 to 2023, utilizing the Autoregressive Distributed Lag (ARDL) technique applied to data from Kenya. The results indicate that, in the long run, all financial deepening variables have a positive influence on economic growth in Kenya. In the short run, findings show a positive relationship between private sector credit, stock market performance, bank deposits, money supply, and economic growth. At the same time, liquidity liabilities exhibit a negative relationship in Kenya. This underscores financial deepening as a key driver for economic growth by facilitating economic upgrading through capital accumulation. To stimulate economic growth in Kenya, policies should prioritize enhancing access to private sector credit and improving stock market regulations. Furthermore, increasing financial literacy and integrating financial technology would encourage savings and expand access to financial services 2025-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2213 The Moderating Effect of Regional Economic Policies on The Relationship Between Tax Compliance and Financial Sustainability of SMES in Trans Nzoia County Bett, Cheptoo Purity; Tarus, K.John; Wanjala, Arnold Vision 2030 is Kenya's national long-term growth plan that identifies SMEs as key drivers of economic development. Financial sustainability indicates entrepreneurial activities that are healthy in the economy; it is an indicator of success of SMEs and prosperity of the society. However, the growth and sustainability of these SMEs have been poor leading to shut down within few years of operation as well as not achieving their goals; with statistics showing less than 50% of SMEs survive the 3-year mark.SMEs in different regions face varying challenges due to diverse regional contexts hampering their operations and expansion.Thestudy evaluates the effect of taxcomplianceon financial sustainability and also examine the moderating effect of regional economic policies on the relationship betweentax compliance and financial sustainabilityof SMES in Trans Nzoia County. The study was informed by dynamic capacity theory of economic growth. Anchoring on an explanatory research design, the study target population was 2246 registered SMEs in Trans Nzoia County, Kenya. The study sample size was294SMEs, computed using the Yamane formula. The SMEs were selected using stratified and simple random sampling techniques. Data was collected using structured questioners and items anchored on a five-point Likert scale. The study hypotheses were tested using a multiple regression model and Hayes process macro for moderation analysis.The results showed that tax compliance (β = .398, p = 0.000 < 0.05)had a significant effect on financial sustainability. In addition, regional economic policiesmoderated the relationship between tax compliance (β = -.139, p < 0.05)and financial sustainability.The study concluded that tax complianceis keyin enhancing financial sustainability. The study is beneficial to the government and policymakers since it may uncover some specific challenges or barriers faced by SMEsespecially when meeting tax obligation, or financial sustainability. Journal of Business, Economics and Management Research Studies2(3)Received:September21, 2024Accepted:November04, 2024Published:November07, 2024 2024-11-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2205 Bank-specific and Macroeconomic Determinants of Commercial Banks Profitability in Kenya Oseko, Deborah; Ng’eno, Elijah; Naftaly, Naftaly Mose This study focuses and examines the impact of bank-specific factors and macroeconomic determinants on the financial performance of commercial banks listed on the Nairobi Securities Exchange (NSE) during the period spanning from 2011 to 2020. The research is anchored on transaction cost economic theory with financial panel data methodology. In the pursuit of study objective, the study employed pooled ordinary least squares (OLS) estimation method combined with fixed effect model to account for individual-specific characteristics that may not be directly observable but are likely to impact the dependent variable. The research findings reveal that bank assets, bank capital and debt ratio have a positive impact on bank profitability while bank concentration has a negative effect. Notably, inflation rate, lending rate and tax rate were insignificant in relation to rate of return on equity among the selected banks in NSE. The study recommends that banks should prioritize efficient capital allocation and diversify their business lines and offerings. Therefore, banks should give thought to the implementation of strategic asset management as a means to optimize their asset allocation, as it can contribute to increased profitability through diversification and efficient asset utilization 2024-01-01T00:00:00Z