http://41.89.164.27:8080/xmlui/handle/123456789/31 2026-04-09T11:46:57Z 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/123456789/2464 Effects of Budget Planning on Financial Performance of Selected SMEs in Eldoret Town, Kenya Moderated by Digital Finance Services Jepleting, Gladys,; Tarus, John; Shitote, Zachariah The study intention was to investigate effects of budget planning on financial performance of selected SMEs in Eldoret town, Kenya, moderated by digital financial services. Specific objectives of the study were to examine the influence of budget planning on financial performance and effect of digital financial services on financial performance. The study was designed to assess the moderating role of digital financial services on the relationship between budget planning and financial performance of selected SMEs. The research was guided by the Priority-Based Budgeting Theory and Resource Based Theory. The study utilized explanatory research design and descriptive research design. Simple random sampling techniques in collecting data from 302 selected SMEs using structured questionnaires. Cronbach alpha was applied to test reliability while Factor analysis was applied to test validity. Using SPSS version 23 hierarchical regression model was employed in data analysis and testing of the hypotheses. The results reveal that digital finance services had significantly positive relationship between budget planning and financial performance. 2024-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2461 Influence of Green Product Selection Practice on Organizational Performance of Manufacturing Firms in Nairobi County Mutai, Diana; Keitany, Pauline; Bartocho, Evaline Manufacturing firms in Nairobi County would operate with a strong organizational performance achieving high productivity, efficiency, profitability, and quality standards through green product selection practices. A strong organizational culture supports these practices, fostering employee engagement, innovation, and environmental sustainability. However, the sector faces challenges such as limited technical efficiency, declining GDP contribution, and reduced market share. Despite contributing 17.30% of total tax revenue, the sector's technical efficiency is lower. Therefore, the main objective of this study was to establish the influence of green product selection practice on organizational performance of manufacturing firms in Nairobi County. This study was guided by Ecological Modernization theory. This study utilized an explanatory research design. The study targeted 554 procurement managers of all manufacturing companies in Nairobi County. The researcher obtained sample size of 232 respondents using Yamane formulae. The study used stratified random sampling technique to select respondents from manufacturing companies. These research study used structured questionnaires to collect data. Pre-testing of research instruments was achieved through pilot study in manufacturing companies in Nakuru County which have similar characteristics as manufacturing companies in Nairobi County. This assisted in testing for reliability and validity of the research instruments. Collected data was analysed using both descriptive and inferential statistics with the aid of Statistical Package for Social Science (SPSS) version 25. Descriptive statistics included frequency, means, minimum, maximum and standard deviation. Inferential statistics included correlation and regressions models. The study findings revealed that green product selection practice (β1=0.165, p=0.002) had a positive and significant effect on organizational performance of manufacturing firms in Nairobi County. The study concluded that integrating green product selection, enhances manufacturing firms’ performance, cost-effectiveness, and market competitiveness while advancing their environmental and social responsibilities. The study recommends that firms develop a strong sustainability-focused culture, integrate green product, engage with environmental policies and certifications to maximize sustainability performance. 2025-01-01T00:00:00Z http://41.89.164.27:8080/xmlui/handle/123456789/2459 The Moderating Influence of Enterprise Resource Planning on the Relationship between Electronic Order Processing Systems and Supply Chain Performance of Manufacturing Firms in Uasin Gishu County, Kenya Chepkemoi, Clara; Keitany, Pauline; Shitote, Zachariah Kenyan manufacturing firms face challenges in supply chain performance, including fierce competition, high production costs, and delayed product availability, requiring improved efficiency and cost-cutting strategies. The aim of this study was to investigate the moderating effect of enterprise resource planning on the relationship between electronic order processing system and supply chain performance among manufacturing firms in Uasin Gishu County, Kenya. The study utilized resource-based theory, explanatory research design, a census approach, and a closed ended questionnaire to collect data from 270 heads of 9 departments in 30 manufacturing firms in Uasin Gishu County. A hierarchical regression model was used to test all the study hypotheses. Results of the control variables indicate that firm age (β=.190, P = .021) significantly influences supply chain performance while firm size (β=.101, P=.223) does not. These control variables explain 4.8% of the variance in supply chain performance (R2 of .048). Furthermore, the electronic order processing system (β=.837, P=.000) and enterprise resource planning (β=0.117, P=.003) significantly influence supply chain performance. Finally, enterprise resource planning moderated the link between electronic order processing system and supply chain performance (β=.132, P =.000). This moderation model indicates an improved R2 of .579 and a change in R2 of .083 implying that all the variables in the study account for 57.9% and 8.3% of the variance in supply chain performance. This study contributes to knowledge by examining the interaction of enterprise resource planning and the study variables. The study suggests that manufacturing firms should adopt electronic order processing systems and ERP to enhance supply chain efficiency. In addition, policymakers and managers should develop policies and strategies that encourage investments in these technologies, as they have been found to influence supply chain performance and competitive advantage. 2024-01-01T00:00:00Z 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