School of Business, Economics and management sciences

EFFECT OF MACROECONOMIC VARIABLES ON EXCHANGE RATE VOLATILITY IN KENYA

Wed, 01 Jan 2025 00:00:00 GMT

EFFECT OF MACROECONOMIC VARIABLES ON EXCHANGE RATE VOLATILITY IN KENYA KINUTHIA, JOSEPH NGIGI Foreign direct investment, government expenditure, public debt, inflation rate, interest rates, and money supply are essential macroeconomic variables that can alter currency volatility and its impact on the Kenyan economy. The exchange rate of the Kenyan shilling has exhibited significant volatility against major currencies such as the US dollar. In 2022, the KES depreciated by an average of 0.6% monthly. This trend intensified in early 2023, with average monthly depreciation rates reaching 4%, and some months witnessing increases of up to 6%. By October 2023, the exchange rate reached KES 148.4 per US dollar, up from KES 120.8 in early 2022, marking a 13% depreciation in 2023. In January and February 2024, the KES continued to weaken, exceeding KES 160 and 163.98 per US dollar, respectively. This sharp fluctuation in the Kenyan shilling highlights concerns about currency stability. The objective of this study was to examine the effect of foreign direct investment, government expenditure, public debt, inflation rates, interest rates, and money supply on exchange rate volatility in Kenya. The study was informed by the Purchasing Power Parity Theory, the General Equilibrium Theory of Exchange Rate Determination, the International Fisher Effect theory, and the Interest Rate Parity theory. The study used an explanatory research design, analysing annual secondary data from 1971 to 2024. Data was collected using a structured review matrix and tested for stationarity and cointegration before analysis using descriptive statistics and the ARDL model. Descriptive statistics results showed that the average FDI, government expenditure, and public debt were 0.71, 15.68% and 47.60% respectively. Interest rates, inflation rate, and money supply growth averaged 6.20%, 11.31% and 34.77%, respectively. Inferential results revealed that in the long run, a unit increase in foreign direct investment and government expenditure reduced exchange rate volatility by 36.4% and 341.5%, respectively, while inflation and money supply increased it 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.

MODERATING EFFECT OF SELF-CONTROL ON THE RELATIONSHIP BETWEEN FINANCIAL LITERACY AND RETIREMENT PLANNING AMONG COMMERCIAL BANK EMPLOYEES IN ELDORET CITY, KENYA

Wed, 01 Jan 2025 00:00:00 GMT

MODERATING EFFECT OF SELF-CONTROL ON THE RELATIONSHIP BETWEEN FINANCIAL LITERACY AND RETIREMENT PLANNING AMONG COMMERCIAL BANK EMPLOYEES IN ELDORET CITY, KENYA CHESEREK, GLADYS Retirement planning, defined as a goal-oriented behavior where individuals devote effort to prepare for their retirement life, can effectively reduce retirement worry, keep stress under wraps, and enhance retirement preparedness and confidence. However, there is little literature about retirement planning among employees working in Kenyan Commercial banks. To fill this gap, this study aimed to establish the moderating effect of self-control on the relationship between financial literacy and retirement planning among commercial bank employees in Kenya. The study was guided by the following specific objectives: to assess the effect of financial knowledge, financial behavior, financial attitude, and self-control on retirement planning among commercial bank employees in Eldoret City, Kenya. In addition, the study examined the moderating effect of self-control on the relationship between financial knowledge, financial behavior, financial attitude, and retirement planning. This study was guided by goal- setting theory, social cognitive theory, and behavioral life cycle theory. The study adopted an explanatory research design, with data being collected from a target population of 1058 employees of 32 commercial banks in Eldoret town. A sample size of 290 respondents was obtained using Yamane’s formula. The study used systematic sampling techniques to select employees as respondents. Data was collected using a structured, closed-ended questionnaire. The researcher ensured the reliability of the research instrument through a pilot study and further confirmed it with Cronbach's alpha, which was above the score of 0.7. Construct validity was assessed using factor analysis, while content validity was assessed by having supervisors and experts in the field review the test items to make sure they were relevant and representative of the content that was being measured. Descriptive and inferential statistical analyses were conducted using SPSS (Statistical Package for the Social Sciences) version 25, with study hypotheses tested through a hierarchical regression model. It was found that Financial Knowledge had a significant positive impact on retirement planning (β = 0.402, p < 0.05), confirming that employees with better financial knowledge are more likely to plan effectively for retirement. Financial Behavior also showed a positive and significant influence on retirement planning (β = 0.182, p < 0.05), indicating that prudent financial actions enhance retirement preparedness. Financial Attitude similarly exhibited a significant positive effect on retirement planning (β = 0.267, p < 0.05). Self- control not only directly impacted retirement planning (β = 0.174, p < 0.05) but also moderated the relationship between financial knowledge (β = 0.120, p < 0.05), financial behavior (β = 0.099, p < 0.05), financial attitude (β = -0.047, p < 0.05), and retirement planning. The study concludes that self-control moderates the relationship between financial knowledge, financial behavior, financial attitude, and retirement planning among commercial bank employees in Eldoret City, Kenya. The results of this study can be used by practitioners and policymakers in developing strategies and formulating policies for retirement systems in the workplace. The findings contribute knowledge to the literature and theory related to financial literacy, self-control, and retirement planning.

Hygiene and Safety Measures Practised by Roadside Meat Vendors of Namawojjolo and Lukaya Food Markets, Uganda

Tue, 01 Jul 2025 00:00:00 GMT

Hygiene and Safety Measures Practised by Roadside Meat Vendors of Namawojjolo and Lukaya Food Markets, Uganda Nanfuka, Annet; Mewa, Eunice; Rachuonyo, Harold Anindo Handling and preparation of roadside roasted meats may often be compromised, considering the general conditions of the makeshift structures and the common minimal education levels of vendors. The study’s objectives were to assess hygiene and safety practices applied in handling, preparing, and vending of roadside roasted meats. Conducted in October 2024 at Namawojjolo and Lukaya, two major food markets along central Uganda's busiest highways, the research used an observational checklist and questionnaires to collect data from 90 meat vendors selling roasted beef, chicken, or goat meat on compliance with best known practices. Descriptive results on hygienic and handling practices were generated, and scores above 70% were used as a hallmark for best practice. Only 6.7% instituted complete sanitation and hygienic practices, while 88.9% did not store leftover meat in refrigerators. Among them, 67.8% kept meat in clean containers, 5.6% stored utensils on clean shelves, and 6.7% had clean roasting areas. Most (93.3%) separate raw meat from ready-to-eat meat, and 37.8% had stalls without rodents. Hygienically, 75.6% wore aprons while working, among whom 85.3% were considered clean aprons, 46.7% had hair covered, 91.1% had short and clean fingernails, 93.3% washed hands with soap, 1.1% covered food while presenting to customers, and 11.1% wore jewellery while working. Training on food safety was undertaken by 63.3% and 78.9% served food in paper bags. Personal hygiene practices of most vendors were fairly good, but most lacked sanitation facilities and demonstrated relatively low knowledge of best and acceptable practices in meat handling. There is a need for more sensitisation and provision of sanitation facilities to vendors to improve both the quality and safety of roadside vendor products.

MACROECONOMIC EFFECTS OF FINANCIAL DEEPENING BETWEEN 1990 TO 2023 ON ECONOMIC GROWTH IN KENYA

Wed, 01 Jan 2025 00:00:00 GMT

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<0.05), stock market capitalization 0.04(p-value 0.00<0.05), bank deposit 1.419(p-value 0.00<0.05), liquidity liabilities 0.004(p-value 0.00<0.05), broad money 1.55(p-value 0.00<0.05) and deposit interest rate 0.08(p-value 0.00<0.05) have significant positive effect on economic growth. In contrast, inflation rate -0.08(p-value 0.00<0.05) has a negative impact. In the short run, credit to private sector 0.15(p-value 0.01<0.05), stock market capitalization 0.02(p-value 0.03<0.05), bank deposit 0.84(p-value 0.00<0.05), broad money 0.30(p-value 0.02<0.05) and interest rate 0.03(p-value 0.00<0.05) are positively related to economic growth while inflation rate -0.03(p-value 0.00<0.05) has a negative impact. Liquidity liabilities - 0.0004(p-value 0.15>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.

Income Inequality And Economic Growth in Kenya

Sun, 01 Jan 2023 00:00:00 GMT

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.

Assessing the Impact of Financial Inclusion on Financial Performance of Micro, Small and Medium Enterprises in Baringo County, Kenya

Mon, 01 Sep 2025 00:00:00 GMT

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.

Macroeconomic Drivers of Subnational Debt: Evidence from Kenyan Counties after COVID-19

Wed, 01 Jan 2025 00:00:00 GMT

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.

Effect of Inventory Management on Competitiveness of Food and Beverage Manufacturing Firms in Uasin Gishu County, Kenya

Wed, 01 Jan 2025 00:00:00 GMT

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.

Moderating Effect of Financial Literacy on The Relationship Between Clan Culture and Financial Performance of SMEs in Nandi County, Kenya

Wed, 01 Jan 2025 00:00:00 GMT

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.

Effects of Budget Planning on Financial Performance of Selected SMEs in Eldoret Town, Kenya Moderated by Digital Finance Services

Mon, 01 Jan 2024 00:00:00 GMT

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.