Browsing by Author "Akenga, Grace Melissa"

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Effect of Leverage on Performance of Non-financial Firms Listed at the Nairobi Securities Exchange
(Science Publishing Group, 2015-08-13) Mukaria, Henry Kimathi; Mugenda, Nebat Galo; Akenga, Grace Melissa
Managers strive to maximise shareholder wealth by making rational financing decisions regarding optimal capital structure which would minimise its cost of capital. In attempt to magnify the return to shareholders, managers employ the use of debt. When excessive debt financing is employed by a firm, it increases the cost of financing and the financial risk of the firm leading to decreasing the return on equity as a result of financial distress. Do the various debt equity ratio levels lead to different financial performance when compared for high levered and low levered firm, high growth and low growth firm or large and small firms? A causal research design was used to establish the cause and effect relationship between financial leverage and the financial performance of the firms. The target population was 61listed firms on the Nairobi securities exchange by December 2013.Purposive sampling was used to select 38 non-financial companies. Financial companies were eliminated because the company’s capital structures have specific characteristics affected by industry regulatory requirements. Secondary data was obtained from published financial statements of the sampled companies for the six year period from 2008 to 2013.Ordinary Least Square method was used to establish the cause effect relationship among variables; Hypotheses were tested at 5% significance level using t-statistic. The study found that there was no significant difference in financial performance between highly levered and lowly levered firms and that there existed a negative relationship between Leverage and firm’s performance. There were also no significant differences in financial performance between high growth levered firms and low growth levered firms and that there existed a negative relationship between a firm’s growth opportunity and financial leverage ratio. There was no significant difference in financial performance between large levered firms and small levered firms. The findings of this study may act as a policy guideline to finance managers involved in managing firms on the contribution of financial leverage and its association with return on equity to maximise shareholder wealth.
Effect of Mergers and Acquisitions on Financial Performance of Commercial Banks in Kenya
(IOSR Journal of Business and Management (IOSR-JBM), 2017-08) Akenga, Grace Melissa; Olang’, Margaret Akinyi
Mergers and acquisitions (M&A) perform a vital role in corporate finance by enabling firms achieve varied objectives and financial strategies.In Kenya banks have been merging with the goal of improving their financial performance. Studies done on mergers and acquisitions have not conclusively established whether or not banks benefit from mergers. Therefore this study aims at establishing the effect of mergers and acquisitions on financial performance of commercial banks in Kenya. The study will be guided by the following objectives; to find out the effect of asset growth, shareholders value and synergy on the financial performance of merged banks in Kenya. The study adopted a causal research design. It adopted a census method which involved studying all the 6 merged banks from the year 2010 to 2017. The study used secondary data from published audited annual reports of commercial banks and banking supervision annual reports. Descriptive and inferential statistics were used to analyse data at 5% significance level. The study found out that the mergers and acquisitions had a positive impact on shareholders’ value and assets of the merged or acquiring banks in Kenya.
Effect of Mortgage Market Risk on Mortgage Uptake: A Case Study of Mortgage Lenders in Kenya
(2015-12) Akenga, Grace Melissa; Olang, Margaret Akinyi; Galo, Nebat Mugenda
Mortgage market is a financial system that provides opportunity for originating and trading mortgage loans. A mortgage loan is used for financing real estate investments. Although there has been a remarkable increase in demand for real estate investments in Kenya the amount of mortgage uptake is still low. Studies reveal risks as important macroeconomic variables in the mortgage market. However the effect of these risks on mortgage uptake in Kenya is inconclusive. The purpose of this study was to evaluate the effect of mortgage market risk on mortgage uptake. The objectives of the study were to determine the effect of credit risk, interest rate risk, price risk and liquidity risk on mortgage uptake in mortgage lending institutions in Kenya. Causal research design was used to establish the effect of mortgage market risk on mortgage uptake. Purposive sampling was used to select a sample size of 27 out of 37 mortgage lenders that had been involved in mortgage lending since 2008 to 2013. Secondary data was obtained from Central Bank of Kenya reports and mortgage special reports for the period under study. The assumptions that form a basis for use of the regression model were tested using homoscedasticity and autocorrelation. Ordinary Least Square method was used to determine the cause effect relationship among variables while hypotheses were tested at 5% significance level. The overall model was found to be significant with F=13.474 and p-value (0.00 < 0.05). The findings revealed that risks faced by lenders affect mortgage uptake such that if the risk involved in lending is high lenders limit the amount of mortgage lending. The study recommended that lenders should ensure risks are well managed so as to increase mortgage uptake. The findings would form a basis for lenders to formulate risk management strategies that would help to mitigate risks and increase mortgage uptake. The study also forms a basis for further research and adds to the existing body of knowledge.