Bio

Workshops attended 2012:

- Proposal Writing workshop - UNES

- Assessment of the Capacity of Business Schools and Other Institutions to  Support the Development of Entrepreneurship in Eastern Africa, University of  Nairobi , School of Business in Collaboration with Plymouth University Business  School and Funded by DFID.

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Publications


Submitted

Mutembe, N, Elly D.  Submitted.  Effect of Financial Literacy on Voluntary Retirement Planning Among Employees of State Corporations Under the Ministry of Health in Nairobi County, Kenya . African development finance journal . 1(1):1-27. Abstracteffect_of_financial_literacy_on_voluntary_retirement_planning_among_employees_of_state_corporations_under_the_ministry_of_health_in_nairobi_county_kenya.pdf

Purpose - The study sought to determine the effect of financial literacy on voluntary retirement planning among employees of state corporations under the Ministry of Health in Nairobi County, Kenya. Methodology – This study adopted a descriptive study design and uses primary data collected using a questionnaire with a five point Likert scale on the parameters of each variable. The study applied simple random sampling technique to select respondents to participate in the study. Data is analysed using means, percentages and frequencies. Multiple regression analysis was used to test the relationship between financial literacy and voluntary retirement planning. Findings – Financial literacy was found to influence the level of voluntary retirement planning among the employees since they are able to make key decisions that involve money in such a way that there is minimal risk to them. The study also established that financial literacy has a positive impact on voluntary retirement planning, however the results indicate that other factors such as income levels, age, marital status and level of education are also strongly related to retirement planning. Implications – To boost the voluntary retirement planning process, the eventuality of retirement should be made obvious for all the employees in the Kenyan economy so as to influence peoples’ attitude and receptiveness to the process. There is therefore need to develop financial education programs that focus particularly on important financial planning aspects for employees that will help them strike a balance between consumption and saving. Value – The findings of this study would also be valuable to the Retirement Benefits Authority and the Government of Kenya in development of policies and regulations

2017

Nyanaro, E, Elly D.  2017.  The Relationship between Stock Market Performance and Economic Growth In the East African Community. African development finance journal. 1(1):110-132. Abstractthe_relationship_between_stock_market_performance_and_economic_growth_in_the_eac.pdf

Purpose – This paper investigated the relationship between the stock market performance and the
economic growth in the East African Community. The stock market variables considered in the
study were stock market capitalization, market liquidity and share price volatility. The GDP
growth was a used a measure for economic growth.
Methodology – The quantitative research methods were employed to define the nature of
relationship between the variables. The population of the study was the All-Share index in the 4
stock markets in the member countries. To fulfill the purposes under the research, the stock market
performance of the EAC member countries was collected from the Capital markets, EASRA and
the respective Stock Exchanges. Data for GDP growth was collected from the World Bank website.
The study employed the Vector Autoregressive (VAR) model as well as the Granger test for
causality to estimate as well as provide evidence regarding the nature and direction of relationship
of the variables.
Findings - The study established an existence of long term relationship between the stock market
performance variables (market capitalization and liquidity) and economic growth in the East
African community. The study established that there was no relationship between the share price
volatility of the stock market and economic growth

Munyasia, EO, Ouma DO, Ochieng DE.  2017.  The Relationship between Lunar Cycle and Stock Returns in Companies Listed at Nairobi Securities Exchange. Research Journal of Finance and Accounting. 8(20):95-103. Abstract

The belief that Lunar Cycle (LC) affects people’s mood and behavior stems from ancient lore. Various
psychological studies and behavioral business literature provide proof about effect of mood on the benefit prices.
Despite the effects of LC on people’s moods by international researchers, there has been no known study that
focuses on the impact of LC on stock returns at Nairobi Securities Exchange (NSE). The purpose of this research
is to examine the association between LC and stock return among companies listed at NSE. This study adopts
descriptive research design and a sample of NSE 20-Share Index to meet the objective of the study. Secondary
data collected from NSE reports between 2010 and 2014 is analyzed using event study model and numerical
Package for the societal discipline evocative data and statistical association, and the significance of the findings
tested using t-statistic at 95% significance level. This study finds that stock returns increases throughout New
Moon (NM) and Full Moon (FM) phases compared to the normal trading days of the LC. Further analysis finds
that cumulative stock returns are higher during the NM dates. The p–value of -2.72 and -2.404 recorded during
NM and FM phases respectively deviates significantly from the t-significant rate of 1.943 under the degree of
freedom of 6, subjected to testing at 95% significance level. The results show that there exists significant
difference among mean value of stock returns during NM/FM phases compared to the mean return during
normal trading days. This study recommends that capital markets authority (CMA) and NSE comes up with
regulation which will edge lowest and highest price levels through FM and NM phases so that it can secure price
against manipulations and to protect investors against manipulations.
Keywords: Lunar Cycle, Stock Returns, Nairobi Security Exchange

Nzioka, S, Elly D.  2017.  The Relationship between Diversification Strategies and Capital Structure of Non-Financial Firms Listed At the NSE. African development finance journal. 1(2):32-61. Abstract

Purpose-This study was carried out with an aim to analyze the effect of
diversification strategies on capital structure of non-financial firms listed at NSE. The
study focused specifically on analyzing the effect of product (related and unrelated)
and geographical diversification on capital structure.
Methodology-An exploratory study design was used to collect data, with the
population of the study being 64 firms listed in NSE. Out of the 64 firms, 41 non-
financial firms were selected as the sample of the study. Data was collected from
secondary sources, NSE and capital market authority. Data collected was analyzed
through STATA by the use of panel data regression analysis.
Findings- Related product diversification had a coefficient of 21.5(p-value=0.007)
indicating that it has a significant relationship with capital structure. The study results
show that debt is the most preferred form of financing in related product
diversification strategies. Unrelated product diversification had a coefficient of 22.7(p
value =0.006) indicating that it has a significant relationship with capital structure.The
findings of this study show that debt is the most preferred form of financing in
unrelated product diversification strategies. Geographical diversification had a
coefficient of 0.178 (p-value=0.799) indicating that it doesn’t have a significant
relationship with capital structure.Geographical diversification boosts the worth of
shareholders by taking advantage of specific assets and by accelerating functioning

Mwangi, PM, Ochieng DE.  2017.  The Effect of Selected Macro-economic Variables on Exchange Rates in Kenya. African development finance journal. 1(2):162-177. Abstractthe_effect_of_selected_macro_economic_variables_on_exchange_rates_in_kenya.pdf

Purpose – This paper sought to establish the effect of selected macro-economic variables
on exchange rates in Kenya. The selected macro-economic variables for this study were
interest rates, inflation rates and trade flows.
Methodology – The study was modeled as a descriptive survey. A data collection sheet
was used to collect secondary data from the published bulletin and other publications by
Central Bank of Kenya and Kenya National Bureau of Statistics for a period of ten years
between 2006 and 2015. The data was examined using descriptive, correlation and
regression analyses.
Findings - Results of the study showed that interest rate had a positive correlation
coefficient of 0.446 with exchange rate, Inflation rate and exchange rate had a correlation
coefficient of negative 0.395 while the Level of aggregation of trade flows had a
correlation coefficient of positive 0.829 to the exchange rate. The value of R square was
0.745, a discovery that 74.5 percent of the deviations in exchange rates in Kenya
occurred due to changes in interest rate, inflation rate and trade flows at 95 percent
confidence level. The significance value obtained was less than p=0.05 implying that the
model was statistically significant in predicting how the macro economic variables of
interest rate, inflation rate and trade flows affect exchange rates in Kenya.
Implications - The Kenyan shilling has been depreciating in value over the years
implying a weakening of its purchasing power in the international markets. Policy makers
should come up with policies that will contribute to reversing this trend. Managing the
prevailing levels of inflation, interest rates and trade flows will be key as they have been
found to significantly affect exchange rates.
Value - The study will act as a guide to variou

Mungai, LM, Elly D.  2017.  The Effect of Alternative Investments on the Financial Performance of Pension Funds in Kenya. African development finance journal. 1(2):160-181. Abstract

Purpose - This research focused on the effects of alternative investments on the
financial performance of pension schemes in Kenya.
Methodology - This research was descriptive and Secondary data covering a period
of 5 years, 2012-2016, and comprised a population of 442 segregated pension
schemes and from which a sample of 90 schemes was selected using stratified
sampling technique. Only data from 385 schemes was available. The remaining 57
schemes did not qualify for sampling due to incomplete data, data received did not
pass sense checks and also responses to queries were not received on time. The data
was obtained from the Retirement Benefit Authority and the Actuaries Survey from
Alexander Forbes Consulting. Diagnostic tests carried out were tests for normality,
multicollinearity and autocorrelation. They were used to test for data fitness before
any further analysis. The study also employed the use of a linear multiple regression
model to analyze the effect of alternative investments on the financial performance of
pension funds in Kenya. The tests of significance used in the study were the t-test, F

Kimunduu, GM, MWANGI MIRIE, Kaijage E, Ochieng DE.  2017.  Intervening Effect of Cash Holdings in the Relationship Between Financial Performance and Dividend Policy. European Scientific Journal. 13(28):264-281. Abstract

Many studies on relationship between financial performance and
dividend policy have resulted to controversial outcome with few studies
questioning the intervening effect of cash holdings. The purpose of this study
was to evaluate the effect of cash holdings on the relationship between
financial performance and dividend policy. The study applied positivism
research philosophy and descriptive causal research design. The study was
anchored on hypothetical view that the relationship between financial
performance and dividend policy of firms listed at the Nairobi securities
exchange is not intervened by cash holdings which was tested against a
sample size of 31 firms listed at the Nairobi securities exchange selected
using purposive sampling technique. The research findings were as follows:
There was a significant direct association between operating cash flows and
dividend policy which was intervened by cash holdings. In general it was
concluded that the link between financial performance and dividend policy
of firms listed at the Nairobi securities exchange was significant. The study
outcome augment existing knowledge on financial performance and dividend
policy for it is evident that firms with ability to generate income directly
influence dividend payout ratio and therefore, top management should
enhance financial performance an

Omondi, HM, Ochieng DE.  2017.  INTERNAL FACTORS INFLUENCING EXTERNAL AUDITORS INDEPENDENCE AMONG PRACTICING ACCOUNTANTS IN KENYA. African development finance journal. 1(2):117-144. Abstract

Methodology - The study employed a cross-sectional descriptive study design and used primary
data. The collected data was analyzed with the help of the SPSS software version 22 and presented
with the help of frequency distributions, computation of mean and standard deviation. The
association between the research variables was presented using an ordinal a regression model.
Findings – The study established that internal factors influence auditor independence by 31.7%.
From the results of the research, it also revealed that there is a significant relationship between
audit tenure, audit firm size and audit independence. This was indicated with a p-value of 0.029
and 0.009. The study also established that there is no significant relationship between audit
committee and audit independence with a p-value of 0.465. The study concludes that audit tenure
and firm size affect audit independence and thereby the study recommends the need for ICPAK
to develop a policy that will guide audit tenure and audit committee.
Implications –The study findings suggest that ICPAK develops a policy that will guide the audit
tenure and audit committees, this will in essence promote an understanding of the auditors‟ independence
in the profession. The study also further suggested that similar studies should be carried
and focus on the perception of users such as institutional and private investors, audit committees
and members of regulatory bodies.
Value -The findings of the study concludes that audit tenure and firm size affect audit independence
and thereby the study recommends the need for the Institute of Certified Public Accountants
of Kenya (ICPAK) to develop a policy that will guid

Kimunduu, GM, MWANGI MIRIE, Kaijage E, Ochieng DE.  2017.  Financial Performance and Dividend Policy. European Scientific Journal. 13(28):138-154. Abstractfinancial_performance_and_dividend_policy.pdf

Past studies on the relationship between dividend policy and firm
performance continue being an unresolved predicament with few studies
interrogating the causality relationship between financial performance and
dividend policy. The purpose of this study was to establish the nature of
relationship between financial performance and dividend policy of firms
listed at the Nairobi securities exchange. The study applied positivism
research philosophy and descriptive causal research design. The study was
anchored on hypothetical view that the relationship between financial
performance and dividend policy of firms listed at the Nairobi securities
exchange is not significant which was tested against a sample size of 31
firms listed at the Nairobi securities exchange selected using purposive
sampling technique. The research findings were as follows: There was a
statistically significant direct association between return on equity and
dividend policy. This implies that as firm profitability improve; a
corresponding proportionate change in dividend payout ratio is initiated by
management. In addition, it was established that there was a statistically
significant positive linkage between operating cash flows and dividend
policy which denotes that as cash flow levels from operating activities
change, dividend payout ratio will change in the same direction leading

Nzioka, OM, Kaijage E, Ochieng DE.  2017.  Financial Integration, Macroeconomic Volatility And Economic Growth In The East African Community. European Scientific Journal. 13(19):317-331. Abstract

This study aimed at determining the moderating effect of macroeconomic
volatility on the relationship between financial integration and
economic growth in the EAC.
The study adopted a positivistic research philosophy and casual research
design.. Generalized-two stage least squares instrumental variable regression
model (G2SLSIV) was then conducted to test the hypothesis. The findings of
the study showed that, macro-economic volatility does not have a significant
moderating effect on the relationship between financial integration and
economic growth. Therefore, the study recommends that, the governments of
respective member states work on a monetary policy that aims to attain a
single digit level of inflation rate (low inflation targeting), in the spirit of
macro-economic convergence. The study culminates with acknowledging the
limitations encountered and provides suggestions for further research.

Mutende, EA, Mwangi M, NJIHIA JM, Ochieng DE.  2017.  Free Cash Flows, Agency Costs and Performance of Firms Listed at the Nairobi Securities Exchange. The Pan-African Journal of Business Management. 1(2):1-20. Abstractfree_cash_flows_agency_costs_and_performance_of_firms_listed_at_the_nairobi_securities.pdf

Abstract: Firm performance is affected by various factors, both internal and external. Internal
factors include firm characteristics such as firm size, age, liquidity, leverage, profitability,
growth prospects among others. External factors include regulation, agency costs and general
macro-economic factors. This paper sought to establish the influence of agency costs on the
relationship between free cash flows and firm performance. The second objective was to assess
the influence of agency costs on the relationship between free cash flows and performance of
firms listed at the Nairobi securities exchange. The study used both primary data and secondary
panel data which were obtained from all firms listed at the NSE for the period 2006 to 2015.
Panel data and simple regression analyses using OLS were employed in the study. Results
indicate that free cash flows have a significant positive relationship with firm performance, and,
agency costs have a positive significant moderating effect on the relationship between free cash
flows and firm performance. All the predictor variables had a joint positive and significant effect
on performance. The main academic contribution of the study is that free cash flows have a
positive relationship with firm performance and that agency costs; and specifically, firm
monitoring and corporate governance has a positive and significant effect on the performance of
firms listed at the NSE. Firm managers, shareholders, practitioners, the government and other
regulators should, therefore, enhance firm monitoring and corporate governance because the
benefits derived from investing therein seem to outweigh the costs.

Ochieng, DE, JM N, Mwangi M, Mutende EA.  2017.  The moderating role of firm characteristics on the relationship between free cash flows and financial performance of firms listed at the Nairobi securities exchange. Journal of Finance and Investment Analysis,. 6(4):55-57. Abstract

This paper sought to find out the influence of firm characteristics on the
relationship between free cash flows and firm financial performance. Specifically,
the objectives of the study were two-fold: first, to establish the relationship
between free cash flows and financial performance of firms listed at the NSE; and
secondly, to determine the influence of firm characteristics on the relationship
between free cash flows and financial performance of firms listed at the NSE. The
firm characteristics considered in this study are firm size and age. The study used
secondary panel data which was obtained from all firms listed at the NSE for the
period 2006 to 2015. Regression analysis was employed in data analysis. Results
indicate that free cash flows have a significant positive effect on financial
performance; while firm characteristics have a negative significant moderating
effect on the relationship between free cash flows and financial performance. The
main academic contribution of the study is that free cash flows have a positive
statistically significant effect on financial performance. The study recommends
that firm managers, shareholders and practitioners should focus more on the need
for firms to generate more FCF

Masinde, SP, Ochieng DDE.  2017.  Effects of Working Capital Management on Financial Performance of Energy and Petroleum Companies Listed at Nairobi Securities Exchange . African development finance journal. 1(2):61-79. Abstract

Purpose – This paper sought to establish the effect of Working Capital Management on the financial performance of Energy and Petroleum Companies listed at the Nairobi Securities Exchange. Methodology – The study was modelled as correlation survey. A data collection sheet was used to collect secondary data from the published financial statements of all Energy and Petroleum companies listed at Nairobi Securities Exchange for a period of eight years between 2007 and 2014. Both descriptive and quantitative analyses were adopted. Pearson correlation, regression and ANOVA analysis were also conducted. Findings - The study suggests that Working Capital Management influence the Return on Assets significantly. 17.8% of the variations in profitability were influenced by variations in the Working Capital Management. The study establishes that the influence of Working Capital Management on profitability is statistically significant. The study finds weak negative associations between profitability and inventory conversion period, accounts collection period, accounts payable period and cash conversion cycles. The study establishes that the negative relationships between accounts payable period, cash conversion cycle and profitability are statistically significant. The relationships between accounts collection period, inventory conversion period and performance are not statistically significant. Implications - It is incumbent upon the Finance Managers of Energy and Petroleum companies listed at Nairobi Securities Exchange to understand the Energy and Petroleum business operations, and put in place robust Working Capital Management framework because of significant and positive impact on the financial performance of these companies. Value - A vibrant and profitable Energy and Petroleum sector has been identified as a key pillar to the achievement of Kenya’s Vision 2030. It is critical therefore, to reevaluate existing Working Capital Management framework of these companies for robustness in order to realize the Vision 2030.

Key Words: Working Capital Management, Financial Performance, Nairobi Securities Exchange

  2017.  EFFECTS OF SELECTED FIRMS CHARACTERISTICS ON CAPITAL STRUCTURE DECISIONS OF FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE . African development finance journal . 1(2):102-116. Abstracteffects_of_selected_firms_characteristics_on_capital_structure_decisions_of_firms_listed_at_the_nairobi_securities_exchange.pdf

Purpose - Capital structure choice remains a crucial decision alongside the vital choices intended by a corporate since they have a high consequence on the value and the cost of the company. Therefore this study main focus was to examine the effects of selected firms characteristics on the capital structure decisions of companies registered at the Nairobi Stock exchange.
Methodology - The study adopted a descriptive research design and used secondary data. The collected data was analyzed with the help of the SPSS software version 23 and presented with the help of frequency distributions, computation of mean and standard deviation. The association between the research variables was presented in a correlation matrix and a regression model.
Findings - Firm size showed greatest influence on the company choice of capital structure among the firms followed by asset structure, profitability and liquidity. Further, the regression model also generated adjusted R squared value of 0.692 that is to mean 69.2% of the variations in financing options can be well illustrated by variations in the firm size, asset structure, profitability and liquidity. The findings from the study indicated an affirmative correlation among firm’s size and the financing options. The findings also revealed an affirmative association among assets structure against the source of financing. The findings from the research also showed that there is undesirable association among the firm’s profitability and source of financing of the firms listed at the NSE while a negative relationship among liquidity and the principal investment was exhibited in the research findings. This leads to a conclusion that rise in company size resulted to a rise in the investment structure of a firm therefore increase in demand to increase the capital base by seeking more financing. The study also found out that an increase in asset structure resulted in an increase in capital structure while an increase in profitability levels resulted in decrease in capital structure; increase in in liquidity levels led to a decrease in capital structure of the firms listed at the NSE.
Implications –The study findings emphasize that firms should understand the specific characteristics that influence choice of their respective capital structure in order to opt for the best financing option. The study also further suggested that similar studies should be carried out every three to five years to find out the significance of firm characteristics on choice of capital structure of firms listed at the NSE
Value -The findings of the study would be significant to public institutions and other non-listed firms in the choice of financing options and design of capital structure. Policy makers would infer the findings in formulation of relevant capital structure policies.
Key words: Capital structure decisions, size of the firm, asset structure, profitability, liquidity

Mwangi, S, Elly DD.  2017.  Effects of Operating Environment Factors on Infrastructure Finance Flows in the Capital Markets in Kenya . African development finance journal. 1(1):132-159. Abstract

Purpose – This study sought to establish the whether the operating environment factors affect efficient infrastructure finance flows in the capital markets in Kenya. Policy framework, legal environment, regulations and institutions are the operating environment factors which influence the infrastructure finance flows through the capital markets.

Methodology – The study was undertaken using descriptive research design where a questionnaire was used targeting a population of 100 infrastructure related institutions. The questionnaire used to collect quantitative data was on the Likert scale with numerical scores 1 to 5. Descriptive and regression analysis were conducted on the data to show how each independent variable of the operating environment factors influences the infrastructure finance flows.

Findings – Majority of respondents think that there are inadequate policies, laws and regulations while half of these respondents believe that the institutions lack the necessary capacity to operate efficiently and effectively. From the results, majority of these respondents agreed that there is need for an urgent review of the existing financial sector policies and institutions. Half of the respondents want the regulations revised but majority of these respondents believe that the existing laws do not require review. The results indicated that the policy framework, legal environment, regulations and institutions significantly affect the infrastructure finance flows through the capital markets in Kenya. From the results, it can be concluded that there are no adequate policy, legal, regulatory and institutional arrangements to facilitate the uptake of infrastructure finance in the capital markets. Further, it can be deduced that the policy, legal, regulatory and institutional regimes are poorly configured to deliver financing of infrastructure projects in the capital markets of Kenya. Finally, it can be inferred that the financial sector policies, regulations and institutions are not strong enough to provide a supportive environment in delivery of infrastructure finance.

Implications – The financial sector policies, laws, regulations and institutions need to be reviewed in order to create a conducive operating environment for financing of infrastructure investments. Benchmarking studies are critical for enhancement of policies, laws, regulations and institutions based on the international best practices for efficient and effective delivery of infrastructure finance through the capital markets in Kenya. Further research is recommended on effects of operating environment factors on infrastructure finance flows in the capital markets in Kenya.

Keywords: Infrastructure investments, policy framework, legal environment, regulations, institutions

Elly, D, Kaijage ES.  2017.  Effects of Demand Side Factors on Access to External Finance by Small and Medium Manufacturing Enterprises in Nairobi, Kenya . African development finance journal. 1(1):44-6. Abstract

Abstract Purpose - This paper investigates how demand-side factors affect access to external finance by small and medium manufacturing enterprises (SMMEs) in Nairobi, Kenya. The demand-side factors considered in the study are firm characteristics, financial management practices and entrepreneur characteristics. Methodology - The study employs an exploratory survey design utilizing quantitative methods in data collection and analysis. Data is analyzed using descriptive and inferential statistics. Logistic regression is used to test the relationship between demand-side factors and access to external finance because of the dichotomous nature of the dependent variable. Findings – The study establishes that some of the demand-side factors significantly influence access to external finance. These factors include variations in entrepreneur’s networks, firm growth and earnings volatility which explain variations in odds of access to external finance by 39.9 percent for networks and 45.8 percent for earnings volatility and firm growth. Implications – To minimize SMMEs financial constraints, social networking amongst entrepreneurs, firm growth and stabilized earning should be prioritized by management and policy makers. Though ethnic orientation influences the odds of access to external finance, policy efforts should be put in place to ensure efficiency in external financing markets so that entrepreneurs are not disenfranchised on this basis. Value - The study recommends establishment and support of sustainable social networks that guarantee enterprise growth given that firm growth also influence odds of access to external finance. Further studies should probe the significance of good financial management practices on odds of access to external finance in diverse settings and industries.

Waweru, G, Ochieng’ DDE.  2017.  EFFECTS OF CAPITAL FLOWS ON ECONOMIC GROWTH IN KENYA . African development finance journal. 1(1):1-17. Abstracteffects_of_capital_flows_on_economic_growth_in_kenya.pdf

Purpose -This study investigated the immediate and lagged effects of the various forms of capital flows - FDI flows, portfolio flows and “Other investments capital flows” (which mainly represents corporate, financial institutions and general government borrowings as well as remittances from the diaspora) - on economic growth in Kenya over a 30 year period from 1984 to 2014.
Methodology – The study adopted a quantitative research design in the form of an econometric model known as Auto Regressive Distributed Lag Model (ARDLM). Findings -FDI and portfolio investments flows have a negative impact on the GDP growth rate and that their impact is not statistically significant.However, other investments flows, which mainly represent corporate, financial institutions, general government borrowings and remittances from the diaspora, have a positive impact on GDP growth rate and the impact is statistically significant.Based on the study findings, it can be inferred that a significant slowdown or a reversal in capital flows in form of “Other investments capital flows” into Kenya result into significant slowdown in economic growth in the country. Implications -Policy makers may lay much emphasis on attracting portfolio investment flows and “Other investments capital flows”, while investors and firms should consider the upside opportunities that may be created by increase in other investments capital flows and the downside risks that could results from a significant slowdown or a reversal in these forms of capital flows into the country.

Keywords: Capital flows, Economic growth, FDI flows, portfolio investment flows, Private equity, Diaspora remittances, Auto Regressive Distributed Lag Model.

Kinyanjui, E, Ochieng DE.  2017.  Effect of Remittances from Diaspora on Financial Sector Deepening in the East African Community . African development finance journal. 1(1):82-10. Abstract

Abstract
Purpose – This paper investigated the effect of diaspora remittances on financial sector deepening in the East African Community. Personal diaspora remittances were used as a measure of remittances from diaspora. The three proxies for financial deepening that were employed in the study were domestic credit as a ratio of GDP, total credit provided by the financial sector as a percentage of GDP and degree of monetization, M2 as a percentage of GDP.
Methodology – The study adopted an explanatory research design. It employed panel data analysis - fixed effects method, to model the linear regression equation. The population of the study was the five East African Community member countries and covered a 20-year period (1997 to 2016). The data for this study was obtained from the World Bank statistics website.
Findings – This study established that there exists a positive relationship between remittances from diaspora and financial sector deepening in the EAC but this relationship is not significant. The three models analyzed in this study, show that a 0.31, 0.08 and 0.28 change respectively, in remittances in the respective models, leads to a unit change in the level of financial sector deepening in the EAC.
Implications – The results of this study show that an increase in the level of remittances leads to increased financial deepening in the EAC economies. There is therefore need for the government in liaison with the private sector, to provide a conducive environment for development of financially innovative products that ease and reduce the cost of sending remittances as this will foster further financial deepening, which has the positive effect of financial inclusion, access to credit and economic growth.
Value – This study recommended the fostering of activities that are geared towards the ease of sending remittances and cost reduction of sending the remittances through employment of new financial technologies. Further studies have also been recommended to increase the frontiers of the study especially on developed countries in order to gain more conclusive understanding and generalizability of the remittances-financial sector deepening nexus.

Key Words; Diaspora remittances, Financial sector deepening, East Africa Community

Njiru, FAK, Elly D.  2017.  Effect of Monetary Policy on Credit Supply in Kenya . African development finance journal. 1(1):28-43. Abstract

Purpose- This paper sought to establish the effect of monetary policy on credit supply in Kenya.
Methodology- This study adopted a descriptive research design. Descriptive statistics such as mean, median, minimum, maximum and standard deviation were used to describe the trend of the variables. Breusch Godfrey serial correlation LM test was used to test correlation of the study variables. Stationarity tests on time series data was conducted using augmented dickey fuller test statistic. Regression analysis was used to establish the influence of monetary policy on credit supply.
Findings- The study concluded that CRR, OMO and Inflation are significant and have a negative effect on credit supply. The model was also fit to explain the relationship as 76% (R2= 0.761160) variation of the dependent variable (Credit supply) was explained by the independent variables (OMO, CRR, CBR and Inflation) in the long run. Adjusted R- square which provides adjustment to the R Square was73% (Adjusted R2= 0.736664) indicating 73% variation in credit supply was explained by independent variables (OMO, CRR, CBR and Inflation). F- Statistic 31.07233 was significant at 1% level P=0.0000.
Implications – The study recommends that the Central Bank of Kenya should come up with monitoring and evaluation programmes of monitoring how credit supply is influenced by various monetary policy instruments and should streamline the economic environment in which banks operate by ensuring CRR, OMO and Inflation are maintained at a constant.
Value –The study narrowed in scope to commercial banks and excluded the non-banking organizations. Additionally a study should be done on the impact of monetary policy on money supply to capture both banking and non-banking institutions. The research had a presumption that the relationship of the variables was linear therefore more studies should be carried out explore nonlinear relationship on the variables of study,
Key Words: Credit Supply, Monetary policy

2016

D, E, D O.  2016.  The effects of Rights Issue Announcements on Stock Returns for Firms Listed at the Nairobi Securities Exchange. International Journal of Education and Research . 3(9):2411-5681. AbstractEffects_of_rights_issue_announcements_on_stock_returns_at_the_nairobi_securities_exchange-1.pdf

Rights issue is a secondary equity issue in which new additional shares are issued to the existing
shareholders in exchange for cash (capital) needed by a publicly quoted company, either for
expansion purposes or to finance company operations. The rights are issued to the shareholders in
the proportion of their existing holdings. Empirical studies give mixed results on the direction of
stock returns upon a rights issue announcement. Since there has been no consensus on how capital
markets generally respond to rights issue announcement, this study investigates the effect of rights
issue announcement on stock returns of companies listed at an organised exchange. The study
adopts an event study technique on a sample of twelve companies which issued rights between
January 1, 2007 and August 31, 2014. Secondary data on share prices is collected from the Nairobi
Securities Exchange (NSE) database. The study establishes that stock prices and returns changes
significantly in the post announcement period than in the preannouncement period. Analysis of
mean abnormal return reveales that rights issue announcement results into either positive or
negative stock return. Based on the cumulative average abnormal return (CAAR), the study
concludes that rights issue announcement results into a negative abnormal stock return for the listed
firms. The study therefore recommends that the investment banks and listed companies should
consider the negative abnormal stock price reactions and the subsequent negative abnormal stock
return changes to the announcement of rights issue while setting the discounted rights issue prices
so as to ensure that during the issue period, the stock trading prices do not fall below the rights issue
price, a fact that can lead to the collapse of the rights issue exercise. The study recommends further
academic exploration on the effects of repeat rights issues on stock prices and returns so as to
understand the possible response of investors to seasonal issues.

D, E, W K, J. K.  2016.  THE EFFECT OF GENERAL ELECTIONS ON STOCK RETURNS AT THE NAIROBI SECURITIES EXCHANGE. European Scientific Journal. 11(28):1857-7881. AbstractEffects_of_general_elections_on_stock_returns_at_the_nairobi_securities_exchange.pdf

The performance of the financial markets is significantly impacted by
the political environment during eneral ellections. This paper focussed on the
effect of general ellections on the stock retuns at the Nairobi Securities
exchange. Emperical results have given inconsistent results on whether
general election events negatively of positively impact the stock return. The
study adopted event study methodology and analysed secondary data
collected from the NSE around the 1997, 2002, 2007 and 2013 general
election dates in Kenya. The study found that market reaction to elections is
highly negative or positive depending on the volatility of the election
environment. Analysis of the cumulative abnormal returns (CAR) found that
the 2002 and 2013 general elections were insignificant, while the CAR
around the 1997 and 2007 general election events were found to be
significant at 5% level of significance. The study, thus recommends that
stock market, investors and other stakeholders not to overlook electioneering
events, and to implement policies that will cusion the security market against
political risks during general elections to enhance investor confidence

D., E.  2016.  EFFECT OF NATIONAL ANNUAL BUDGET READING ON EQUITY RETURNS AT THE NAIROBI SECURITIES EXCHANGE. DBA Africa Management Review. 6(1):107-118. AbstractEffect_of_national_annual_budget_reading_on_equity_returns_at_the_nairobi_securities_exchange1.pdf

The objective of this study was to investigate the effect of budget reading on equity returns at
Nairobi Securities Exchange. The study adopts descripting staristics design using event model
methodology to establish the correlation between the variables. Secondary data on stock
performance around the 2009, 2010, 2011, 2012 and 2013 budget reading dates was collected
from the NSE database. Data analysis was done using SPSS program to generate the descriptive
statistics, and the study finds that the reading of national budget has significant effect on the
stock returns at NSE during the event period, depending on information content. Analysis of the
AAR, CAR and SCAR of the companies in the NSE-20 share index, during the 5 day event
period before and after the annual national budget reading finds that other than year 2010 that
records no statistical significance of SCAR, the SCAR p value for 2009, 2011, 2012 and 2013
are all less than p = 0.05, suggesting that the market returns for four years deviated significantly
from their means during the event period of budget readings. Therefore, the study recommends
that investors, investment banks, listed companies and the capital markets authority to consider
the effect of national budget reading on stock returns, to formulate policies that can cussion
investors against the effects of budget reading.

2015

Elly, D, Kaijage ES.  2015.  DEMAND SIDE FACTORS AND ACCESS TO EXTERNAL FINANCE BY SMALL AND MEDIUM MANUFACTURING ENTERPRISES IN NAIROBI, KENYA, 28- 29TH -5-2015. 15TH INTERNATIONAL CONFERENCE ON AFRICAN ENTREPRENEURSHIP AND SMALL BUSINESSES DEVELOPMENT. , WHITE SANDS HOTEL, DAR ES SALAAM, TANZANIA. Abstractdemand_side_factors_and_access_to_external_finance_by_small_and_medium_manufacturing_enterprises_in_nairobi_kenya-2.pdf

This study investigates how demand-side factors affect access to external finance by small and medium manufacturing enterprises (SMMEs) in Nairobi, Kenya. The demand-side factors considered in the study are firm characteristics, financial management practices and entrepreneur characteristics. The study employs an exploratory survey design utilizing quantitative methods in data collection and analysis. Data is analyzed using descriptive and inferential statistics. Logistic regression is used to test the relationship between demand-side factors and access to external finance because of the dichotomous nature of the dependent variable. The findings of the study show that some of the demand-side factors significantly influence access to external finance. These factors include entrepreneur’s networks, ethnic orientation, firm growth and earnings volatility. The study recommends further probing of the role of good financial management practices such as preparation and usage of financial information on access to external finance in diverse settings and industries. It is also important for entrepreneurs and providers of the finances to establish and support sustainable networks that guarantee enterprise growth. Though ethnic orientation influence access to external finance, policy efforts should be put in place to ensure there is efficiency in the market for external financing and certain entrepreneurs are not disenfranchised on the basis of their ethnic background. As firm growth also influences access to finance, managers of the SMMEs should endeavor to attain steady and predictable earnings growth with minimal deviations. Such efforts would help minimize financial constraints caused when external funds are inaccessible.

Key Words: Demand side factors, Small and medium manufacturing enterprises

2014

Elly, D, Kaijage ES.  2014.  FINANCIAL INTEGRATION RELATIONSHIPS AND LINKAGES IN EAST AFRICAN COMMUNITY (EAC) EQUITY MARKETS, 17 October. ORSEA. , lower Kabete Abstractfinancial_integration_relationships_and_linkages_in_east.pdf

This paper investigates financial integration and linkage relationships amongst equity
markets in East Africa Community over time by determining the speed and levels of
integration using monthly market return data for the period 2007 to 2013. The study also
examines the short run and long run relationships amongst the markets. The study was
motivated by the ongoing plans of establishment of the East Africa Monetary Union
(EAMU) which will be characterized by mobility of labor and capital as factors of
production across the member states.
Using beta and sigma convergence measures, the study notes that financial integration
has not deepened in the EAC over the years though there are trends towards full
integration. Correlation analysis suggests strong significant relationships amongst EAC
equity market returns. Johansen Cointegration tests suggest existence of three stochastic
trends in the equity markets. Vector auto regression analysis and impulse response
analysis suggest linkages amongst the markets hinging on the NSE and mean reversion in
all the equity markets. The study findings suggest that the EAC equity markets are weak
form efficient and there are arbitraging opportunities across the equity markets. The
responses to the shocks in any of the markets are found to be dependent on the
relationships between the markets.
From the study findings, it is inferred that the roadmap to EAMU should be fast tracked
by facilitating efficiency in the EAC markets where rates of return are market
determined. Policy initiatives should be put in place to eliminate arbitrage opportunities
across the markets and to encourage capital mobility through the equity markets. To
support integration, there should be academic studies on the existence of home bias in the
EAC equity market segments.
Key Words: East Africa Community (EAC), East Africa Monetary Union (EAMU), Dar
es Salaam Stock Exchange (DSE), Financial Integration, Nairobi Securities Exchange
(NSE), Uganda stock Exchange (USE).

Elly, D.  2014.  EXECUTIVE COMPENSATION AND FIRM FINANCIAL PERFORMANCE: A CRITICAL LITERATURE REVIEW. : University of Nairobi Abstract

There has been growing academic interest in the compensation of senior management in corporate enterprises. This interest stems from a concern about the motivation of management as well as concerns about equity and fairness coupled with the importance of corporate governance in enterprises. Shareholders as principals in entities desire maximization of stock returns for a given level of risk and they naturally wish that their firms design compensation systems that motivate senior executives as their agents to pursue policies that meet the principal objective of shareholder wealth maximization. This desk review of relevant theoretical and empirical literature investigates whether the executive compensation – performance link meets an optimality test ex –ante or ex – post under the agency based models as well as other alternative paradigms that explain managerial actions. From the review findings, a confusing debate rages among academics about the relationship between executive compensation and firm financial performance. This confusion manifests itself in a number of ways: in the range of empirical specifications for pay to performance regressions in the literature; in the wide discrepancy in estimates of pay performance sensitivities and in controversy over the appropriate level of executive holdings of stock and stock options. Differences in research methodology explain some of the inconsistent conclusions notwithstanding that there is even a lack of consensus among some studies that use identical or very similar research designs. Foremost, the measurement of firm success is in intself controversial regarding adoption of performance measures. Also controversial is treatment of the components of compensation. The diverse set of disciplines involved in the study area and the wide variety of methods used to investigate the main questions complicates the way to consensus especially on incorporation of organizational contextual settings and other contingency factors for executive compensation.
Research gaps emerging in the literature review include; wide variations of pay performance sensitivities derived within agency models, minimal evaluation of explanatory values of alternative paradigms to the agency models, undefined relationships between pay performance sensitivity and the performance metric applied, undefined relationship between executive compensation components and past and future organizational performance levels, inexplained sensitivity of the pay performance link to organizational contextual effects of ownership and internationalization, unspecified possibility of dual causality between executive compensation and firm performance and the information content of executive compensation plan adopted by a public enterprise.
The study recommends future research effort for bridging the knowledge gaps using alternative paradigms while adressing the methodological issues of empirical specifications, causality, fixed-effects, first-differencing, and instrumental variables. On the empirical specifications, the studies need to reconsider the causality relationships, operationalization of research variables, use of panel data and incorporation of control variables like demographic characteristics, corporate governance mechanisms, regulation, firm ownership and globalization.

Kaijage, ES, Elly D.  2014.  EFFECT OF CORPORATE CHARACTERISTICS ON CAPITAL STRUCTURE DECISIONS OF SMES: A CASE OF DTMs IN KENYA, 30 May 2014. THE 14TH INTERNATIONAL CONFERENCE ON AFRICAN BUSINESS AND SMALL BUSINESS (ICAESB). , THE UNIVERSITY OF DAR ES SALAAM BUSINESS SCHOOL (UDBS) Abstracteffect_of_corporate_characteristics_on_capital_structure_decisions_of_smes.pdf

The choice between debt and equity for a business firm has implications on the value of a firm as well as strategic importance for corporate managers. Previous studies have addressed the issue of capital structure decisions from the point of view of large firms. The capital structure of Small and Medium - sized Enterprises (SMEs) has become a research topic only recently despite the fact that SMEs play a very crucial role in fostering growth and employment in many countries. Some research studies have investigated the relationship between capital structure mix as an independent variable and specific corporate characteristics as dependent variables. This paper reverses this order by investigating the influence of various corporate characteristics on the capital structure of deposit taking microfinance institutions (DTMs) in Kenya. DTMs are a special group of SMEs in Kenya, which create money through deposit mobilization and lending and are regulated by the Central Bank of Kenya (CBK). Using secondary data from financial reports of 7 out of 9 Licensed DTMs in Kenya for the period 2008 to 2012, this study has applied ordinary least squares (OLS) fixed - effect regression models to estimate the influence of firm corporate characteristics on capital structure measure of debt equity ratio. The corporate characteristics considered are: size, profitability, liquidity, growth, tangibility of assets and volatility of earnings. The study findings suggest that size and growth positively influence, in a significant way, the capital structure of DTMs in Kenya. Furthermore, liquidity, profitability, and tangibility of assets have been found to be negatively influencing the capital structure of the DTMs. These findings generally concur with the predictions of the pecking order theory and the signaling effects of capital structure decisions of firms.

Key Words: Deposit taking microfinance institutions (DTMs), Microfinance institutions (MFIs), Small and Medium Enterprises (SMEs), Capital Structure and Corporate characteristics.

2013

Elly, OD, Hellen KW.  2013.  Relationship between Inflation and Dividend Payout for Companies Listed At the Nairobi Securities Exchange. International Journal of Education and Research. 1(6):1-8. Abstractrelationship_between_inflation_and_dividend_payout_for_companies_listed_at_the_nairobi_securities_exchange.pdf

Earlier studies conducted have a mixed opinion on the effect of inflation on dividend payout.
Due to the nominal increase in the volumes of money, which result from the increase in
inflation, at least for a short run, some studies have concluded that inflation has a positive
effect on dividend payout. However, in the long run, studies in general seem to show that the
inflation rate and stock returns are negatively related. This study, which considers a sample of
all the firms that consistently paid dividend between the year 2002 to 2011 and were listed at
the Nairobi Security Exchange showed that, inflation rate has no impact on the dividend
payout.
However, other variables considered, that is, the spot Dollar exchange rate to Kenya Shillings,
the Volumes of Money Supply and the T-Bill rate (91 day rate) show mixed results. The study
reveals that, the exchange rate and the T-Bill rate have a positive correlation with dividend
payout, while volume of money supplied has no impact on the dividend payout.

Elly, OD, Ojung’a AS.  2013.  THE EFFECT OF EXCHANGE RATE VOLATILITY ON FOREIGN DIRECT INVESTMENTS IN KENYA. International Journal of Education and Research. Vol. 1 September 2013(9) Abstractthe_effect_of_exchange_rate_volatility_on_foreign_direct.pdf

Kenya like most developing countries has had a deficiency of investment capital which can
negatively affect economic activities. Due to the decline in official development assistance (ODA)
in the 1990s, most of the developing countries’ governments have put in efforts to attract foreign
direct investment which not only creates employment opportunities but also contributes to
economic growth and development. This study therefore investigates the effect of exchange rate
volatility on foreign direct investments (FDI) in Kenya by examining the degree of relationship
between the exchange rate volatility and FDI inflows.
Secondary annual data of both FDI inflows and Exchange rate fluctuation variables for the periods
1981 to 2010 were collected and analyzed in the study. This period is sampled since it captures
three exchange rates regime namely fixed rates regimes, pegged rates regimes and finally floating
rates regimes. The data for real effective exchange rates and FDI are obtained from the IMF and
World Bank data bases on their websites and from the Central Bank of Kenya (CBK).
The findings of the study indicate that the correlation between the two variables is 0.318 implying a
positive correlation which is however weak. The study recommends a more controlled
macroeconomic environment in order to control the fluctuations of the macro economic variables
hence attract more foreign investors in order to increase the FDI inflows into the country. It further
considers future investigation on the contributions of other variables that affect FDI.
Key Words: Exchange rate fluctuations, Foreign direct investments (FDI).

Elly, OD, Hellen KW.  2013.  Relationship between inflation and dividend payout for companies listed at the Nairobi Securities Exchange. International Journal of Education and Research. 1(6) Abstractrelationship_between_inflation_and_dividend_payout_for_companies_listed_at_the_nse_2013.pdf

Earlier studies conducted have a mixed opinion on the effect of inflation on dividend payout. Due to the nominal increase in the volumes of money, which result from the increase in inflation, at least for a short run, some studies have concluded that inflation has a positive effect on dividend payout. However, in the long run, studies in general seem to show that the inflation rate and stock returns are negatively related. This study, which considers a sample of all the firms that consistently paid dividend between the year 2002 to 2011 and were listed at the Nairobi Security Exchange showed that, inflation rate has no impact on the dividend
payout. However, other variables considered, that is, the spot Dollar exchange rate to Kenya Shillings,
the Volumes of Money Supply and the T-Bill rate (91 day rate) show mixed results. The study reveals that, the exchange rate and the T-Bill rate have a positive correlation with dividend payout, while volume of money supplied has no impact on the dividend payout.
Key Words: Nairobi Securities Exchange (NSE), Dividend Payout, Inflation, Exchange Rate, Money Supply, T-Bill rate.

OCHIENG’, ELLYDUNCAN.  2013.  EXECUTIVE COMPENSATION AND FIRM FINANCIAL PERFORMANCE: A CRITICAL LITERATURE REVIEW. , Nairobi: University of Nairobi Abstractexecutive_compensation_and_firm_financial_performance_-_a_critical_literature_review.pdf

There has been growing academic interest in the compensation of senior management in corporate enterprises. This interest stems from a concern about the motivation of management as well as concerns about equity and fairness coupled with the importance of corporate governance in enterprises. Shareholders as principals in entities desire maximization of stock returns for a given level of risk and they naturally wish that their firms design compensation systems that motivate senior executives as their agents to pursue policies that meet the principal objective of shareholder wealth maximization.

This desk review of relevant theoretical and empirical literature investigates whether the executive compensation – performance link meets an optimality test ex –ante or ex – post under the agency based models as well as other alternative paradigms that explain managerial actions. From the review findings, a confusing debate rages among academics about the relationship between executive compensation and firm financial performance. This confusion manifests itself in a number of ways: in the range of empirical specifications for pay to performance regressions in the literature; in the wide discrepancy in estimates of pay performance sensitivities and in controversy over the appropriate level of executive holdings of stock and stock options.

Differences in research methodology explain some of the inconsistent conclusions notwithstanding that there is even a lack of consensus among some studies that use identical or very similar research designs. Foremost, the measurement of firm success is in intself controversial regarding adoption of performance measures. Also controversial is treatment of the components of compensation. The diverse set of disciplines involved in the study area and the wide variety of methods used to investigate the main questions complicates the way to consensus especially on incorporation of organizational contextual settings and other contingency factors for executive compensation.

Research gaps emerging in the literature review include; wide variations of pay performance sensitivities derived within agency models, minimal evaluation of explanatory values of alternative paradigms to the agency models, undefined relationships between pay performance sensitivity and the performance metric applied, undefined relationship between executive compensation components and past and future organizational performance levels, inexplained sensitivity of the pay performance link to organizational contextual effects of ownership and internationalization, unspecified possibility of dual causality between executive compensation and firm performance and the information content of executive compensation plan adopted by a public enterprise.

The study recommends future research effort for bridging the knowledge gaps using alternative paradigms while adressing the methodological issues of empirical specifications, causality, fixed-effects, first-differencing, and instrumental variables. On the empirical specifications, the studies need to reconsider the causality relationships, operationalization of research variables, use of panel data and incorporation of control variables like demographic characteristics, corporate governance mechanisms, regulation, firm ownership and globalization.

2012

Elly, OD, Oriwo AE.  2012.  The Relationship Between Macro Economic Variables And Stock Market Performance In Kenya. DBA Africa Management Review . 3(1):38-49. Abstractthe_relationship_between_macro_economic_variables_and_stock_market_performance_in_kenya.pdf

This study investigates the relationship between macroeconomic variables on NSE All
share index (NASI) and goes further to determine whether changes in macroeconomic
variables can be used to predict the future NASI. Three key macroeconomic variables
are examined and they include lending interest rate, inflation rate and 91 day Treasury
bill (T bill) rate. Secondary data for the periods March 2008 to March 2012 is collected
as follows; data for NASI was obtained from the Nairobi Securities Exchange (NSE),
data for inflation was obtained from Kenya National Bureau of Statistics and finally
data for lending rates and 91-day T Bill was obtained from Central Bank of Kenya
(CBK). The data is analysed using regression method. The lending rate is dropped from
the regression model since it is correlated with the 91-Day T bill rate. The findings in
the study indicate that 91 – day T bill rate has a negative relationship with the NASI
while inflation has a weak positive relationship with the NASI. Based on these findings,
the study recommends monitoring of the macroeconomic environment since the
changes in the macroeconomic variables has an effect on the stock market performance,
which also influences the foreign investor’s decisions in the local investments.

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