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Journal articles on the topic 'Equity Bank (Kenya)'
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1
Kori, Blandina Walowe, Stephen M. A. Muathe, and Samuel Mwangi Maina. "Financial and Non-Financial Measures in Evaluating Performance: The Role of Strategic Intelligence in the Context of Commercial Banks in Kenya." International Business Research 13, no. 10 (September 28, 2020): 130. http://dx.doi.org/10.5539/ibr.v13n10p130.
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This study provides comprehensive discussion on role of strategic intelligence in commercial banks, in Kenyan context. The primary focus was to evaluate the performance of commercial banks using both financial and non-financial performance measurers. The financial measurers comprised return on equity (ROE), while non-financial measures were customer satisfaction, learning and growth, and internal processes. The study was anchored on resource-based view and balanced scorecard model. The target population comprised 40 commercial banks. Additionally, the sample size 181 was selected proportionately through stratified sampling procedure. Data collection instruments comprised closed and open -ended questionnaires and online review. The study used both primary and secondary data, where primary data was obtained from Kenya commercial banks head offices, while secondary data, for the year 2016 – 2018, was obtained from the annual reports of the central bank of Kenya. Data analysis was done using descriptive statistics and linear multiple regression analysis. Findings of the study indicate that strategic intelligence has a statistically significance on the performance of commercial banks in Kenya. Moreover, both financial and non-financial measures of performance are relevant in the banking sector and growth of Kenyan economy. The study recommends that commercial bank in Kenya should integrate their training focus and strategy implementation with investors interests based on balanced score card.
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Karimi, Kirima Lucy. "Effects of Agency Banking on Bank Performance: A Case of Equity Bank Meru Branch, Kenya." Business and Economic Research 8, no. 4 (November 21, 2018): 100. http://dx.doi.org/10.5296/ber.v8i4.13941.
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The purpose of this study was to establish the effects of agency banking on bank performance with a focus of Equity Bank Meru Branch, Kenya. The reason for the selection of Equity Bank was because of its large customer base and because of its growth. The study adopted a descriptive research design and the target population was the eighteen agency bank agents. The study used stratified random sampling to select 11 agents that were used in the study. Both quantitative and qualitative data was collected by use of questionnaires with both open and closed ended questions. Data was analyzed and presented using descriptive statistical tools. The study findings indicated that the general cost such as operations and transactions cost were still high even for agency banking, security measures were in place that is physical security though it needed strengthening, transaction security and customer security were not good and needed improvement and the regulations that were in place for agency banking also needed to be improved. The study made the following recommendations: For agent banking operations to be effective, strong internal control systems should be put in place which should be flexible and be evaluated periodically to increase efficiency and effectiveness; there should also be frequent updates of regulations and policies that guide agency banking and procedures that are used in the banking and agency industry in Kenya. Bankers Association in consultation with the Central Bank of Kenya should carry out frequent audit and research in relationship to agency banking to determine any loopholes and challenges in order to advice the banks accordingly. Also banks should work closely with the agents in order to streamline the systems and processes to help achieve efficiency. The results gathered out of the audit and research will help the banks to keep their agents updated.
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Mwangi, Mercy Wanja, and Jane Wanjira. "Corporate Social Responsibility and the Performance of Commercial Banks in Kenya: A Case of Equity Bank." International Journal of Current Aspects 3, no. II (May 20, 2019): 186–98. http://dx.doi.org/10.35942/ijcab.v3iii.17.
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The goal of this study was to explore the influence of Social Corporate Responsibility on organization Performance. It specifically sought to establish the influence of philanthropic CSR activities benefits salient to CSR activities CSR contributions and financial-focused CSR on Equity Bank performance. This study was guided by three theories namely Triple Bottom Line Theory, the Stakeholder Theory as well as the Fiduciary Capitalism Theory. This study adopted a descriptive research design. With all the 238 management staff at Equity Bank being the target population. In order to answer the research questions, the study incorporated merits of secondary data which formed a basis for comparison with findings. The findings of the study were: philanthropic CSR, benefit salient, CSR contributions and financial focused CSR, had a significant influence on organizational performance of commercial banks in Kenya. The study concludes that: Philanthropic CSR, benefit salient on CSR, CSR contributions and financial focused CSR activities had a positive and significant influence on Equity Bank organizational performance. The study thus makes the following recommendations that Equity bank management should continue to invest more in the corporate social responsibility aspect done to make the life of beneficiaries better in terms of education, health and other humanistic endeavors. They should improve on strategies that improves on the desired outcomes that accrue out of CSR activities and improve by seminars and involvement actions how the employees feel about CSR enough to warrant motivation to better productivity by them.
This is an open-access article published and distributed under the terms and conditions of the Creative Commons Attribution 4.0 International License of United States unless otherwise stated. Access, citation and distribution of this article is allowed with full recognition of the authors and the source.
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Mwangi, Mirie. "The Effect of Size on Financial Performance of Commercial Banks in Kenya." European Scientific Journal, ESJ 14, no. 7 (March 31, 2018): 373. http://dx.doi.org/10.19044/esj.2018.v14n7p373.
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The question of whether size influences financial performance of commercial banks has not been conclusively settled empirically. The objective of the study was therefore to establish the effect size has on the profitability of commercial banks in Kenya. The study used an unbalanced panel of all commercial banks in Kenya for the ten year period 2007 to 2016 (the number ranged from 39 to 43). Regression analysis was used to relate size (proxied by log of total assets) against financial performance (Return on assets and return on equity). Size was found to have a positive effect on financial performance of commercial banks in Kenya. In addition, the effect was stronger the larger the commercial bank. The study recommends that policy initiatives geared towards increasing the size of the commercial banks be considered and shareholders/managers could also adopt growth strategies (internally generated, fund raising or mergers and acquisitions).
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Muriithi, Jane Gathigia, and Kennedy Munyua Waweru. "Liquidity Risk and Financial Performance of Commercial Banks in Kenya." International Journal of Economics and Finance 9, no. 3 (February 22, 2017): 256. http://dx.doi.org/10.5539/ijef.v9n3p256.
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The focus of this study was to examine the effect of liquidity risk on financial performance of commercial banks in Kenya. The period of interest was between year 2005 and 2014 for all the 43 registered commercial banks in Kenya. Liquidity risk was measured by liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) while financial performance by return on equity (ROE). Data was collected from commercial banks’ financial statements filed with the Central Bank of Kenya. Panel data techniques of random effects estimation and generalized method of moments (GMM) were used to purge time-invariant unobserved firm specific effects and to mitigate potential endogeneity problems. Pairwise correlations between the variables were carried out. Wald and F- tests were used to determine the significance of the regression while the coefficient of determination, within and between, was used to determine how much variation in dependent variable is explained by independent variables. Findings indicate that NSFR is negatively associated with bank profitability both in long run and short run while LCR does not significantly influence the financial performance of commercial banks in Kenya both in long run and short run. However, the overall effect was that liquidity risk has a negative effect on financial performance. It is therefore advisable for a bank’s management to pay the required attention to the liquidity management.
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Odhiambo, Felix Ouma, and Fredrick Ndede. "Credit Information Sharing Practices and Financial Performance of Commercial Banks in Kenya." International Journal of Current Aspects 3, no. VI (November 8, 2019): 67–82. http://dx.doi.org/10.35942/ijcab.v3ivi.79.
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The banking sector in Kenya suffered increased non-performing credits which prompted collapse of certain banks with an upsurge of loan defaulters. This was mainly attributed to the continued information asymmetry in the industry because of absence of a credit data sharing component. Commercial banks in Kenya have continued to encounter a number of challenges in obtaining information on customers’ payment history that helps guide on determining their ability to access and re-pay loan advancements. This has made more commercial banks to subscribe to credit reference bureaus since its establishment in 2008. As a result, commercial banks in Kenya have been experiencing high rates of Non-Performing Loans advanced to customers. The general objective of the study was to determine the effect of credit information sharing practices on financial performance of commercial bank in Kenya. The study specific objectives were to determine the effect of information accuracy, volume of lending and customer credit reports on financial performance of commercial bank in Kenya. The study was anchored by adverse selection theory, moral hazard theory and asymmetry theory. The researcher used a descriptive research design. The target population was five banks within Nairobi County including KCB, Equity Bank, Family Bank, Cooperative Bank and Barclays Bank. Primary data was collected using questionnaires and secondary data using financial statements of the commercial banks performance for the past 5 years. Data was analysed using descriptive statistics and inferential statistics. The study found that information accuracy, volume of lending and customer credit reports were positively and significantly related to the financial performance of the commercial banks. The study concludes that information accuracy increases the banks ' understanding of the applicants’ features and allows a more precise forecast of their probabilities of repayment, it decreases the information rents that banks could otherwise obtain from their clients and it can function as a borrower discipline tool. Lending volume enhances business banks ' enhanced operations, which in turn leads to banks’ enhanced economic results. Sharing of credit information has made commercial banks grant more loans on the basis of their reputation to deserving clients, thereby improving their profitability. When extensive consumer credit history information are easily accessible, it considerably decreases the cost of entering loan markets for fresh lenders, enhances competition and lowers credit rates. The research recommends that for enhanced results, all financial institutions in Kenya need to protect the precision of their platforms for data sharing. Regular site visits should offer credibility to the precision of the borrowers’ data. The data supplied by CRB should be used efficiently by commercial banks to lend to prospective borrowers. Only borrowers with a strong history of credit should be permitted access to the loans. The research also proposes that Kenya's commercial banks should base credit awards on the borrowers’ reputational assets, ensuring that the loan default rate is small, thus enhancing commercial bank performance.
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Njoroge, Lucas K. "The Financial Trilemma and Macroeconomic Instability: Empirical Evidence from Kenya." American Journal of Trade and Policy 2, no. 2 (August 31, 2015): 59–70. http://dx.doi.org/10.18034/ajtp.v2i2.384.
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The purpose of the study is to test whether the financial trilemma holds for a small open economy, and examine the implication of the implicit financial trilemma configuration on macroeconomic instability using Kenyan data. First, the study constructs the trilemma and macroeconomic instability indices and tests the financial trilemma. Second, the study empirically examines the effect of financial trilemma on macroeconomic instability. The results show that the financial trilemma does not hold for Kenya. However, by using the overall foreign participation to total equity turnover as a measure of financial openness, the trilemma indices are statistically significant. The results imply that the increasing financial openness is potentially driving the Kenyan economy towards financial trilemma characterized by a delicate balance of improving monetary independence and exchange rate stability. Financial openness is associated with increased macroeconomic instability. International reserve accumulation acts as a buffer and does not cause macroeconomic instability, implying that the Central Bank of Kenya conducted effective sterilization during the study period. This is the first study to test for the financial trilemma using Kenyan data. This study differs from other similar studies in a number of important ways. First, the study construct alternative financial trilemma indices that reflect the various reforms taking place in Kenya. Second, the study uses a unique data set based the newly released quarterly GDP data unlike most other studies that depend on annual data.
JEL Classifications Code: F31
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Njeri Mwara, Mary. "Assessment of Use of Diversification Strategy in Enhancing Competitive Performance at Equity Bank, Kenya." International Journal of Finance and Banking Research 2, no. 2 (2016): 40. http://dx.doi.org/10.11648/j.ijfbr.20160202.12.
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Ndungu, John Gichia, and Willy Muturi. "Effect of Diversification on Financial Performance of Commercial Banks in Kenya." International Journal of Current Aspects 3, no. V (October 31, 2019): 267–85. http://dx.doi.org/10.35942/ijcab.v3iv.67.
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Diversification plays a vital role in risk management and consequently financial performance of commercial banks. Diversification mitigates systemic risk facing a commercial bank and thus reduces the probability of bank failure. In Kenya, commercial banks have been diversifying their business by increasingly offering new services such as mobile banking, agency banking, bank-assurance, faceless banking and integrating microfinance in their banking system. Diversification by the commercial banks is premised on the need to enhance financial performance. This has mainly emanated from banking industry having undergone numerous regulations regimes which over the years have affected financial performance of these entities. Empirical literature shows that diversification may not always lead to higher financial performance due to increased overheads and exhausted economies of scale. The study sought to determine the effect of diversification on financial performance of commercial banks in Kenya. The specific objectives of the study were to determine the effect of income diversification on financial performance of commercial banks in Kenya, to examine the effect of geographical diversification on financial performance of commercial banks in Kenya and to examine the effect of product diversification on financial performance of commercial banks in Kenya. Secondary data used by the study was collected for five years period (2013-2017 on annual basis). All the commercial banks were studied. Data was analysed using descriptive and inferential statistics and presented in tables and figures. The study found that Income Source Diversification and Geographical Diversification had a positive effect on the financial performance of the commercial banks while the Product Diversification had a negative impact the financial performance the commercial banks. The findings from the OLS regression analysis revealed that the diversification components studied namely product diversification, geographical diversification and income diversification explain up to 13.3% of the variations in return on assets (R2=0.133) and 18.7% of the variations in return on equity (R2=0.187). The study concluded that financial performance of the commercial banks in Kenya can be accounted for by the diversification strategies that have been implemented. It was further concluded that increased formulation and implementation of additional diversification strategies resulted in significant improvement in the financial performance of the commercial banks. The study recommended that managers at the commercial banks to make formulation and implementation of diversifications as a key organizational priority. Before the adoption of any particular diversification, the management of the commercial banks are econcouraged to first determine the suitability of that particular diversification strategies based on the organization structure, culture and policies and the overall intended outcomes. The study recommends that the government and other regulatory bodies to create favourable policies on the implementation of diversifications in commercial banks. This will ensure that there is effectiveness, efficiency as well as consistency in the use and adoption of diversifications by not only the banks but also other organizations in different sectors.
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Ouma, Moses O., and Gabriel N. Kirori. "Evaluating the Financial Soundness of Small and Medium-Sized Commercial Banks in Kenya: An Application of the Bankometer Model." International Journal of Economics and Finance 11, no. 6 (May 5, 2019): 93. http://dx.doi.org/10.5539/ijef.v11n6p93.
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The study investigated the financial soundness of small and medium-sized commercial banks in Kenya over the four-year period, 2014 to 2017, using the bankometer model and further compared the financial health of the two bank categories. The study employed secondary data from a census of Twelve (12) medium-sized and Sixteen (16) small banks, with the financial soundness being proxied by the overall solvency score (S-Score) in order to achieve its objective. A total of six (6) different financial ratios namely, Capital to Assets ratio, Equity to Assets ratio, Capital Adequacy Ratio, Non-Performing Loans ratio, Operating Cost to Operating Income ratio and the ratio of Loans to Assets were used in the study to measure the degree of financial health of the banks. One of the key findings of the study was that both the small and medium-sized commercial banks in Kenya were financially sound during each of the four (4) years studied, with no significant difference in the financial soundness of the two bank categories. Other findings were that all the banks studied experienced poor performance in loans and operations while two banks had below the benchmark capital adequacy ratio. The findings of the study are important in that, they can be used to formulate policies and strategies for promoting improvement in the financial performance of the banking sector in particular and the business sector at large in the country.
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David Gichuhi, Raymond Kiplagat; Paul Gesimba;. "Influence of Technology Usability on Digital Banking Adoption by Customers of Selected Commercial Banks in Nakuru Town, Kenya." Editon Consortium Journal of Economics and Development Studies 1, no. 1 (February 1, 2020): 28–39. http://dx.doi.org/10.51317/ecjeds.v1i1.68.
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The purpose of this research was to find out the influence of technology usability on digital banking adoption by customers of selected commercial banks in Nakuru town. It was guided by the Technological Acceptance Model and employed the descriptive research design. The target population was 192,138 bank customers from three Commercial Banks namely Barclays, Equity, and KCB located in Nakuru Town. A sample of 138 customers was determined using the Cochran formulae and selected using clustered and systematic sampling techniques. Primary data was collected using semi-structured questionnaires. Quantitative data was analysed using descriptive and logistic regression method while qualitative data was analysed using the thematic content analysis technique. Finding revealed that technology usability (W2= 19.399, sig= .044), has a statically significant and positive influence on digital banking adoption by bank customers in the study area. Customers who found digital technology to have high usability were 3.27 times more likely to adopt digital banking technology than customers who felt that the technologies have low usability The study recommends that banks should design simple and easy to use platforms so as to increase usability. They should also educate customers on how to use the digital banking services.
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Koskei, Loice. "The Effect of Foreign Portfolio Equity Purchases on Security Returns in Kenya: Evidence from NSE Listed Financial Institutions." International Journal of Economics and Finance 9, no. 4 (March 24, 2017): 202. http://dx.doi.org/10.5539/ijef.v9n4p202.
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Foreign portfolio inflows increase the liquidity and the volume of finance available for financial institutions. At the same time, as foreign portfolio inflows finances in part the capital requirements of local companies, it can also increase the competitiveness of these companies. A huge surge of the inflows can be very inflationary because this forces the Central Bank of Kenya to expand the country’s monetary base by releasing counterpart domestic currency which eventually feeds into the inflationary process. The main aim of this study was to find out the effect of international portfolio equity purchases on security returns of listed financial institutions in Kenya. The study population was 21 financial institutions listed on the Nairobi Securities Exchange. Using purposive sampling technique the study concentrated on 14 financial institutions. The research design of the study was causal as it is concerned more with understanding the connection between cause and effect relationships. The study adopted panel data regression using the Ordinary Least Squares (OLS) method where the data included time series and cross-sectional. A unit root test was carried in this study to examine stationarity of variables because it used panel data which combined both cross-sectional and time series information. Panel estimation results indicated that international portfolio equity purchases have no effect on stock returns of listed financial institutions in Kenya. The study recommended implementation of regulations and policies that would attract foreign portfolio equity inflows in financial institutions.
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Joseph Masinde Wabwire. "Socio-Economic Factors and Utilization of Formal Financial Services among smallholder Farmers in Kenya." Editon Consortium Journal of Economics and Development Studies 3, no. 1 (January 5, 2021): 177–88. http://dx.doi.org/10.51317/ecjeds.v3i1.196.
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The main aim of this research was to establish the effect of socio-economic factors on utilization of formal financial services among smallholder farmers in Kenya. Farmers in low-income counties encounter a number of challenges among them limited access to finance. Financing agriculture, therefore, becomes a critical service to enable the full realization of the sector’s potential. In Kenya, the advent of innovative banking models through commercial banks such as Equity bank have seen a higher proportion of the rural population who were previously unreached being reached by financial services. That said, the subscription to formal financial services by small holder farmers is still low and many of them either shy away from formal financial institutions or are simply ineligible for the services due to lack of a banking profile with the institutions. Cross-sectional survey research design was adopted. The target population for this study were smallholder farmers from Nakuru, Busia and Kirinyaga Counties in Kenya. The study sample was determined using simple random sampling. The sample size was 560 smallholder farmers. The questionnaire and secondary information were the key instruments for data collection. Quantitative data was analysed using multiple linear regression equations with the aid of SPSS software. The study established that the socio-economic factors significantly affected utilization of formal financial services by the smallholder farmers in the country. Policy Makers should therefore, encourage small holder farmers by way of incentives to disclose their annual income so as to improve their chances of accessing formal financial services that can expand their enterprises.
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Nkam, Fonkam Mongwa, Akume Daniel Akume, and Molem Christopher Sama. "Macroeconomic Drivers of Private Equity Penetration in Sub-Saharan African Countries." International Business Research 13, no. 1 (December 19, 2019): 192. http://dx.doi.org/10.5539/ibr.v13n1p192.
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The objective of this study is to investigate in to the drivers of private equity penetration in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases (CapitalIQ, Preqin, Burgiss and Mergermarket), World Bank development indicators, regional private equity and venture capital associations and country specific stock market websites. The Panel Two-Stage Least Squares Instrumental Variables (2SLS IV), Panel Corrected Standard Errors (PCSE) and Feasible Generalised Least Squares (FGLS) estimation techniques were used. This was due to potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results using the 2SLS IV estimation technique show that stock market capitalisation, GDP per capita, banking credit to private sector, real exchange rate and private investments are key macroeconomic drivers of private equity penetration in the selected Sub-Saharan African countries. Inflation had negative and insignificant effect on private equity penetration in the selected countries. The results using the PCSE and FGLS estimation techniques show that the signs of all the variables remain the same as was the case in the 2SLS IV estimation technique though the magnitudes were different. However, the results of PCSE and FGLS estimation techniques show that banking credit to private sector is significant in the FGLS model while private investments is significant in the PCSE model. GDP per capita, real exchange rate, stock market capitalisation and inflation are significant in both the PCSE and FGLS estimation techniques.
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Mberia, Charity, and Kevin Wachira. "INFLUENCE OF BUDGETING AND DEBT MANAGEMENT LITERACY TRAINING ON FINANCIAL PERFORMANCE OF EQUITY BANK TRAINED WOMEN SELF HELP GROUPS IN MACHAKOS TOWN, KENYA." International Journal of Entrepreneurship and Project Management 6, no. 1 (September 21, 2021): 1–11. http://dx.doi.org/10.47604/ijepm.1378.
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Purpose: The purpose of the study was to find out the influence of financial literacy on budgeting and debt management skills on financial performance of Equity bank trained women self-help groups in Machakos Town, Kenya.
Methodology: The research methodology employed two theories namely; The Bruce Tuckman’s Theory of group development and Expectancy Theory. Empirical studies were outlined and existing literature critiqued hence the research gap. The target population was 33 women self-help groups that are registered and trained by Equity Bank. Census sampling design was used for accuracy of the subdivisions of the subdivision and purposive sampling technique was used to calculate sample size because it focuses on particular characteristics of a population. The study used structured questionnaire as its data collection instrument. Analyzed data was presented through graphs and charts.
Results: Findings on budget training established a significant relationship between budget training and financial performance of women self-help groups in Machakos Town, r=0.255, p=0.035<0.05 indicating that adding a unit on budget training will increase financial performance of women self-help groups in Machakos Town by 0.255 multiple units. Further findings on debt management skills training established a significant relationship between debt management training skills training and financial performance of women self-help groups in Machakos Town, r=0.600, p=0.005<0.05 indicating that adding a unit on debt management training skills will increase financial performance of women self-help groups in Machakos Town by 0.600 multiple units.
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Momanyi, Elizabeth, Kibiwott Kurgat, Jonai Wabwire, and Benard O. Nyatuka. "Awareness of the Concept of Corporate Communication among the Youth: A Case of Equity Bank’s Social Responsibility Programmes in Kisii County, Kenya." International Journal of Social Science Research 4, no. 1 (March 2, 2016): 115. http://dx.doi.org/10.5296/ijssr.v4i1.8871.
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As one of the components of corporate communication, corporate social responsibility (CSR) is gaining currency in both for-profit as well as not-for- profit organizations the world over as it enhances good corporate management and sustainable development. Although many corporations in Kenya are engaged in CSR activities, Equity Bank has tended to employ a more transformative approach. Majority of those who are targeted to benefit from the bank’s CSR programmes comprise the youth. However, there is very little known about the extent to which the public, including the youth, is aware of these programmes, particularly in Kisii Central sub-county of Kisii county, Kenya. Thus the study sought to fill this gap. The descriptive survey research design was used. The study population comprised 897 youths in the sub-county who had benefitted from the bank’s CSR programmes. Simple random sampling was used to select 180 of them to participate in the study. Additionally, five (5) respondents who were knowledgeable on the bank’s CSR programmes concerning youth empowerment were purposively involved as well. An interview guide and questionnaire were used to gather information to be analyzed. Descriptive statistics including frequencies, percentages and graphs were used to present the data. The study revealed that the level of awareness among youths of the bank’s range of CSR programmes was low. The study recommends that the youth be sensitized on all the bank’s CSR programmes. Apart from laying ground for further research, the findings are of great benefit to the concerned policy makers, academicians and other stakeholders.
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Yusuf, Swalhah Ibrahim. "The Effect of Capital Structure Gearing Levels on Financial Performance of Public and Private Sector Firms in Kenya’s Coastal Counties." International Journal of Economics and Finance 11, no. 3 (February 27, 2019): 99. http://dx.doi.org/10.5539/ijef.v11n3p99.
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Soon after independence in 1963, many firms including those in productive public and private sectors were set up in Kenya to produce goods and services for consumption in Kenya and beyond. Some public and private firms were set up in Kenya’s coastal counties while some were set up in other parts of Kenya. As at June 1990 however, most of these firms were either collapsed and liquidated or were ailing. Few were performing fairly. By 2015, there were 194 public firms which were in operations. Many of these however were formed after 1990. 46.4% of these had poor financial performance as measured by accounting and market ratios (ROE and ROA). About 35 of these firms, among them sugar firms and local authorities had more operating expenses than revenue. Postal Corporation of Kenya for example made KES 2.6b in revenues. Operating expenses however were KES 4.16b. National Oil Corporation of Kenya (NOCK) made KES 24.76b in revenues. Cost of sales excluding operating expenses however were KES 22.95b (Kenya’s treasury department, statement, 2015). In the small enterprise segment, about 300,000 SME’s were set up in 2010. About 350,000 SME’s were set up in 2012. However 2.2m SME’s closed down in six years ending 2015. About 35% of these closed down in 2015. Overall, about 96% of the firms which are set up closed down by the end of their first year in operations. (World Bank Report, 2010). The questions were ‘why did firms underperform and why did these firms fail?’ Published annual financial reports of firms, studies by Kenya National Bureau of Statistic (KNBS) and others attributed the poor financial performance and failure of the firms to many factors; high cost of energy, intense competition, high cost of raw materials, obsolete equipment, poor management, poor technical skills, high cost of finance and other bank charges, inadequate finance, family feuds, lack of succession plan etc. Some empirical studies attributed poor financial performance and failure of firms to financing; the capital structure. None however attributed this to capital structure gearing levels. This constituted a research gap to be filled by this study to add to the body of knowledge and literature. The capital structure gearing level is the proportion of external finance used in financing a firm. This proportion (gearing) may vary between ›0 to 100% (Brealey & Myers, 1991). Some firms however have a proportion ranging between ›0 and <30% (LG), 30%-‹35% (MG1) ≥35%-‹40% (MG2) ≥40%-≤60% (MG3) and ›60% (HG). The external finance may be inform of short term and long term debt and equity finance. Debt carries a fixed slice of earnings. The gearing levels therefore debt levels will carry a proportionate fixed slice of earnings. High gearing (HG) will magnify the effect on earnings and hasten the process of insolvency (Brealey & Myers, 1991). Poor financial performance and failure therefore maybe the result of inappropriate gearing level. Gearing level therefore was the problem. This study sought to do the following:
Assess the capital structure of public and the private sector firms in Kenya’s coastal counties.
Assess the capital structure gearing levels of public and private sector firms in Kenya’s coastal counties.
Determine the effect of the capital structure gearing levels on financial performance of public and private sector firms in Kenya’s coastal counties.
This involved a target population of 500 productive firms in Kenya’s Coastal Counties. Using the Cochran’s sample size formula, 50% proportion of the productive public and private sector firms randomly selected, the sample was 139 firms. They were observed for a period of 2003 to 2015. Questionnaires and structured interviews were used as instruments for collecting primary data from finance officers or finance managers or their equivalent of the firms. Secondary data was obtained from financial statements (income statement and the balance sheet). Control variables were; size, tangibility and growth. The basic framework for regression was of the form below;
Y= f (gearing levels+ tangibility+ size+ growth)
Where, Y= return on assets/return on equity
ROA/ROE=f (gearing levels+ tangibility+ size+ growth)
Data analysis was done using both descriptive statistics and inferential statistics (regression).
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Oni, Olabanji. "Determinants of Venture Capital Supply in Sub-Saharan Africa." Journal of Economics and Behavioral Studies 9, no. 4(J) (September 4, 2017): 87–97. http://dx.doi.org/10.22610/jebs.v9i4(j).1824.
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The purpose of this paper is to determine the variables that influence venture capital supply in Sub-Sahara Africa. The study developed econometric models and examined a 10-year period (2006 to 2015) pertaining to eight (8) Sub-Sahara African countries namely: Botswana, Ivory Coast, Ghana, Kenya, Mauritius, Nigeria, South Africa and Uganda. The empirical model includes six determinants (initial public offering, market capitalisation, unemployment rate, foreign direct investment inflow, inflation rate and trade openness). Secondary data was utilised for the study. The primary sources of data were the World Bank Development indicators and Preqin data base. All the statistical analyses in the study were performed using E-views version 8. Panel data models of pooled, fixed and random effects were employed. The results suggest that there is a significant positive relationship between initial public offering, market capitalisation and venture capital supply. Second, there is no significant relationship between unemployment rate, foreign direct investment inflows, trade openness and venture capital supply. Based on the empirical findings, this study recommends that Sub-Sahara African governments should attempt to develop their economies by improving infrastructure and corporate governance. There is also a need for African countries to develop the equity market.
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Oni, Olabanji. "Determinants of Venture Capital Supply in Sub-Saharan Africa." Journal of Economics and Behavioral Studies 9, no. 4 (September 4, 2017): 87. http://dx.doi.org/10.22610/jebs.v9i4.1824.
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The purpose of this paper is to determine the variables that influence venture capital supply in Sub-Sahara Africa. The study developed econometric models and examined a 10-year period (2006 to 2015) pertaining to eight (8) Sub-Sahara African countries namely: Botswana, Ivory Coast, Ghana, Kenya, Mauritius, Nigeria, South Africa and Uganda. The empirical model includes six determinants (initial public offering, market capitalisation, unemployment rate, foreign direct investment inflow, inflation rate and trade openness). Secondary data was utilised for the study. The primary sources of data were the World Bank Development indicators and Preqin data base. All the statistical analyses in the study were performed using E-views version 8. Panel data models of pooled, fixed and random effects were employed. The results suggest that there is a significant positive relationship between initial public offering, market capitalisation and venture capital supply. Second, there is no significant relationship between unemployment rate, foreign direct investment inflows, trade openness and venture capital supply. Based on the empirical findings, this study recommends that Sub-Sahara African governments should attempt to develop their economies by improving infrastructure and corporate governance. There is also a need for African countries to develop the equity market.
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Ng’eny, Amon. "THE MODERATING EFFECT OF AGE ON FIRM’S INTERNAL DETERMINANTS OF TRADE CREDIT OF LISTED FIRMS IN KENYA." International Journal of Business Strategies 6, no. 1 (May 18, 2021): 36–57. http://dx.doi.org/10.47672/ijbs.713.
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Purpose: Trade credit is one of the main sources of funding for global companies. The importance of trade credit can also be seen from the proportion of investment that is financed through it. Despite the potential importance of trade credit, limited attention has been paid to its role and use, especially in developing countries. The main aim of the study was to establish the determinants of trade credit and moderating role of the age of the firms listed in Nairobi securities exchange.
Methodology: The study adopted an explanatory research design which was guided by both the transaction cost and the credit substitution theories. The study was based in firms listed on the Nairobi securities exchange for the period 2012 to 2013 and used document analysis to collect secondary data from the company’s annual report. Data were analysed through the use of descriptive statistics and inferential statistics methods.
Results: The study findings indicated that debt levels (β1 = 0.5422, ρ<0.05), liquidity (β3 = -0.0275, p < 0.05) and inventory (β4 = -0.0399, p < 0.05) have a significant effect on firm trade credit with an explanatory power of 56% (R2 = 0.5695, p< 0.05), while collateral (β2= -0.1363, ρ > 0.05) have an insignificant effect. On the other hand, firm age has a significant moderating effect on the relationship between determinants and trade credit. In particular, firm’s age has significant interaction effect on debt level (β6 = -2.3609, p < 0.05), the interaction effects on liquidity (β8 = -2.4649, p < 0.05).
Unique Contribution to Theory, Practice and Theory: Firms need to establish a well-defined trade-credit granting criteria to assess the creditworthiness of the buyers to avoid default risk or late payment by buyers. Firms should be cautious while pledging an asset as collateral since the bank has exclusive access to pertinent information. Also, firms should hold liquid assets to meet their financial obligations. There is also a need for firms to transform the raw material supplied into finished goods so that suppliers’ advantage in repossessing and selling supplied goods is reduced. The study also contributes to credit substitution theory by indicating the possibility of using internal equity or external debt financing that cannot be undervalued in the market.
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Maloba, Michelle, and Abdul Latif Alhassan. "Determinants of agri-lending in Kenya." Agricultural Finance Review 79, no. 5 (October 7, 2019): 598–613. http://dx.doi.org/10.1108/afr-10-2018-0094.
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Purpose The purpose of this paper is to examine the factors that influence financial institutions’ lending to the agricultural sector in Kenya. Design/methodology/approach The paper employs a panel data of 15 licensed financial institutions (commercial banks and deposit-taking microfinance institutions) from 2011 to 2016. The random effects and ordinary least squares panel corrected standard errors estimation techniques are employed to estimate the effect of liquidity, size, equity, lending rate (LR), type of financial institution and non-performing loans on agri-lending. Findings The results indicate that only 3.9 per cent of loan portfolio of the sampled financial institutions were advanced to the agricultural sector over the study period. From the panel regression analysis, the paper finds agricultural credit risk to reduce lending to the agricultural sector while size, LR and type of financial institution were observed to significantly increase agricultural lending. Compared to 2011, agri-lending was also observed to have declined between 2012 and 2015. Practical implications The findings highlight important indicators for enhancing lending to the agricultural sector in Kenya and other emerging economies. Originality/value As far as the authors are concerned, this presents the first empirical evidence on the determinants of agri-lending by financial institutions in Kenya.
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Mutisya, Maria Mueni, and Gerald Atheru. "Electronic Banking and Financial Performance of Commercial Banks in Kenya." International Journal of Current Aspects 3, no. II (May 31, 2019): 293–304. http://dx.doi.org/10.35942/ijcab.v3iii.24.
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Information technology has changed the traditional ways of doing business to a digital and electronic way that has led to globalization. The banking industry has been forced by the wave of electronic payment system in the business environment to change from its traditional ways such as: long queues as customers waited to be served, delay in the clearing house as representatives of different banks waited to settle their dues and manual work that resulted to errors. The main purpose of the study was to determine the effect of electronic banking on the financial performance of commercial banks in Kenya. The specific objectives were to determine the extend of internet, mobile, automated teller machine and debit/credit card banking adoption and its effect on financial performance. The study covered a period of five years that is from the year 2011 to the year 2015 and adopted descriptive research design. The data collected was analyzed by the use of both descriptive and inferential statistics procedures. Primary and secondary data was collected from the 34 commercial banks that responded leading to a respond rate of 79.04% out of the 43 commercial banks. The trade analysis showed that internet banking was recognized and accepted by the Kenyan commercial banks and the Kenyans as a way of transacting. Electronic banking was found to be positive and significantly related to the financial performance of the commercial banks in Kenya. This was attributed by an R Square of 0.688 for Return On Assets, 0.63 for Net Profit and 0.277 for Return On Equity indicating that the independent variables in the study were able to give information of up to 68.8%, 63% and 27.7% respectively while the remaining 31.2%, 27% and 72.3% could not be explained in the study but could be explained using other variables outside the study. All the independent variables were (internet banking, Mobile banking, Automated Teller Machine banking and Debit/Credit banking) found to be positively and significantly related to the Return On Assets while only mobile banking and internet banking were found to be positively and significantly related to Net Profit since their p Values were less 0.05. Automated Teller Machine banking showed a positive relation that was insignificant with the Return On Equity.The study recommends that, electronic banking should be employed by commercial banks through proper management policies since it has shown improved efficiency and financial performance. For further studies, areas of crime technology, quality of banking services, electronic fund transfer and performing loans should be looked at.
This is an open-access article published and distributed under the terms and conditions of the Creative Commons Attribution 4.0 International License of United States unless otherwise stated. Access, citation and distribution of this article is allowed with full recognition of the authors and the source.
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Barus, Jane J., Dr Willy Muturi, Dr Patrick Kibati, and Dr Joel Koima. "EFFECT OF ASSET QUALITY ON THE FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT SOCIETIES IN KENYA." American Journal of Finance 1, no. 4 (January 17, 2017): 13. http://dx.doi.org/10.47672/ajf.160.
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Purpose: The purpose of this study was to establish the effect of asset quality on the financial performance of savings and credit societies in Kenya.Methodology: The study employed an explanatory research design. The target population was 83 registered deposit taking SACCO’s in Kenya that have been in operation for the last five years. The sample size for the study was all 83 SACCOs that have remained in existence since 2011-2015. Census methodology was used in the study. Both primary and secondary sources of data were employed. Multiple linear regression models were used to analyze the data using statistical package for the social sciences (SPSS) and STATA. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables and graphs.Results: Based on the findings the study concluded that asset quality influenced the financial performance of savings and credit societies in Kenya. This can be explained by the regression results which showed that the influence was positive and also showed the magnitude by which asset quality influenced the financial performance of savings and credit societies. The univariate regression results showed that asset quality influenced the financial performance of savings and credit societies by 5.827units.Unique contribution to theory, practice and policy: The study recommended that management need to be cautious in setting up a credit policy that will not negatively affects profitability and also they need to know how credit policy affects the operation of their banks to ensure judicious utilization of deposits and maximization of profit. The study also recommended for credit information sharing between SACCO's. This will play a significant role in determining performance of deposit taking SACCO’s. Further, the study recommended that SACCO’s opt for equity financing instead of debt financing to improve on its leverage. SACCO’s should also avoid excessive lending, maintain high credit standards and limit lending to un-hedged borrowers.
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Hujo, Katja. "Social protection and inequality in the global South: Politics, actors and institutions." Critical Social Policy 41, no. 3 (May 13, 2021): 343–63. http://dx.doi.org/10.1177/02610183211009899.
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In this themed section, we explore the links between contemporary social protection approaches and inequality in developing countries, focusing on political economy drivers and the role of actors and institutions in recent reform and implementation processes. This introduction article establishes some common ground by introducing context, concepts and questions. Reducing inequality is identified as a key condition for achieving inclusive and sustainable development as aspired in the Sustainable Development Goals governments committed to in 2015. The introduction situates the three articles in this issue, two studies of pro-poor cash transfers in the Philippines and Kenya, and an analysis of the new national minimum wage policy in South Africa, in a context of contested globalisation, increasing inequality and the social turn, a come-back of social policy as a key development instrument. After identifying the limitations and opportunities of this social turn, the article discusses the three social protection reforms and their impact on equality and social change in the different country contexts through a lens of contestation, institutions and transformative change.
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Cinaroglu, Songul, and Onur Baser. "VP135 Clustering Surgical Indicators And Predictors Of Catastrophic Expenses." International Journal of Technology Assessment in Health Care 33, S1 (2017): 210–11. http://dx.doi.org/10.1017/s026646231700383x.
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INTRODUCTION:Increasing access to surgical care is crucial in improving the general health status of a population. Despite studies indicating the cross-country differences of general health indicators, there is a scarcity of knowledge focusing on the cross-country differences of surgical indicators. This study aims to classify countries according to surgical care indicators and identify risk predictors of catastrophic surgical care expenditures.METHODS:For this study, data were used from the World Health Organization and the World Bank on 177 countries. The following variable groups were chosen: total density of medical imaging technologies, surgical workforce distribution, number of surgical procedures, and risk of catastrophic surgical care expenditures. The k-means clustering algorithm was used to classify countries according to the surgical indicators. The optimal number of clusters was determined with a within-cluster sum of squares and a scree plot. A Silhouette index was used to examine clustering performance, and a random forest decision tree approach was used to determine risk predictors of catastrophic surgical care expenditures.RESULTS:The surgical care indicator results delineated the countries into four groups according to each country's income level. The cluster plot indicated that most high-income countries (for example, United States, United Kingdom, Norway) are in the first cluster. The second cluster consisted of four countries: Japan, San Marino, Marshall Islands, and Monaco. Low-income countries (for example, Ethiopia, Guatemala, Kenya) and middle-income countries (for example, Brazil, Turkey, Hungary) are represented in the third and fourth clusters, respectively. The third cluster had a high Silhouette index value (.75). The densities of both surgeons and medical imaging technology were risk determiners of catastrophic surgical care expenditures (Area Under Curve = .82).CONCLUSIONS:Our results demonstrate a need for more effective health plans if the differences between countries surgical care indicators are to be overcome. We recommend that health policymakers reconsider distribution strategies for the surgical workforce and medical imaging technology in the interest of accessibility and equality.
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Allen, Franklin, Elena Carletti, Robert Cull, Jun Q. J. Qian, Lemma Senbet, and Patricio Valenzuela. "Improving Access to Banking: Evidence from Kenya*." Review of Finance, September 30, 2020. http://dx.doi.org/10.1093/rof/rfaa024.
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Abstract We explore the relationship between bank branch expansion, financial inclusion, and profitability for Equity Bank. Unlike traditional banks, including foreign and government owned banks in Kenya, Equity Bank targets less developed territories and less privileged households. Its presence increased financial inclusion by 31% of the adult population between 2006 and 2015, especially for Kenyans who were less educated, did not own their own home, and lived in less-developed areas. The bank’s business model proves to be highly effective, with branch-level profits rising in areas with a smaller number of operating banks. Overall, the growth of Equity Bank demonstrates that financial inclusion can be achieved and sustained through profitable branching and service strategies that also serve the needs of underserved regions and populations. Thus, financial inclusion need not come at the sacrifice of bank profitability.
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Koskei, Loice. "Determinants of Banks’ Financial Stability in Kenya Commercial Banks." Asian Journal of Economics, Business and Accounting, October 16, 2020, 48–57. http://dx.doi.org/10.9734/ajeba/2020/v18i230281.
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Introduction: The collapse of several banks in Kenya followed by a possibility of acquisition of struggling banks led to bank runs in Kenya causing customers to withdraw their deposits from stressed banks and taking them to financially stable banks.
Aim of the Research: The paper investigated the determinants of Bank’s stability as proxied by asset quality in the Kenyan banking sector.
Data Collection: Monthly secondary data spanning from the period January 2015 to December 2019 was collected from central Bank of Kenya and Kenya National Bureau of Statistics.
Methodology: A multiple regression model with the help of SPSS statistical software was employed to address the objective of this study.
Main Results: The multiple regression model results indicated that liquidity ratio; inflation rate and lending rate results presented a negative but statistically significant relationship with banking stability indicating that a decrease in liquidity ratio, inflation rate and lending rates affect banking stability respectively. The results for loan growth and return on equity exhibited a positive but statistically significant relationship with banking stability indicating that an increase in growth of loans and returns on equity diminishes and enhances banking stability in Kenya respectively. Exchange rate results had a positive and statistically insignificant relationship with banking stability implying that exchange rate does not affect banking stability. Return on assets and public debt results indicated a negative and statistically insignificant relationship with banking stability implying that return on assets and a country’s public debt has no effect on banking stability respectively.
Recommendation: Banking financial stability is fundamental in reducing the far-reaching social and economic effect that could occur due to challenges facing the banking industry. The study recommends adoption of policies that minimize the negative effect of microeconomic and macroeconomic factors in the banking industry in Kenya.
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Issackow, Mohamed Maalim, Felix Mwambia, and Wilson Muema. "Credit Risk Assessments and Firm Value of Listed Commercial Banks in Kenya." Asian Journal of Economics, Business and Accounting, September 6, 2021, 68–82. http://dx.doi.org/10.9734/ajeba/2021/v21i1230453.
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Despite the various control measures put in place especially the CBK’s prudential laws to ensure that the performance of commercial banks in Kenya is ensured, most commercial banks have been collapsing in the recent past. It is in this light that the current study sought to ascertain the impact of bank liquidity, capital adequacy, asset quality and earnings on the firm value of listed Commercial banks in Kenya. Descriptive research design was employed on a population sample of eleven publicly listed retail banks. Secondary data was collected from CBK and other public financial reports over the 12-year period from 2009 to 2020. The collected data was analysed using1a multivariate panel regression1model to generate the relevant regression tests. The1study established that the capital adequacy has a marginal positive impact on the firm value while earning ability was found to have a statically insignificant positive effect on firm value among Kenyan commercial bank. The study findings indicated that liquidity was insignificantly and negatively correlated with firm value as asset quality had insignificant positive effect on firm value among Kenyan commercial bank. The study recommends that, managers of listed banks should embrace utilization of internally generated equity capital to ultimately promotes credit risk assessments as they maintain optimal levels of liquidity to maximize firm value and maintain high quality of assets as they sustained levels of earnings that boost output. This paper explained a credit risk rating concept that had not been examined in Kenya before.
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Oganda, Aloys Jared, Vitalis Abuga Mogwambo, and Simeyo Otieno. "Effect of Cash Reserves on Performance of Commercial Banks in Kenya: A Comparative Study between National Bank and Equity Bank Kenya Limited." International Journal of Academic Research in Business and Social Sciences 8, no. 9 (October 15, 2018). http://dx.doi.org/10.6007/ijarbss/v8-i9/4648.
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Ndegwa, Rose. "THE INFLUENCE OF ELECTRONIC MARKETING STRATEGIES ON THE PERFORMANCE OF EQUITY BANK LIMITED IN KENYA." European Journal of Economic and Financial Research 5, no. 1 (June 20, 2021). http://dx.doi.org/10.46827/ejefr.v5i1.1094.
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The evolution and direction of any marketing strategy in local and international environments has forced firms to adopt electronic marketing strategies to gain competitive edge and viability in the market arena (Bui & Jones, 2006). Fast development of technologies, economic globalization and many other external circumstances stimulate changes in marketing environment. For the company to gain competitive edge in today's market, especially in the electronic market, it must have a good knowledge of the external environment, especially in technological environment that affects business operations. It is important for the company to know and predict environmental conditions that influence marketing activities. Some of the external factors that influence marketing activities of modern companies include; political, economic, social-cultural, and technological factors (Adam, Mulye,Deans & Palihawadana, 2002). The study used descriptive cross sectional census survey. The design is appropriate since all the units of interest were investigated. Comparative analysis amongst all the units was done and the phenomenon under the study described as they appear to be satisfactory. From the findings, it was established that the performance of commercial banks is affected by the electronic marketing strategies selected by the bank. There is a rapid development in technology and hence banks are not being left behind in the adoption of new technology, due to either pressure from customers, stiff competition or change in technology. The banks performance is affected by electronic marketing strategies selected. The banks which have adopted the electronic marketing strategies, the performance is improved, banks which have not yet adopted the electronic marketing strategies are struggling in the performance. The banking sector should embrace electronic marketing strategy in order to survive in the rapidly changing markets.
JEL: G21; D20; D83
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Karigi, Richard Nganga. "Effect of Profitability on Financing Small and Medium Enterprises (SMEs) by Financial Institutions in Kenya: A Case Study of Equity Bank, Central Kenya." International Journal of Business & Management 9, no. 5 (May 31, 2021). http://dx.doi.org/10.24940/theijbm/2021/v9/i5/bm2105-051.
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Obare, Dominic M., Gladys G. Njoroge, and Moses M. Muraya. "Analysis of Individual Loan Defaults Using Logit under Supervised Machine Learning Approach." Asian Journal of Probability and Statistics, May 1, 2019, 1–12. http://dx.doi.org/10.9734/ajpas/2019/v3i430100.
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Financial institutions have a large amount of data on their borrowers, which can be used to predict the probability of borrowers defaulting their loan or not. Some of the models that have been used to predict individual loan defaults include linear discriminant analysis models and extreme value theory models. These models are parametric in nature since they assume that the response being investigated takes a particular functional form. However, there is a possibility that the functional form used to estimate the response is very different from the actual functional form of the response. The purpose of this research was to analyze individual loan defaults in Kenya using the logistic regression model. The data used in this study was obtained from equity bank of Kenya for the period between 2006 to 2016. A random sample of 1000 loan applicants whose loans had been approved by equity bank of Kenya during this period was obtained. Data obtained was on the credit history, purpose of the loan, loan amount, nature of the saving account, employment status, sex of the applicant, age of the applicant, security used when acquiring the loan and the area of residence of the applicant (rural or urban). This study employed a quantitative research design, it deals with individual loans defaults as group characteristics of a borrower. The data was pre-processed by seeding using R- Software and then split into training dataset and test data set. The train data was used to train the logistic regression model by employing Supervised machine learning approach. The R-statistical software was used for the analysis of the data. The test data set was used to do cross-validation of the developed logistic model which later was used for analysis prediction of individual loan defaults. This study focused on the analysis of individual loan defaults in Kenya using the logistic regression model in Machine learning. The logistic regression model predicted 303 defaults from train data set, 122 non-defaults and misclassified loans were 56 and 69. The model had an accuracy of 0.7727 with the train data and 0.7333 with the test data. The logistic regression model showed a precision of 0.8440 and 0.8244 with the train and test data respectively. The performance of the model with both the train and test data was illustrated using a plot of train errors and test errors against sample size on the same axes. The plot showed that the performance of the model increases with an increase in sample size. The study recommended the use of logistic regression in conjunction with supervised machine learning approach in loan default prediction in financial institutions and also more research should be carried out on ensemble methods of loan defaults prediction in order to increase the prediction accuracy.
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Abishua, Derek Ariel. "Strategic Responses used by Equity Bank to Compete in the Kenyan Banking Industry." SSRN Electronic Journal, 2010. http://dx.doi.org/10.2139/ssrn.1708555.
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Hapsari Ardianti, Putu Novia. "Profitabilitas, Leverage, dan Komite Audit Pada Tax Avoidance." E-Jurnal Akuntansi, March 5, 2019, 2020. http://dx.doi.org/10.24843/eja.2019.v26.i03.p13.
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Penghindaran pajak merupakan tindakan menurunkan laba kena pajak melalui perencanaanpajaknya baik dengan mengikuti aturan yang berlaku maupun tidak. Penelitian ini bertujanuntuk menguji pengaruh profitabilitas, leverage, dan komite audit, pada penghindaran pajak(tax avoidance) yang diukur menggunakan proksi effective tax rates (ETR) pada perusahaanmanufaktur yang terdaftar di Bursa Efek Indonesia selama periode pengamatan 2015-2017.Metode penentuan sampel penelitian ini menggunakan metode purposive sampling danmemperoleh 14 perusahaan manufaktur. Teknik analisis dalam penelitian ini menggunakanteknik analisis regresi berganda. Hasil Pengujian menunjukkan bahwa profitabilitas dankomite audit tidak berpengaruh terhadap tax avoidance. Sedangkan Leverage berpengaruhnegatif terhadap tax avoidance. Implikasi teoritis penelitian ini yaitu dapat menjadi sumberreferensi penelitian yang berkaitan dengan aktivitas tax avoidance serta dapat mendukungteori kepentingan, sedangkan implikasi praktis yaitu sebagai bahan pertimbangan bagiperusahaan-perusahaan dalam mengambil keputusan bisnis, terutama dalam aktivitasperpajakannya. Kata Kunci: Return On Asset (ROA), Debt To Equity Ratio (DER), Komite Audit, EffectiveTax Rate (ETR).