International Journal of Innovative Research and Development

Abstract

Mergers and Acquisitions perform a vital role in corporate finance in enabling firms achieve varied objectives and financial strategies. In Kenya, banks have been merging with the goal of improving their financial performance. Studies done on mergers and acquisitions have not conclusively established whether or not banks benefit from mergers. Most studies have observed that mergers did not lead to an improvement in financial performance as indicated by their profitability and earnings ratios. This study examined the banks that have merged or acquired in Kenya for the period between 2000 and 2014.  The aim of the study was to analyze whether the merger had any effect on the banks’ performance. The study was guided by the following specific objectives; to determine the effect of the mergers and acquisitions on the shareholders’ value and to examine the implication of mergers and acquisitions on profitability. The study was a census of which all the 14 banks that have merged or acquired others in the period from 2000 to date were investigated. Data was collected by use of questionnaires with both open and closed ended questions. The collected data was analyzed using SPSS where the co-efficient of correlation obtained was used to determine the nature of the relationship between the independent and dependent variables. The study found out that the mergers and acquisitions raised the shareholders’ value of the merged/acquiring banks in Kenya. The study further revealed that the main reason why most banks merged or acquired was to raise their profitability. The research questions were significant to the study and useful in arriving data conclusion. The researcher recommended that thorough feasibility studies should be carried out before the merger/acquisition process can be done. On areas of further research, it was recommended that effect of mergers/acquisitions in other sectors of the economy should be established with a view of drawing a parallel with the effects of the same processes in the banking sector.  

Mergers and Acquisitions perform a vital role in corporate finance in enabling firms achieve varied objectives and financial strategies. In Kenya, banks have been merging with the goal of improving their financial performance. Studies done on mergers and acquisitions have not conclusively established whether or not banks benefit from mergers. Most studies have observed that mergers did not lead to an improvement in financial performance as indicated by their profitability and earnings ratios. This study examined the banks that have merged or acquired in Kenya for the period between 2000 and 2014.  The aim of the study was to analyze whether the merger had any effect on the banks’ performance. The study was guided by the following specific objectives; to determine the effect of the mergers and acquisitions on the shareholders’ value and to examine the implication of mergers and acquisitions on profitability. The study was a census of which all the 14 banks that have merged or acquired others in the period from 2000 to date were investigated. Data was collected by use of questionnaires with both open and closed ended questions. The collected data was analyzed using SPSS where the co-efficient of correlation obtained was used to determine the nature of the relationship between the independent and dependent variables. The study found out that the mergers and acquisitions raised the shareholders’ value of the merged/acquiring banks in Kenya. The study further revealed that the main reason why most banks merged or acquired was to raise their profitability. The research questions were significant to the study and useful in arriving data conclusion. The researcher recommended that thorough feasibility studies should be carried out before the merger/acquisition process can be done. On areas of further research, it was recommended that effect of mergers/acquisitions in other sectors of the economy should be established with a view of drawing a parallel with the effects of the same processes in the banking sector.  

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Abstract

The role of the government in providing start-up funds and their relationship to sustainability is crucial. The main focus of this research was to analyze the loan repayment and sustainability issues of government micro-credit initiatives in Murang’a County. The specific objective of the study was to establish the effect of borrower characteristics to micro-credit repayment in Murang’a County. The study adopted a positivism philosophy of research, where the researcher was independent on what was being observed and what was studied. Descriptive survey design was used to determine the level of government funded micro-credit loan repayment and its effect on sustainability for other borrowers. The target population was 1520 social and economic groups in Murang’a County. Clustering and Simple Random Sampling techniques were applied to select a sample size of 307 groups including a census of 16 constituency credit officers, who were interviewed. This, in total accounted to 19.5% of the total population. A questionnaire and an interview schedule were used to collect data. Descriptive data were analysed using tables and charts. Qualitative data were analysed using Chi-square, Analysis of Variance and Logit Regression Model. Hypothesis testing revealed statistically significant results, for borrowers’ characteristics effect to loan repayment and sustainability. The study found that due to problems of high risk and high cost of borrowing, uncertainity of repayment capcity on the rural borrower has been reported high due to irregular income streams. Systems should be developed to ensure consistent incomes and expenditure to reduce/remove uncertainty. The study found some spouses who had run away from homes after receiving loans, to evade repayment or to evade the nugging demands from their partners or to part with some/all the amount borrowed. This may be one of the explanations of wife/husband buttering in Cental Kenya reported by the local media.

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The behaviour of dividend policy is one of the most debatable issues in corporate finance literature and still keeps its prominent place both in developed and emerging markets. Many researchers have tried to uncover the issue regarding dividend behavior or dynamics and determinants of dividend policy but we still do not have an acceptable explanation for the observed dividend behavior of firms. This study sought to establish the effects of dividend payout on market value among listed banks in Kenya. The general objective of this study was to establish the effects of dividend payout on market value among listed banks in Kenya. The study specifically sought to determine whether capital structure, corporate earnings, dividend payout ratio and capital market investments have any effect on market value among listed banks in Kenya. The study adopted descriptive research design. The target population was all the 10 listed banks in Kenya as at December 2010. All the ten banks listed at the period of study were involved in the study. A census survey was adopted as its sampling design. The study used both secondary and primary data. The secondary data was obtained from Nairobi Securities Exchange for the period between 2006 and 2010 while the primary data was collected from senior finance officials through an interview schedule. There was a 70% response rate from the primary data sources. Data collected was analyzed using both descriptive and inferential statistics. Data analysis was done with the aid of Statistical Package for Social Sciences software. The study found a significant and positive relationship between market value and capital structure, corporate earnings, dividend payout ratio and capital market investments in most of the years. It therefore concludes that the dividend policy adopted has a significant impact on market value of banks. The study concludes that there is a relationship between capital structure and market value among listed banking companies in Kenya. The study recommends that commercials banks should consider their profitability, pattern of past dividends, investment opportunities, and capital ownership structure, shareholder’s expectations, tax position of shareholders and access to capital markets in designing a dividend policy. The study also recommends that banks should consider the financial needs of the firms when designing the dividend payout policy.

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