Despite the remarkable documentation on investment incentives, empirical revelations underscore lack of research on their fair values. The realization of this gap motivated the current study to question the influence of corporate governance, investment incentives and economic growth on enterprise value among county revolving loan funds in Kenya. The specific objectives explored the direct effect of corporate governance on enterprise vale, the mediated and moderated effect through investment incentives and economic growth respectively. It also looked into the joint relationship among the variables. The study employed quasi-longitudinal approach and collected secondary data for 2019 to 2024 from 31 selected county revolving loan funds in Kenya. Linear regressions were done to test the study hypotheses. The findings indicated that, corporate governance had a strong positive relationship with enterprise value. They also disclosed investment incentives’ partial mediation effect on corporate governance and enterprise value. They further revealed economic growth’s conditional and positive moderating influence on the relationship between corporate governance and enterprise value. Finally, the study confirmed that corporate governance, investment incentives and economic growth had a joint influence on enterprise value. The study distinguishes financial mechanism as the most fundamental determinant for fair value for the county revolving loan funds. Keywords: Corporate governance, Investment incentives, Enterprise value, Realism.
This paper’s theme was to explore the implications of governance on the relationship between investment incentives and business valence. The paper equally dealt with overview on the connectivity between the study variables. The empirical literature review presents a suggestion that governance is a complex concept which is involved in the relationship between investment incentives and business valence. While connectivity between investment incentives and business valence is relative, it is variously accounted to different forms of investment incentives that avail divergent and fairly unpredictable levels of appeal. Investors exuding high expectations are very keen on governance impacts on investment possibilities. Investment incentives and governance bear clear connectivity because actualization of investment incentives is the preserve of governance. The three variables under study, display a peculiar interconnectivity in which they build on and reinforce each other. There is gap in succinct relationship between the three variables because the links among them remains a logical coincidence. This becomes complicated with the fact that these variables manifest themselves in multiple directions and forms. There is also no clear confirmation between mediator and predictor level of influence on the outcome of investors’ perceived value. Keywords: Governance, Investment incentives, Business Valence.
This study sought to address the three variable research entitled, “Joint effects of Capital structure, interest rate sensitivity and market value of non-financial firms listed at NSE in Kenya. The research was based on quantitative approach applying panel data collected from NSE with a population of 32 firms culminating to 320 observations over ten years from 2012-2021. A quantile regression model was applied to test the hypothesis, which reported a significant joint effect relationship of capital structure and interest rate sensitivity on firms’ market value. Further joint analysis equally confirmed that interest rate and debt capital showed a significant inverse relationship, which confirmed that as interest rate increases, so does the reduction of uptake of debt capital. Finally, the findings could authoritatively be recommended for adoption by stakeholders for making financial management decisions like merger and acquisition, balancing of debt and equity in the capital structure taking into consideration interest rate trends, trading off of debts or investing in new ventures. The result equally can be specifically extended further to; government policymakers, scholars and non-financial sector managers who would find the findings applicable in their areas of specialty besides learning from the challenges addressed. JEL classification numbers: G32, G12, C23, G30. Keywords: Capital Structure, Interest Rate Sensitivity, Firm Market Value, Nairobi Securities Exchange.
The object of the study was to assess the effect of asset quality and liquidity on financial performance of commercial banks in Kenya. The study deployed explanatory research design using panel data. The period covered was 13 years from 2010 to 2022. Secondary data were mined from individual banks' published audited financial reports and also from annual reports published by the Central Bank of Kenya. A total of 38 commercial banks licensed in Kenya as at December 31st, 2022 were covered under census. Both descriptive and inferential statistics analyses were generated using Stata Soft Ware version 17.0 and Microsoft Excel. Regression analyses were applied to test the hypothesis. Tables and figures were used for data presentation. Based on the findings, asset quality had a statistically significant but negative impact on financial performance. Liquidity, on the other hand, indicated positive but non-statistical significance on financial performance. However, cumulatively, both factors had a statistically significant influence on financial performance. For a bank to survive in the current tempestuous financial climate, the management has to put more emphasis on credit ratings before issuing loans to clients. In addition, the regulatory authorities should relentlessly pursue stringent liquidity policies. All the recommended procedures are in line with the Anticipated Income Theory. This study contributes immensely to the prominence roles credit risk and liquidity risk management framework play in commercial banks’ operations. Keywords: Asset Quality, Liquidity, Financial Performance, Commercial Banks.
This study examines the effect of dividend yield on the connection between firm liquidity and firm value among companies listed on the Nairobi Securities Exchange (NSE). It defines firm liquidity through measures such as short-term liquidity, asset convertibility, and new debt liquidity, while dividend yield is assessed via dividends paid, and firm value is indicated by Tobin’s Q. The study is guided by theories including the Operating and Cash Conversion Cycle, Dividend Signaling, and Size Effect, investigating the influence of dividend yield on the liquidity-value relationship, which remains inconclusive in emerging markets. Employing a positivist framework and a descriptive design, the study analyzed panel data from 2007 to 2022, implementing diagnostic tests for various statistical properties, followed by regression and mediation analysis using both the Baron and Kenny method and the Sobel test. The findings reveal that firm liquidity positively affects firm value, but dividend yield does not mediate this relationship. Additionally, larger firms exhibit a strengthened link between liquidity and value. The study emphasizes the importance of liquidity for enhancing firm value and recommends strategic management of liquidity and dividends, along with suggestions for further investigation into sectoral and cross-country differences. Keywords: Firm Liquidity, Dividend Yield, Firm Value, Tobin’s Q, Panel Data, Sobel test.
This study examines the performance of robo-advisors within the broader digital transformation of financial services. Robo-advisors automate portfolio construction and maintenance through algorithmic frameworks that apply established investment principles and low-cost ETFs, thereby extending professional investment management to individuals lacking the time, resources, or expertise traditionally required. Focusing on Wealthfront’s Classic Portfolio from 2013 to 2023, the analysis evaluates absolute and risk-adjusted returns, volatility and drawdown dynamics, and factor exposures to distinguish systematic risks from potential investment skill. Results show that passive indexing outperformed all examined robo-advisor portfolios on both absolute and risk-adjusted bases during a decade dominated by strong U.S. equity performance. Although robo-advisors successfully delivered calibrated risk exposure, their diversified multi-asset allocations incurred notable opportunity costs in a growth-driven market. The platforms offer the greatest value to conservative investors, while more aggressive investors may pay advisory fees without receiving proportional benefits. JEL classification numbers: G11, G51. Keywords: Robo-advisor, Artificial intelligence, Performance evaluation, Risk-adjusted performance.
The study explores the relationship between the expenses of insurance companies and their ESG performance. It analyses with panel data models a large sample of property and casualty (PC) insurers worldwide over the 2013-24 period. The results reveal that companies with strong ESG profiles benefit from lower underwriting, operating, and interest expenses. Moreover, alternative measures for the company expense ratio decrease as ESG scores improve. These effects are significant across all three ESG pillars, with the governance dimension having a slightly stronger impact. These findings suggest that ESG is a strategically important factor for efficient cost management in insurance companies, with potential implications for insurance availability and economic development. The research offers insights into ESG effects on the management of insurance companies, a domain that has not been extensively studied by the recent literature but has been closely monitored by managers and policy makers. JEL classification numbers: G22, G30. Keywords: Insurance companies, ESG, Expenses, Expense ratio.
Tea is a vital cash crop in Kenya, supporting around 560,000 smallholder farmers and significantly contributing to the national economy. Fairtrade certification aims to promote ethical production, equitable compensation, and sustainable development for these farmers. While Fairtrade has improved market access and income stability, recent research highlights on-going challenges, particularly limited adoption of market innovation, which hampers adaptability, competitiveness, and long-term financial sustainability. This study examines how market innovation moderates the relationship between Fairtrade practices and financial performance among certified small tea producer organizations in Kenya. Financial performance was assessed using Return on Assets (ROA), Quick Ratio, Stock Turnover Ratio, and Bonus earnings (Ksh/Kg of Green Leaf). Grounded in integrative social contract theory, the study employed a descriptive cross-sectional design, collecting data from 67 KTDA-affiliated organizations across 17 tea-growing counties. Analysis using SPSS, including ANOVA, revealed that Fairtrade practices significantly improve financial performance, and this effect is strengthened when market innovation such as product diversification, new marketing strategies, and technology adoption is integrated. The findings underscore the importance of combining ethical trade frameworks with innovation to enhance competitiveness and sustainability. The study offers practical insights for stakeholders aiming to support smallholder tea producers through socially equitable and market-responsive strategies. Keywords: Market Innovation, fairtrade practices, financial performance, Kenya.
The study assessed the mediating role of Private Sector Growth (PSG) in the relationship between Government Expenditure (GE) and Economic Growth (EG) across East African Community (EAC) countries from 1970 to 2022. Using panel data from six member states and mediation analysis, the study results reveal that PSG partially mediates the GE–EG relationship. This suggests that while GE has a direct positive impact on EG, it also enhances growth indirectly by stimulating private sector performance. Grounded in Keynesian and endogenous growth theories, the findings emphasize that public investment can unlock private sector potential and drive long-term economic development. The study indicates the need to align fiscal policy with private sector development strategies to achieve more sustained growth. While regional integration efforts aim to foster collective growth, persistent disparities in EG across EAC countries highlight the need for a more harmonized and coordinated regional framework. Prioritizing GE in sectors with strong private sector spillovers, conducting regular fiscal audits, and reducing regulatory barriers are essential for enhancing the effectiveness of public investment. By leveraging PSG as a mediating force, EAC countries can better align fiscal policy with regional development goals, enabling a more inclusive and balanced transformation across member states. Keywords: Government Expenditure, Private Sector Growth, Economic Growth, Fiscal Policy, Regional Integration, East African Community (EAC).
This study aims to empirically assess how independent factors influence the acquirer's investment efficiency in Pakistan. This study used primary data gathered through the survey method from 584 respondents. The secondary data was collected from yearly reports of 300 selected Pakistani companies from 1991 to 2023. The study has chosen 1000 samples of asset acquisitions, 550 purchases have several business units and 450 have individual segments. Multivariate regression analysis and econometric modeling were used to estimate data outcomes. The study findings emphasize that independent factors directly relate to subjectivity, objectivity and rationality of corporate players, which strongly influence the acquirer's return. In unfavorable circumstances, the independent attributes adversely influence the performance of firms and the return on the asset buyer's investment. Findings further revealed that the majority of acquirers rely on personal expertise, mental accounting, social interactions and recommendations instead of emphasizing the existing market dynamics. This study's outcomes have practical implications and expand the theory that behavioral biases, social pressure, financial awareness, decisional biases, political risk, economic and environmental characteristics have mixed effects on the asset buyer's investment efficiency. Keywords: Independent factors, Acquirers return, Value maximization, Investment efficiency, Asset acquisitions.
Abstract The financial sustainability of oil resources is a critical issue for resource-rich developing countries like South Sudan, where the management of oil revenues plays a pivotal role in national economic stability and growth. The study's objective was to determine the mediating effect of investment incentives on the relationship between government revenue management practices and financial sustainability of oil resources in South Sudan. A descriptive longitudinal research design was adopted, utilizing secondary data collected from 2012 to 2023 from sources such as the Central Bank of South Sudan, the Ministry of Petroleum (MOP), the Ministry of Finance and Planning (MOFP), the World Bank Report and the International Monetary Fund (IMF) and analysis by regression models. The findings revealed that investment incentives mediates the relationship between government revenue management practices and financial sustainability of oil resources in South Sudan, suggesting that strategic incentives enhance the benefits of revenue management practices (R2 = 0.3412, p<0.05). The study concludes that effective government revenue management, supported by strategic investment incentives are essential for the financial sustainability of oil resources in South Sudan. This study aids industry stakeholders in developing best practices that ensure the sustainable extraction and sale of oil resources, the findings can shape the development and refinement of national strategies and regulations pertaining to the oil sector and the study enriches academic literature on the dynamics of resource-rich economies. Based on the findings, the study recommends that policymakers in South Sudan prioritize the implementation of robust fiscal policies that enhance the efficiency of revenue collection and ensure transparency in public expenditure. Specifically, the government should establish an independent fiscal oversight body tasked with monitoring oil revenue management and ensuring that revenues are allocated and spent in a manner that supports long-term economic stability. Keywords: Government revenue management practices, investment incentives, financial sustainability, oil resources in South Sudan.
Abstract This paper studies the sources of cyclical information delivered by the term spread for output growth predictability in the U.S. I use a wavelet-based time-frequency decomposition to decompose the predictive power of the yield spread across time scales, both in-sample and out-of-sample, over various forecast horizons. Spreads between interest rates on 10-year and 3-month Treasuries have a predictive ability for output growth that changes largely over different time scales. I find evidence of a negative correlation between the spread and future GDP growth for fluctuations with a frequency of 4 to 8 years per cycle. A linear combination among filtered yield spreads shows a sizable improvement in forecasting out-of-sample. The time-frequency decomposition is also used to propose an interpretation for the breakdown of in-sample predictability documented by Dotsey (1998) that arises after 1985. JEL classification numbers: C19, E43, E27. Keywords: Multiresolution analysis, Term structure, Predictability.
Abstract The study focused on assessing how the funding structure mediates the relationship between corporate governance (CG) and financial performance (FP) in deposit-taking Savings and Credit Cooperative Organizations (SACCOs) in Kenya from 2018 to 2022. The research covered all 172 deposit-taking SACCOs in Kenya, using longitudinal data sourced from annual financial reports and supervision reports by the Sacco Societies Regulatory Authority (SASRA). To estimate the relationships, the fixed effect model was utilized, justified by the Hausman specification test. The findings indicated that the funding structure acts as a partial mediator in the CG-FP relationship. This implies that while CG has a direct impact on FP, the funding structure also significantly influences this relationship. These findings are critical for theoretical development, as they enhance the understanding of how CG affects FP through the funding structure. Moreover, the results have significant policy implications. For regulators like SASRA, the findings provide insights into crafting policies that strengthen CG practices to improve FP with in SACCOs. For SACCO management, the study offers guidance on developing strategies that align their funding structures with effective governance practices to achieve better financial outcomes. Keywords: Corporate Governance, Funding Structure, Financial Performance; Deposit Taking SACCO’s.
Abstract The present paper addressesthe problem of valuing contingent claims on the term structure in a single good economy under uncertain inflation. In the context of arbitrage-free valuation, a simple diffusion model for pricing inflation -indexed securities is proposed. A martingale characterization of nominal and real prices is given and a stochastic generalization of the Fisher equation is provided. An example of two-factor model which can be used to value inflation-linked securitiesin practical applications, is also discussed. JEL classification numbers: G00, G10, G30. Keywords: Term structure of interest rates, Fisher equation, HJM-methodology, Inflation-linked securities.
Abstract Research and teaching in financial economics very often assumes that the efficient market hypothesis is verified. Nonetheless, financial markets are still very far from reaching substantial levels of efficiency. Moreover, different perspective of market efficiency can be subsumed. In this paper, we provide a clearcut taxonomy of the different nuances of financial markets efficiency, useful for economic research and teaching. We also argue that scholars should necessarily disclose in advance the perspective of market efficiency assumed for the research analysis or teaching purposes and discuss the limitations in the inference that can derive. JEL classification numbers: G14, G10. Keywords: Financial markets, Market efficiency, Efficient market hypothesis, EMH.
Abstract This article describes a single financial ratio (“Optimized Directional Risk Ratio”) which reflects both an instrument’s downside risk as well as its overall return. By using the ODRR, investors and fund managers can more readily and precisely perceive which combinations of financial instruments, and in which proportions, stand to maximize returns while minimizing the investor’s risk. The ODRR can be calculated for any given time period of two months or more where there is at least one month with an observed positive return for a financial instrument, and one or more months of negative returns. Two-year, three-year, and five-year timeframes are logical time periods for calculation of the ODRR. JEL classification numbers: G110. Keywords: Risk measurement, Portfolio risk, Risk/reward, Optimized Directional Risk Ratio, Sharpe Ratio, Holmes Ratio.
Abstract Quantitative investment trading is becoming more and more popular due to the gradual integration of computer technology, mathematics, and statistics. It is of great practical significance to develop a multi-species portfolio investment model that takes into account various transaction costs and conforms to live trading. In this paper, we use the free software R to program the Bollinger Bands trading strategy and test it on the historical data of the Chinese futures market. Through in-sample optimization, out-of-sample testing and correlation test, the varieties with good back testing effect are selected for risky investment portfolio to provide investors involved in the Chinese futures market with specific trading strategies that can be used for reference, and at the same time to provide investors with a way of thinking to develop quantitative investment portfolio models. JEL classification numbers: C60. Keywords: Quantitative investment, R language, Chinese futures market, Bollinger Bands.
Abstract The purpose of this paper is to present and study the evaluation of mergers and acquisitions of cooperative banks. In this paper we present and afterwards we calculate Financial Ratios that extract from Financial Cash Flow Statements. The purpose is to show a methodology that help us to evaluate the profitability, efficiency and insolvency before and if any after mergers and acquisitions in the Cooperative Banks, using mainly Financial Cash Flow Statements. So, we evaluate the Cooperative Bank of Drama and the Cooperative Bank of Evros three years before the acquisition and then we evaluate four years after the acquisition the Cooperative Bank of Drama which is the bidder and remain bank. This acquisition was completed in recent years and the purpose was for the acquiring cooperative bank of Drama with the completion of the acquisition and the full integration of the acquired bank of Evros, to become more attractive in relation to its competitors mainly in terms of profitability, efficiency and to improve its insolvency ratio, but in the end this did not happen. We start our study with the introduction and we go on with the literature review, the methodology, the results, the conclusions and the references. JEL classification numbers: G21, G33, G34. Keywords: Cooperative Banks, Mergers & Acquisitions, Cash Flows Ratio, Profitability, Insolvency.
Abstract This paper offers new evidence on the dynamic behavior of multifactor models. Specifically, we investigate the significance and temporal stability of conditional factor betas in the context of multifactor asset pricing models. Using a Kalman filter approach, we find that conditional factor betas are dynamic and their statistical significance varies over time. Furthermore, the inclusion of more factors improves that statistical significance and time stability of the market factor. Overall, our empirical results support the view that multifactors may not be independent risk factors but help to better identify the market factor. JEL classification numbers: G11; G12. Keywords: Asset Pricing, Risk Factors.
Abstract Travel and tourism represent one of the largest industries in the world as far as percentages of GDP and occupation are concerned, consequently, asset managers could be interested to select listed hotel stocks in their portfolios. The hotel industry has shown some difficulties not only in periods of financial, but also during the health crisis (Covid-19), when global and local restrictions on travel and tourism had a negative effect on the hotel sector. This study aims to analyze how listed hotel stocks could improve their contribution to portfolio diversification in different stages of the market. First, we use a constraint mean-variance approach to analyze the effect of diversification, and then we study the difference in the performance of the hotel sector by using the Risk-Adjusted Performance (RAP) measure. We analyze three sample periods: a) the whole sample (01/2000-09/2021); b) the Financial Crisis sample (06/2007-06/2012) and c) the COVID sample (02/2021-09/2021). Our findings contribute to a good understanding of financial patterns in the hotel industry as an asset class at different stages and support our hypothesis of its possible positive contribution in terms of diversification and performance. JEL classification numbers: G11, G12, G15 Keywords: Portfolio Management, Hotel Stocks, Financial Crisis, Health Crisis, Tourism.
