| dc.description.abstract | The purpose of this study was to determine the effect of selected macroeconomic variable on
financial performance of non-bank institutions in Kenya. Studies have been done on the
effect of macroeconomic variables on financial performance of commercial banks,
microfinance Institutions and aviation sector. The measure for financial performance used
was ROA measured against the macroeconomic variables such as inflation rate, currency
exchange growth rate, average quarterly interest rate and quarterly GDP growth rate as
macroeconomic variables.
The study used correlation and regression analysis research design. The study employed
quarterly secondary data which was for a period of ten years from 2004 to 2013 on a
quarterly basis for the NBFI sub sector comprising of 112 NBFIs. The data was obtained
from the Central Bank of Kenya and Kenya National Bureau of Statistics .The data was
analysed using SPSS .The findings are important to various stakeholders including NBFIs
finance students etc. the study combined regression and correlation analysis in examining
how macroeconomic variables affects financial performance.
The findings of the study indicate Return on Assets of NBFIs has a strong positive
relationship with currency exchange growth rate (2.504) and a weak positive relationship
with quarterly GDP (0.284), inflation rate (0.655) and average quarterly interest rate (1.107).
In addition it can be stated that macroeconomic variable affected ROA with an adjusted R2
of 0.119 meaning 11.9% is the variable in the regression model while 88.10% could not be
explained by the variables .The main policy recommendation was that the government
should control the interest rates charged by the NBFIs to encourage borrowing and
investments which in turn improves the ROA of NBFIs. | en_US |
