| dc.description.abstract | The study attempts to predict corporate financial distress amongst commercial banks in Kenya during the period 2007-2011, the study employs the use of panel data regression model, the researcher analyzed financial ratios relating to cash flow information. The significance of this study is based on the fact that financial distress causes commercial banks to collapse in many instances find have a negative effect on the entire economy of a country, as commercial banks play a key role in serving as intermediary between household and firms, thereby creating the platform for provision of needed funding for investment opportunities.
Due to changes in the operating environment, several licensed institutions, mainly commercial banks, have had to merge (combine their. operations in mutually agreed terms) or one institution takes over another's operations (acquisitions). Some of the reasons put forward for mergers and acquisitions are: to meet the increased levels of share capital; expand distribution network and market share; and to benefit from best global practices among others.
The findings of the study indicate that Interest to total net flow is statistically significant and has positive influence on the financial distress, Dividend payout, Cash dividend coverage, are not statistically significant and have positive influence on the financial distress, whereas Cash flows from operating activities to customers deposit is statistically significant but negatively in Huences financial distress.
On the basis of the study, it can be concluded that the effects or consequences of financial distress can be lessened if firms manage their cash How from operating activities and transactions that require the utilization of cash such as payment of interest and dividends. If firms properly manage their cash, this will ultimately increase profitabilIty of these firms and reduces the risk of facing financial distress which may result to bankruptcy. | en_US |
