PAYABLES MANAGEMENT AND FINANCIAL VALUE OF COMMERCIAL BANKS IN KENYA
Abstract
The concept of firm value has become a great concern to shareholders, managers, potential investors, creditors and other stakeholders globally since it measures the firm’s worth and posits a positive public image. The main objective of the study is to evaluate the effect of payables management on the financial value of commercial banks in Kenya. The study employed a correlation research design on the panel data collected over a span of 10 years. The target population was 38 commercial banks in Kenya. Secondary data was collected from audited financial statements downloaded from the Nairobi Stock Exchange and Central Bank of Kenya websites. Normality was tested through Shapiro Wilk and confirmed. Stationarity was tested using Levin-Lin-Chu test and the results confirm stationarity. The overall descriptive statistics show high variation between the dependent and independent variables among different commercial banks. Inferential statistics comprised of Pearson’s correlation analysis and Random Effects Model. The Pearson’s correlation coefficient depicts r = - 0.15 with a p-value of 0.0037. The regression coefficient was established as 4.34 with p-values < 0.05 confirming that all payables management had a significant positive influence on the financial value of commercial Banks. It was recommended that commercial banks should properly manage short-term liabilities, pending bills and accrued expenses should be minimal as this reduces the liquidity of the firm and further reduces the value of the commercial banks as potential investors see a bank with so many liabilities as risky to invest in. All receivables particularly outstanding loans issued to customers should be closely monitored.
JEL: G21; G29; G38
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DOI: http://dx.doi.org/10.46827/ejefr.v6i3.1346
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