Credit Management Procedures and the Financial Performance of Insurance Companies Listed in Nairobi Securities Exchange, Kenya

Matabel Camila Ndwiga (), Dr. Vincent Nyagilo () and Dr. Charles Roche ()

International Journal of Finance and Accounting, 2025, vol. 10, issue 2, 1 - 21

Abstract: Purpose: The aim of the study was to investigate credit management procedures and the financial performance of insurance companies listed in Nairobi Securities Exchange, Kenya Methodology: The study involved secondary information in a graphic report plan. Five years of board information will be utilized in the review (2017-2021). Each of the six of the insurance companies enlisted on the NSE made up the objective market. An information assortment network was utilized to gather optional information. Information investigation was performed utilizing SPSS form 25 to deliver both distinct and inferential insights. Various relapse examination was used to decide the connection between the free factors and the reliant variable. Findings: The study found that the averages of credit servicing rate for the sampled insurance companies was 80% with a minimum of 48% over the study period skewed to the right (skewness =0.001; Kurtosis = -1.200). The study established that the average existing debt levels was 1,034,492,636.80 with a maximum of 1,190,052,656 and minimum of 913,780,272 skewed to the right (skewness= 0.566; Kurtosis = -2.624). On the relationship between credit risk control and financial performance and insurance companies listed on the NSE, the study found that discovered that the average credit period was 30 days skewed to the left (skewness= -0.411; Kurtosis = -2.413) with a maximum and minimum of 30 respectively over the study. The standard deviation of 0.230 suggested that the success of credit risk control measures was informed by credit period. It was found that the average amount of credit for the sampled insurance companies was Kshs 1,573,453.20 with a maximum of Kshs 1,954,380 and a minimum of Kshs 1,209,006 which was skewed to the left (skewness = -0.219; Kurtosis = -2.716). On the relationship between delinquency management and financial performance of insurance companies listed on the NSE, the study found that the average credit recovery measures was 0.172 skewed to the left (skewness= -0.365; Kurtosis = -2.517) with a maximum of 0.30 respectively over the study. It was also found that the average rate of recovery for the sampled insurance companies was 0.0117 with a maximum of 0.0165 and a minimum of 0.0035 which was skewed to the right (skewness = 0.886; Kurtosis = 0.171). On the relationship between credit disbursement and financial performance of insurance companies listed on the NSE, the study has found that the average terms of repayment was 30 days as minimum (30) and maximum (30) skewed to the right (skewness= 0.113; Kurtosis = 0.04). The findings also indicated that that the average interest rate for the sampled insurance companies was 0.07 with a maximum of 0.07 and a minimum of 0.07 which was skewed to the right (skewness = 0.21; Kurtosis = 0.31). The study concluded that there was a positive significant relationship between credit risk control, credit risk control credit disbursement, delinquency management; and financial performance. Unique Contribution to Theory, Practice and Policy: The study recommends that the listed insurance companies in Kenya can rely on all the study variables (credit risk control, credit risk control, credit disbursement & delinquency management) as reliable credit management procedures to improve their financial performance. The listed insurance companies should continue putting their weight on credit servicing rate, number of foreclosures, existing debt levels, credit period, amount of credit, credit guarantees, credit recovery measures, default rate, rate of recovery, terms of repayment, interest rate, as well as collateral, as there is a high chance of impacting financial performance on a positive trajectory.

Keywords: Credit Management Procedures; Financial Performance; Insurance Companies; Nairobi Securities Exchange (search for similar items in EconPapers)
Date: 2025
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