Influence of Working Capital Management on Performance of Commercial Banks in Trans-Nzoia County, Kenya

Abstract

Effective financial management plays an important role in ensuring the financial health of a company and directly affects its profitability. Its primary objective is to consolidate the company's assets and meet current financial obligations to optimize future operating expenses. This particular study focuses on Kenya and aims to examine the role of monetary policy in monetary policy conditions across Trans Nzoia County. The specific objectives of this study were to examine the impact of financial planning on commercial banking activities in the county and to assess the impact of management accounting on banking activities under Nazism. This study draws on entrepreneurship theory and agency theory by using a descriptive research model to analyze real-world relational situations. These researchers collected data through questionnaires using census methods and selected a sample of 115 people using simple random sampling. The content validity of the questionnaire was determined by the researcher. Regression analyses were conducted to examine the relationship between dependent variables and working capital management. Based on these findings, the study concludes that effective working capital management has a positive impact on the performance of commercial in Trans Nzoia County. In particular, financial planning, invoice management, and inventory management are expected to contribute effectively to the performance of commercial banks in the region. Recommendations from this study include the adoption of a centralized billing system that enables relationship managers to provide better recommendation services by analyzing customer behavior in depth. In addition, this study suggests that bank managers should invest in state-of-the-art information management software that provides real-time analytics. The survey analysis was based on a response rate of 82.6% and the survey instrument demonstrated acceptable reliability. Demographic data showed that the majority of study participants were male, aged 26 to 30 years and older, usually married, with more than three years of banking experience, higher education and in a bank early in their career. The study, conducted in one of Kenya’s 47 counties, acknowledges these shortcomings. Therefore, the researchers recommend a comprehensive study taking into account other factors affecting bank performance. Furthermore, the study showed that the observed variables explain only 46.1% of the factors affecting banking activities in the entire Trans Nzoia County. This suggests that further research is needed to include other variables. In summary, this study highlights the importance of sound financial management for the success of commercial banks in the region and provides an important basis for research in a broader context.