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FACTORS INFLUENCING ACQUISITION OF STRESSED ASSETS AND ASSET SECURITIZATION INTO THE FINANCIAL MARKET IN KENYA

Henzlon Kamau Waithaka
Student, Jomo Kenyatta University of Agriculture and Technology


Dr. Karanja Ngugi
Lecturer, Jomo Kenyatta University of Agriculture and Technology

ABSTRACT

Securitization of future receivables has become increasingly popular in Kenya with many Kenyan organizations using this route for raising and investing funds. Banks, financial institutions, insurance firms, stock brokers, housing finance companies, power generators and distributors have already adopted asset securitization. The purpose of this study was to investigate the factors influencing the acceptance of the acquisition of stressed assets (Bad Debts) and asset securitization for the purposes of liquidity mobbing to attain financial stability in the financial market in Kenya. The study was guided by four research objectives: determining the organizational factors that influences the Acquisition of stressed Assets and Asset securitization in the financial market in Kenya; examining the business environment factors that influence acquisition of stressed assets and Asset Securitization in the financial market in Kenya; establishing the effects of Government policies, control, and regulations on acquisition of stressed assets and asset securitization in the financial market in Kenya and to investigate the adequacy of IAS 39 as financial instrument on recognition and measurement. The study adopted a descriptive research design. The population of the study comprised of the finance officers from 44 commercial banks registered in Kenya as at 31st December 2011, 2 Analyst form Financial Regulators, 4 finance managers from Investment banks and 13 finance managers from Insurance Companies. Stratified random sampling technique was used to select 15 commercial Banks according to asset base. The study used both primary and secondary data. Primary data was collected using semi structure questionnaires. The collected data was analyzed using Statistical Package for Social Sciences (SPSS). The data was presented in the form of frequency tables, pie charts and graphs. The study found that Organizational Factors, Business environment factors, Government policies, control and regulations and Adequacy of Accounting Standards IAS 39 affected the practice of securitization.  The study recommends that financial market should be used in spreading the risk to more stakeholders. Organizations should understand the environment that the business operates since the environmental factors influence almost every aspect of business. Management structures should strengthen management structures, and information systems. Loan evaluation procedures should be improved especially procedures on loan application and credit rating.


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