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INFLUENCE OF UNCLAIMED FINANCIAL ASSETS ACT (2011) ON PERFORMANCE OF COMMERCIAL BANKS IN KENYA. A CASE OF KENYA COMMERCIAL BANK

 

 

NATHAN MUTUA 1

Jomo Kenyatta University of Agriculture and Technology

 

NOOR ISMAIL SHALE PhD 2

Jomo Kenyatta University of Agriculture and Technology

 

 

CITATION: Mutua N M. & Noor I.S (2017). Influence Of Unclaimed Financial Assets Act (2011) On Performance of Commercial Banks in Kenya. A Case of Kenya Commercial Bank. International Journal of Finance and Accounting. Vol. 11 (11) pp 1 – 23.

 

 

 

ABSTRACT

 

Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow inter-temporal smoothing of consumption by households and expenditures by firms; and they enable households and firms to share risks. The purpose of this study was to establish the influence of Unclaimed Financial Assets Act (2011) on performance of commercial banks in Kenya. Specific objectives of the study are to assess whether unclaimed dividends affect performance of commercial banks in Kenya, to determine the effect of dormant accounts on performance of commercial banks in Kenya, to establish how matured bond asset affect performance of commercial banks in Kenya and to determine whether interest rates on unclaimed assets affect performance of commercial banks in Kenya with reference to KCB According to the literature reviewed, governments are adopting regulations that are meant to manage the unclaimed assets that are held by financial institutions. The review confirms that studies on the effect of regulations on unclaimed assets and financial performance of companies and other financial institutions are rare in Kenya. The study adopted a case study of Kenya Commercial Bank. The study made use of both primary and secondary data that was collected from published accounts of banks in Kenya. The data was analyzed using simple linear regression and presented inform of charts and tables for ease of interpretation. The findings indicated that unclaimed dividends affected performance of commercial banks in Kenya. The hypothesis that there is no significant relationship between unclaimed dividends and banks performance was rejected. The study has established that unclaimed dividends has a positive and significant effect on the performance of commercial banks in Kenya. The study therefore recommends that commercial banks to have a flexible chain of paying dividends to the shareholders who may opt to retain them in the bank to improve on the performance.

Keywords: Unclaimed assets, Dividends, Dormant accounts, Bond and Interest rates

 


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