EFFECT OF CASH FLOW MANAGEMENT ACTIVITIES ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED AT NAIROBI SECURITY EXCHANGE MODERATING ROLE OF BANK SIZE

Abstract

Cash flow is the main aspect indicating financial health position of the firms. The cash flows take different dimensions from which outflow and inflow is expected. The different inflows and outflows are resulting to improvement of cash flows.  Financial managers are ensuring cash flow is more than cash outflow in the firm. Performance of listed commercial banks measured by profit before tax in the 2016 indicated ksh 147.40 billion and the year 2017 profit was ksh 133.20 billion.  This shows that there is a decline in financial performance shown by ksh 14.20 billion. The decreases in profit over the years were in corresponding to return on assets by 1.79% in the year 2016 and in 2017 indicated 3.99%. The study indicated that return on equity was different from the year 2017 with 20.6%, 2016 by 24.68% showing the poor performance. The declining aspects of financial performance of listed commercial banks were indicated return on equity and return on assets affect cash flow. The general objective of this study was to assess the effects of cash flow management activities on financial performance as moderated by bank size case of commercial banks listed. The specific objectives were; to examine the effects of operating activities on financial performance of commercial banks and to establish moderating role of bank size on the relationship between cashflow management activities and financial performance of commercial banks. The study adopted agency theory. Descriptive research design was employed by this study. The target population comprised of 12 listed commercial banks at Nairobi security exchange. Stratified random sampling was adopted to choose 11 listed commercial banks. The study used secondary data from financial reports through data collection sheet. The data was collected from financial reports published from 2016 to 2020. The study employed descriptive statistics using percentage, maximum, minimum, mean and standard deviation. Inferential statistics used correlation and regression analysis. The results were presented by tables. The study showed that operational activities had a strong and a positive significant effect on financial performance. The bank should increase operating activities for better improvement of financial performance.