Professional Documents
Culture Documents
NOVEMBER, 2015
Declaration
This proposal is my original work and has not been presented for a degree in any other
university.
Signature_________________________ Date____________________
Name: Philip Musili Musyoka
D53/OL/NYI/24264/2014
Supervisors:
This proposal has been submitted for the review with our approval as University supervisors.
Signature __________________________Date__________________
Name: Dr. .
School of Business
Signature __________________________Date__________________
Name:
Chairman, Department
ii
TABLE OF CONTENTS
Declaration...............................................................................................................................ii
Dedication................................................................................................................................vi
Acknowledgement..................................................................................................................vii
Abbreviations and Acronyms..............................................................................................viii
Operational Definition of Terms............................................................................................ix
ABSTRACT..............................................................................................................................x
CHAPTER ONE......................................................................................................................1
INTRODUCTION....................................................................................................................1
1.1 Background of the Study.....................................................................................................1
1.1.1 Credit Management...........................................................................................................2
1.1.2 Firm Performance.............................................................................................................3
1.1.3 Financial Services Sector in Kenya..................................................................................5
1.2 Problem Statement...............................................................................................................5
1.3 General Objective of the Study............................................................................................7
1.3.1 Specific Objectives...........................................................................................................7
1.4 Research Hypothesis............................................................................................................7
1.5 Justification of the Study.....................................................................................................8
1.6 Scope of the Study..............................................................................................................8
1.7 Limitation............................................................................................................................9
1.8 Assumptions of the Study...................................................................................................9
CHAPTER TWO...................................................................................................................10
LITERATURE REVIEW......................................................................................................10
2.1 Introduction........................................................................................................................10
2.2 Theoretical Review............................................................................................................10
2.2.1 Transactions Costs Theory.............................................................................................10
2.2.2 Asymmetric Information Theory.....................................................................................11
2.2.3 Theory of Performance...................................................................................................11
2.2.4 Pecking Order Theory....................................................................................................12
2.3 Credit Management Practices............................................................................................13
2.3.1 Credit Scoring.................................................................................................................14
2.4 Financial Performance.......................................................................................................15
2.4.1 Profitability.....................................................................................................................16
2.4.2 Efficiency........................................................................................................................16
2.5 Empirical Literature Review..............................................................................................17
2.5.1 Credit Policy and Bank Performance..............................................................................17
2.5.2 Credit Scoring Mechanism and Bank Performance........................................................18
2.5.3 Credit Monitoring Style and Bank Performance...........................................................19
2.6 Summary of the Research gaps..........................................................................................20
2.7 Conceptual Framework......................................................................................................21
CHAPTER THREE...............................................................................................................22
RESEARCH METHODOLOGY.........................................................................................22
3.1 Introduction........................................................................................................................22
3.2 Research Design.................................................................................................................22
iii
iv
Dedication
This research work is lovingly dedicated to my dad Daniel Musyoka and my mum Agnetta
Musyoka who have shown me great support in my quest for education.
Acknowledgement
This research project could not have been possible without the valuable input of a number of
groups whom I wish to acknowledge. First and foremost, great thanks to God for His grace
v
and the gift of life during the period of the study. Special appreciation goes to my supervisor
Dr. Omagwa. I wish to sincerely acknowledge his professional advice and guidance in the
research project. Thanks to the entire academic staff of the school of business for their
contribution in one way or another.
FIs-
Financial Institutions
vi
GDP-
GoK-
Government of Kenya
IMF-
MFIs-
SACCO-
SME-
Commercial bank-
Loan:
Micro credit:
ABSTRACT
Credit management is one of the most essential activities in any commercial bank. Lack of
sound credit management practices leads to pitfalls in the banking sector. The general
objective of this study is to evaluate the impact of credit management on financial
performance of KCB Bank Group. The study specifically seeks to determine the impact of
credit policy, credit scoring mechanism and credit monitoring style on financial performance
of KCB bank branches in Laikipia County. The research shall adopt the use of mixed method
approach research design which is the application of both qualitative and quantitative
approaches.The researcher will draw the population from the KCB bank branches in Laikipia
County where the 78 staff members will be targeted. The study will use census survey on
managerial and supervisory staff while simple random sampling (at 30%) will be used on
viii
other category of staff giving a total sample size of 37. The study will obtain secondary data
through a data collection form that will indicate the profitability and loan sales of the banks.
However, a semi- structured questionnaire will be used to collect primary data from the bank
staff. The researcher will employ self-administration approach of data collection. The pretesting will be carried out on a sample consisting of ten (10%) of the respondents; from
Equity bank, Laikipia town branch. The study will use split-halves and internal
consistency method to measure reliability. Responses in the questionnaires will be tabulated,
coded and processed by use of a computer Statistical Package for Social Science (SPSS)
program to analyze the data. The responses from the open-ended questions will be listed to
obtain proportions appropriately; the response will then be reported by descriptive narrative.
Both descriptive and inferential statistics will be used to analyze the data. Mean and standard
deviations will be used as measures of central tendencies and dispersion respectively. The
relationship between the dependent variable and the independent variables will be tested
using Pearsons correlation.
ix
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The importance of credit management by commercial banks has attracted much attention in
recent years and has become an important topic for economists and policymakers working on
financial and economic development. This interest is driven in part by the fact that
commercial banks account for the majority of buoyant firms in an economy and thus provide
a significant share of employment (Demirguc-Kunt & Huzinga, 2013). Furthermore, most
SMEs usually get funding from commercial banks in order to develop, grow and contribute
to the economic development (Boahene, Dasah & Agyei, 2012). The recent attention on
credit management also comes from the perception among academicians and policymakers
that banks that lack appropriate credit management mechanisms risk making huge losses
(Demirguc-Kunt & Huzinga, 2013). As put in by Nzotta (2004), credit management greatly
influences the success or failure of commercial banks.
Credit management is one of the most essential activities in any commercial bank (Gatuhu,
2013). Therefore, credit management cannot be overlooked by any economic enterprise
engaged in credit irrespective of its business nature. Lack of sound credit management
practices leads to pitfalls in the banking sector. Scheufler (2002) summarizes these pitfalls as
failure to recognize potential frauds, under-estimation of the contribution of current customers to
bad debts, getting caught off guard by bankruptcies, failure to take full advantage of technology,
and spending surplus resources on credit evaluations that are not related to reduction of credit
defaults.
With the rise in bankruptcy rates, the probability of banks incurring losses has risen
(Omboto, 2014). Economic pressures and business practices are forcing organizations to slow
payments while on the other hand resources for credit management are reduced despite the
higher expectations. Therefore it is a necessity for credit professionals to search for
opportunities to implement proven best practices (Gatuhu, 2013). Timely identification of
potential credit default is important as high default rates lead to decreased cash flows, lower
liquidity levels and financial distress. In contrast, lower credit exposure means an optimal
debtors level with reduced chances of bad debts and therefore financial health (Gatuhu,
2013).
assets. He further notes that, credit management provides a leading indicator of the quality of
deposit banks credit portfolio. A key requirement for effective credit management is the
ability to intelligently and efficiently manage customer credit lines. In order to minimize
exposure to bad debt, over-reserving and bankruptcies, companies must have greater insight
into customer financial strength, credit score history and changing payment patterns. Credit
management is concerned primarily with managing debtors and financing debts (Gatuhu,
2013).
Credit management starts with the sale and does not stop until the full and final payment has
been received. It is as important as part of the deal as closing the sale. In fact, a sale is
technically not a sale until the money has been collected. It follows that principles of goods
lending shall be concerned with ensuring, so far as possible that the borrower will be able to
make scheduled payments with interest in full and within the required time period otherwise,
the profit from an interest earned is reduced or even wiped out by the bad debt when the
customer eventually defaults (Diagne & Zeller, 2001).
1.1.2 Firm Performance
Companies that achieve organizational performance enhance the engagement culture by
decentralizing the decision-making process and allowing employees to contribute thus
benefiting from multiple perspectives (Kungu, Desta & Ngui, 2014). Khan, Farooq and Ullah
(2010) analysis shows that companies with the highest levels of performance also have high
levels of employee engagement. Their employees are visible involved and with a leadership
platform that bolsters the company's mission and involves all employees in developing
strategy (Khan, Farooq & Ullah, 2010).
3
The good performance of any company begins to crystallize only after its leaders create an
engagement culture among employees (Kungu, Desta & Ngui, 2014). Turyahebya (2013)
defines financial performance as the ability to operate efficiently, profitably, survive, grow
and react to the environmental opportunities and threats. In agreement with this, Sollenberg
and Anderson (1995) assert that, performance is measured by how efficient the enterprise is
in use of resources in achieving its objectives.
Existing literature on the how to measure organizational performance varies across studies
(Comb, Crook & Shook, 2005). The contradictions between studies are mostly caused by
different concepts and measurement approaches of organizational performance. This is
majorly due to completely different concepts and measurement systems, with each newer
study applying a new construct measurement approach on organizational performance (Khan
et. al. 2010). Consequently, the interest into measurement approaches, construct validation
and conceptual nature of organizational performance is very elusive for most researchers.
However, Combs, Crook and Shook (2005) distinguished between operational and
organizational performance. In their framework, operational performance combines all nonfinancial outcomes of organizations while the conceptual domain of organizational
performance is limited to economic outcomes. But this study combines the two perspectives
of performance and identifies four organizational performance dimensions: profitability and
growth in customer base.
customer relations. If payment is made late, then profitability is eroded and if payment is not
made at all, then a total loss is incurred. On that basis, it is simply good business to put credit
management at the front end by managing it strategically.
The excessively high level of non-performing loans in the banks can be attributed to poor
corporate governance practices, tax credit administration process and the absence or nonadherence to credit risk management practices. Thus far, the major cause of serious banking
problems continues to be related to low credit standards for borrowers and as well counter
parties, poor portfolio management, and lack of attention to changes in economic or other
circumstances that can lead to delineation in the credit standing of banks counter parties.
Thus, the biggest problem facing banking and other forms of financial intermediaries is the
risk of customers or counter party default. Recently, the banking sector witnessed rising nonperforming credit portfolios. This has contributed to the financial distress in banking sector.
Also focused has the existence of predatory debtors in the banking system whose Modus
Operandi involves the abandonment of their debt obligation in some banks only to go ahead
and contract new debts in other banks. In literal sense, it is inimical to state that, the
increasing amount of non-performing loans in the credit portfolio hinders banks from
achieving their objectives to operate successfully and profitably, since a large chunk of banks
revenue accrues from loans from which interest in derived.
Matu (2008) carried out a study on sustainability and profitability of banking institutions and
noted that efficiency and effectiveness were the main challenges facing Kenya on service
delivery. Gitau (2010) did a study on assessment of strategies necessary for sustainable
competitive advantage in the banking and microfinance industry in Kenya with specific focus
to Faulu Kenya. Achou and Tenguh (2008) also conducted research on bank performance
and credit risk management and found that there is a significant relationship between
6
H3- Credit monitoring style has no impact on financial performance of KCB bank branches
in Laikipia County.
Scholars in the field of credit management will use the information to understand the state
of the sector better. They might also use the information as a reference point to research on
the credit strategy formulation and innovations in other industries. Finally, the Government
may find the information useful in diagnosing the problems affecting the banking sector
liquidity and come up with regulative solutions.
other aspects of credit management. The study further seeks to interview bank staff only
thereby ignoring other stakeholders in credit management.
1.7 Limitation
Staff from KCB bank may decline to give information concerning their credit management
and performance due to the fear of competitors and privacy codes. However, the researcher
will clearly outline the motive of the study to them before embarking on data collection.
Time will also be a limiting factor since businesses operate on very tight schedule. Moreover,
a bigger sample size would have been appropriate were it not for the cost and time
constraints. The researcher will plan to interview the respondents on days when they are not
very engaged.
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter concentrates on reviewing the literature with a view of understanding how other
researchers have contributed and the extent of the findings regarding accessibility of finances
and the performance of Bank. The chapter also reviews the theories relevant to the dependent
and independent variables.
10
Renzulli, Purcell, Leppien & Burns, 2002). While some factors that influence improving
performance are immutable, other factors can be influenced by the organization or by others
(Elger, 2007). The factors that can be varied fall into three axioms for effective performance
improvements. These involve a performers mindset, immersion in an enriching environment and
engagement in reflective practice (Bradford, Brown & Cocking, 2000). A ToP informs learning
by organizations through the idea of examining the level of performance of the organization
(Bradford et. al. 2000). This theory will go to support the variable on bank performance. This
theory of performance will be tested against the variable on bank performance and how it is
affected by credit management in the study.
2.2.4 Pecking Order Theory
The pecking order theory by Myers and Majluf (1984) focuses on the immediate need for
funding based on the existence of a pecking order and provides a rational explanation for choice
in corporate finance. For a company, this order consists in order to focus on internal sources of
financing before resorting to external investors. Thus, the company follows a hierarchy of
financing, dictated by the need for external funds. In general, financing by internal funds should
be promoted on the financing by external funds, according to the following hierarchy: cash
flow/debt/issue of shares (Myers & Majluf, 1984). At this level, it is necessary to clarify the
hierarchy of funding, driven by the need of external funding that follows any business according
to the theory of the Pecking Order. This theory will go in to support the variables on credit
monitoring style and credit scoring mechanism and how they affects bank performance.
12
Most companies can readily see losses incurred by bad debts, customers going into liquidation,
receivership or bankruptcy. The writing-off of bad debt losses visibly reduces the Profit and Loss
Account (Omboto, 2014). The interest cost of late payment is less visible and can go unnoticed
as a cost effect (Knox, 2004). It is infrequently measured separately because it is mixed in with
the total bank charges for all activities. The total bank interest is also reduced by the borrowing
cost saved by paying bills late (Knox, 2004). Credit managers can measure this interest cost
separately for debtors, and the results can be seen by many as startling because the cost of
waiting for payment beyond terms is usually ten times the cost of bad debt losses (Knox, 2004).
Effective management of accounts receivables involves designing and documenting a credit
policy (Gatuhu, 2013). Many entities face liquidity and inadequate working capital problems due
to lax credit standards and inappropriate credit policies. According to Pike and Neale (1999), a
13
sound credit policy is the blueprint for how the company communicates with and treats its most
valuable asset, the customers. Scheufler (2002) proposes that a credit policy creates a common
set of goals for the organization and recognizes the credit and collection department as an
important contributor to the organizations strategies. If the credit policy is correctly formulated,
carried out and well understood at all levels of the financial institution, it allows management to
maintain proper standards of the bank loans to avoid unnecessary risks and correctly assess the
opportunities for business development (Omboto, 2014).
2.3.1 Credit Scoring
The first step in limiting credit risk involves screening clients to ensure that they have the
willingness and ability to repay a loan. Banks use the 5Cs model of credit to evaluate a customer
as a potential borrower (Abedi, 2000). The 5Cs help banks to increase loan performance, as they
get to know their customers better. These 5Cs are: character, capacity, collateral, capital and
condition. Character refers to the trustworthiness and integrity of the business owners since its
an indication of the applicants willingness to repay and ability to run the enterprise. Capacity
assesses whether the cash flow of the business or household can service loan repayments. Capital
refers to the assets and liabilities of the business or household. Collateral refers to access to an
asset that the applicant is willing to cede in case of non-payment or a guarantee by a respected
person to repay a loan in default. Finally, conditions refer to a business plan that considers the
level of competition and the market for the product or services as well as legal and economic
environment .The 5Cs need to be included in the credit scoring model.
The credit scoring model is a classification procedure in which data collected from application
forms for new or extended credit line are used to assign credit applicants to credit risk classes
14
(Constantinescu, 2010).Inkumbi (2009) notes that capital and collateral are major stumbling
blocks for entrepreneurs trying to access capital. This is especially true for young entrepreneurs
or entrepreneurs with no money to invest as equity; or with no assets they can offer as security
for a loan. Any effort to improve access to finance has to address the challenges related to access
to capital and collateral. One way to guarantee the recovery of loaned money is to take some sort
of collateral on a loan. This is a straightforward way of dealing with the aspect of securing
depositors funds.
These are appropriate indicators for unsubsidized institutions. But donor interventions more
typically deal with institutions that receive substantial subsidies, most often in the form of grants
or loans at below-market interest rates. In such cases, the critical question is whether the
institution will be able to maintain itself and grow when continuing subsidies are no longer
available (Pandey, 2008). To determine this, normal financial information must be adjusted to
reflect the impact of the present subsidies. Three subsidy-adjusted indicators are in common use:
Financial Self-sufficiency (FSS), Adjusted Return on Assets (AROA), and the Subsidy
Dependence Index (SDI) (Turyahebwa, 2013).
2.4.2 Efficiency
Efficiency of banks is measured by the share of operating expense to gross loan portfolio in most
cases (Gatuhu, 2013). The ratio provides a broad measure of efficiency as it assesses both
administrative and personnel expense with lower values indicating more efficient operations. The
debt equity ratio is a member of the asset or liability management ratios and specifically attempt
to track banks leverage (Gatuhu, 2013). This measure provides information on the capital
adequacy of banks and assesses the susceptibility to crisis. Microfinance investors mainly rely on
16
this ratio as it helps to predict probability of a bank honoring its debt obligations (Turyahebwa,
2013). However, its use should always be contextualized as high values could lead to growth of
banks. The Operating Expense Ratio is the most widely used indicator of efficiency, but its
substantial drawback is that it will make a bank making small loans look worse than an bank
making large loans, even if both are efficiently managed (Turyahebwa, 2013). Thus, a preferable
alternative is a ratio that is based on clients served, not amounts loaned. If one wishes to
benchmark a banks Cost per Client against similar banks in other countries, the ratio should be
expressed as a percentage of per capita Gross National Income; which is used as a rough proxy
for local labor costs (Gatuhu, 2013).
credit policy indeed affect performance of the banks. However, the study focused on loan sale
out targets as the only aspect of performance, a gap the current study seeks to fill.
Azende (2012) did a study on credit management and performance of banks in Nigeria. This
study assessed the impact of credit policy on performance of the banks; using banks in Benue
and Nasarawa States as case study. Mean scores and standard deviation were used to present and
analyze the primary data obtained via questionnaires. Correlation was used to substantiate
whether there was similarity. Simple percentages combined with mean scores were used to test
hypothesis one on credit policy and performance while Chi-square was used to test hypothesis
two on collateral security and performance. The result showed that the banks with strict credit
policies were significantly preferred by corporate clients for loans than those with relaxed credit
policies. Therefore the study concluded that indeed credit policy affects bank performance. The
study recommended that both the government and the banking sector should mutually agree on a
credit policy acceptable to all. However, the study mainly focused on collateral security as an
aspects of credit policy, a gap the current study seeks to fill.
2.5.2 Credit Scoring Mechanism and Bank Performance
A study by Iopev and Kwanum (2012) on how credit scoring mechanism affects financial
performance of banks was done in Nigeria. The study adopted a survey research design. To
achieve the objective of the study, one hundred and ten (110) bank staff from Benue state were
interviewed using an open-ended questionnaire. Data collected was analyzed using descriptive
statistics. The findings revealed that about eighty four percent of respondents agreed that the
credit scoring mechanism affects performance of bank loans. However, the study failed to give a
18
detailed statistical relation between credit scoring mechanism and the performance of the banks;
a gap the current study seeks to bridge.
Muguchu (2013) did a study on the relationship between credit scoring mechanism and financial
performance of MFIs in Nairobi, Kenya. The study sought to find out whether there was
relationship between the two variables. The study focused on the imperfect information theory.
The study used secondary sources of data. Secondary data was sourced from the financial
records from the year 2008 to 2012. The study employed descriptive analysis as well as
regression analysis to analyze the data collected. The target population under study was the
licensed MFIs within Nairobi County. Cluster sampling of Bank in the central business district in
Nairobi was done by clustering the BANK based on the streets where they were located. A
sample of 40 MFIs within the central business district was selected for the survey. Descriptive
analysis as well as regression analysis found that there was a positive relationship between credit
scoring mechanism and return on investment for the MFIs. The study recommended that a
financial institution be set to have special lending structures for Bank to enable them access
credit. However, the study used secondary data only, a gap the current study seeks to fill.
.
2.5.3 Credit Monitoring Style and Bank Performance
Nkuah., Tanyeh & Gaeten (2013) did a study on effect of credit monitoring methods on banks in
Ghana: challenges and determinants of performance. The study focused on the credit rationing
theory propounded by Stiglitz and Weiss (1981). The study employed the quantitative approach
of research in which the probability sampling criteria; specifically the stratified and simple
random sampling; were employed to select eighty bank staff from the Wa Municipality. The
19
major findings for the study indicated that there exist significantly, positive relations between
credit monitoring methods and bank performance. The study also revealed that some monitoring
activities such as business registration, documentation, business planning, asset ownership, and
others also impact heavily on banks financial performance. However, the study only focused on
banks that were within the town location; a gap the current study seeks to fill.
Minh (2012) did a study on the effects of credit monitoring on performance of banks in Vietnam.
Due to the characteristics of data, the study could not aim at in-depth specific problems, but at
general pictures of bank financing including endogenous and exogenous variables. The
binominal logit model was used to assess the influence of credit monitoring style on financial
characteristics of the banks such as credit worthiness and profitability. The study adopted
discriminant and cluster analysis to contribute to the findings. Basing on logistic model, the
study found that besides conclusions that were consistent with other studies, there were also
interesting unprecedented conclusions. The study showed that, banks in Vietnam are largely
affected by credit monitoring styles. However, this did not apply to banks in Central North where
it was extremely easy for small business to access funding.. However, the study concentrated on
predetermined list of banks funded by World Bank, a gap the current study seeks to fill.
Independent Variables
Intervening Variable
Dependent Variable
Central Bank
Credit policy:
Credit control
Credit risk
Regulations
Bank Performance:
Profitability
Loan sales
21
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter presents the methodology that will be used to carry out the study. It further
describes the research design, type and source of data and research instruments to be used to
collect data. It also describes the target population and the data analysis method.
22
Population
Management
Supervisory
14
Others
59
Total
78
23
Population
Sample size
Description
Managerial
Census
Supervisory
14
14
Census
Others
59
18
Simple
Total
78
37
sampling (30%)
random
The questionnaire will contain a mix of questions, allowing for both open-ended and specific
responses to a broad range of questions. The questionnaire will be divided into two sections
where section one will deal with the demographic information while section two will deal with
the study variables. However, section two will be subdivided into three subsections in line with
the variables in the study objectives.
24
where the reliability co-efficient reflects the extent to which a test is free of error variance. The
study will use split-halves and internal consistency method to measure reliability. Splithalves method will be used by comparing the two halves of the responses to each other and
similarities identified. The more similarities between the two halves and each question can be
found the greater the reliability. Internal consistency method will be tested using Cronbachs
Alpha. Cronbach's alpha is a measure of internal consistency, that is, how closely related a set of
items are as a group. A "high" value of alpha is often used as evidence that the items measure an
underlying (or latent) construct (Warmbrod, 2007). Reliability with a predetermined threshold of
0.7 is considered acceptable. That is, values above 0.7 indicate presence of reliability while
values below signify lack of reliability of the research instrument (Warmbrod, 2007).
26
27
REFERENCES
Abiola, I. & Olausi, S. (2014). The impact of credit risk management on the commercial banks
performance in Nigeria, International Journal of Management and Sustainability, 3(5):
295-306
Business Intelligence Survey (2014). Principles for the management of credit Risk, CH 4002,
Switzerland Bank for International Settlements
Central Bank of Kenya, (2009). Risk Management Survey for the Banking Sector. CBK, Nairobi.
Cooper D. & Schindler P. (2010). Business Research Methods. Mc-Graw Hill
Demirguc-Kunt, A. and Huzinga, H. (2013). Determinants of Commercial Bank Interest Margins
and Profitability: Some International Evidence, The World Bank Economic Review,
13(2), 379-40
Doll, J. & Mark, P. (2014). An analysis of effects of collateral security on bank performance for
Bank in Ghana. International Journal of Bank Marketing , 25 (2), 89-101.
Elger, D. (2007). Theory of performance. In S.W. Beyerlein, C. Holmes, & D. K. Apple (Eds.),
Faculty guidebook: A comprehensive tool for improving faculty performance (4th ed.)
(19-22). Lisle, IL: Pacific Crest.
Gieseche, K., (2014). Bank Credit risk modelling and valuation in Nigeria: An introduction,
credit risk: Models and Management. Cornell University, London
Gin, X., Jakiela, P., Karlan, D., Morduch, J. (2013). Microfinance Games. American Economic
Journal: Applied Economics, 2(3), 60-95
Githui O. (2012), The impact of credit risk management on financial performance of
commercial banks in Kenya (Unpublished MBA Thesis). University of Nairobi.
28
29
30
APPENDICES
Appendix I: Letter of Transmittal
Philip Musili Musyoka,
Kenyatta University,
Dear Respondent,
RE: SURVEY DATA COLLECTION
My name is Philip Musili. I am a student from the Kenyatta University. I am conducting a
survey on credit management and performance. The information provided by you will be
treated confidentially and will not be disclosed to any third party. Information will only be
collected for the purposes of research in order to establish the relation of the two variables. I
therefore request you to feel free and provide honest answers without fearing any
intimidation or disclosure of the information.
Your assistance and cooperation will be appreciated.
Kind Regards.
Philip Musili,
Researcher,
Kenyatta University.
31
32
33