SALAD KIKUYU SARITE
Presbyterian University of East Africa
DR. NEMWEL N. BOSIRE, PhD
School of Business, Presbyterian University of East Africa
CITATION: CITATION: Sarite S.K & Bosire N.N (PhD),. (February, 2016), Assessment of the causes of unclaimed assets in financial institutions listed in Nairobi securities exchange. A case of Kenya commercial bank. International Journal of Economics & Finance (IJHEF), volume 2 (II), 102 - 121. ISSN 2105 6008.
Kenya recently through the Unclaimed Financial Assets Act of 2011 joined the list of countries that require companies to account and submit proceeds of unclaimed assets to the government. This regulation is likely to affect the performance of a number of companies more especially those in the banking industry. Since 2012 the unclaimed assets have grown from shs 7B in 2012 to shs 12B in 2013 and moved up to shs 16.9B in 2014. The purpose of this study was to establish the causes of unclaimed assets in banking industry in Kenya. The specific objectives include; To assess whether Legal framework is the cause of unclaimed assets in financial institutions in Kenya, to determine if management support is the cause of unclaimed assets in financial institutions in Kenya unclaimed assets and to establish the whether succession planning is the cause of unclaimed assets in financial institutions in Kenya. The study adopted a survey research design that included all the banks listed in the NSE and they are eleven. The researcher opts for a census since they are view. The study made use of secondary data that collected from published accounts of banks in Kenya. The data was analyzed using simple linear regression with unclaimed assets as the dependent variable and the factors affecting it. Results of the study showed that causes of Unclaimed Financial Assets positively correlates with financial performance of commercial banks in Kenya. The correlation coefficient of causes of unclaimed financial assets with ROA was 0.804 at 95% confidence level. The researcher used legal framework, management support, and succession planning as causes of unclaimed assets in commercial banks in the study. The findings revealed that these factors have a statistical significant relationship of 0.895, -0.867, 0.576, -0.977 respectively. From the secondary data analyzed it showed that so far the Commercial banks have not complied with the Act, hence these banks are still enjoying holding these assets. The duration since the unclaimed assets bill was passed in 2011 and 2013 may not be long enough to get a trend that can give conclusive information.
Keywords: legal framework, management support, succession planning and unclaimed assets.