FINANCIAL RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF FOREX BUREAUS IN NAIROBI COUNTY, KENYA

Abstract

Forex bureaus function in an environment filled with various financial risks that influence their financial performance. These financial institutions, especially in the 21st century, have been faced with multiple occurrences that have culminated to financial risks. The essence of organizations formulating financial risk management approaches was caused by the collapse of reputable businesses such as WorldCom and Enron, and this has helped businesses to cushion themselves and their stakeholders from different financial risks. Financial performance remains one of prominent measures of growth, and organizations have used this measure to attain their objectives. Financial performance in forex bureaus is a numerical indicator for the spread to which financial goals are achieved. The study objectives included; to determine the influence of operational risk management on financial performance of Forex Bureaus in Nairobi County; to establish the influence of credit risk management on the financial performance of Forex Bureau in Nairobi County; to assess the influence of liquidity risk management on the financial performance of Forex Bureau in Nairobi County and to evaluate the influence of market risk management on the financial performance of Forex Bureau in Nairobi County. The target population was 74 Forex Bureau which consisted of CEOs, Managing Directors and Middle Management Staff. Yamane Formula was adopted to arrive at a sample size of 210. The study adopted both primary and secondary data collection method. The study found that there was a relationship between financial risk management and financial performance of forex bureau in Nairobi County. It was clear that there was a positive correlation between financial performance and credit risk management (