INFLUENCE OF FINANCIAL RISK MANAGEMENT ON THE FINANCIAL PERFORMANCE OF LOGISTICS COMPANIES IN THE COASTAL REGION
Abstract
This research established the influence of financial risk management strategies on the financial performance of logistics companies in the Coastal Region. The study adopted a cross-section research design. The researcher targeted 132 logistics companies in Kilifi and Mombasa Counties. The research used primary data where structured questionnaires was used to collect data for analysis. Finally, the researcher used SPSS version 26 for data analysis. It was determined that foreign exchange risk management strategy significantly affect financial performance of logistics companies (r=0.140; p=0.003). It was further determined that an improvement of foreign exchange risk management strategy would significantly contributes to the improvement of financial performance of the organization (β=0.127; t=2.037; p=0.044). On the second objective, it was determined that liquidity risk management strategy positively and significantly affect financial performance of logistics companies (r=0.128; p=0.008). It was shown that liquidity risk management strategy improvement significantly contributes to the improvement of financial performance (β=0.218; t=2.741; p=0.007). It was determined that market risk management strategy significantly and positively affects performance of the organization (r=0.112; p=0.007). It was further determined that market risk management strategy improvement would significantly contributes to the improvement of organizational performance (β=0.173; t=3.045; p=0.003). On the fourth objective, the study established that credit risk management strategy significantly and positively affects the financial performance of logistics organisations (r=0.201; p=0.004). It was also determined that credit risk management strategy improvement would lead to a significant improvement of financial performance (β=0.173; t=3.045; p=0.003). The study concluded that financial risk management strategies (foreign exchange risk management strategies, liquidity risk management strategies, market risk management strategies and credit risk management strategy) significantly affects financial performance of logistics companies. The study recommends that; foreign exchange risk management should always be taken in to account to improve the firms return on assets and hence the financial performance of the logistic firms. Policy makers should also undertake to understand risks affecting the foreign exchange markets in order to maximize returns.
Key Words: Foreign Exchange Risk Management, Market Risk Management, Liquidity Risk, Credit Risk
CITATION: Omedo, W. N., & Wanjala, M. (2023). Influence of financial risk management on the financial performance of logistics companies in the coastal region. The Strategic Journal of Business & Change Management, 10 (2), 1084 – 1103.
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DOI: http://dx.doi.org/10.61426/sjbcm.v10i2.2652
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