Effect Of Private Asset Financing Loans On Financial Performance Of Real Estate Investment Firms In Nauru Town, Kenya
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 5
Abstract
There has been an ever-growing demand for housing in Kenya. Though this may spell booming business for real estate financing investments, this has not been the case, at least in in relation to financial performance. The study examined the effect of private asset financing loans on financial performance of real estate investment firms specifically in Nakuru town, Kenya. In particular, the study analyzed the effect of assetto-loan ratio on financial performance of the said entities. The study population consisted of 80 real estate developers (real estate investment firms). Due to the relatively small size of the study population, a census design was adopted. A structured questionnaire was used to facilitate data collection. The instrument was pilot tested in order to determine both its validity and reliability before it was used to aid in collection of data for the main study. The Statistical Package for Social Sciences Version 24.0 programme was used in data analysis. Data analysis involved both descriptive and inferential statistics. The results of the analysis were presented in tables. The null hypothesis was tested at 95% confidence level. It was established that asset-to-loan ratio substantively influenced financial performance of the stated firms (β0 = 0.327). The null hypothesis was rejected (p < 0.05). It was concluded that asset-to-loan ratio significantly affected financial performance of real estate investment firms in Nakuru town. It was concluded that a substantive proportion of financial performance of the stated firms could be attributed to private asset financing loans, as depicted by the ratio of assets to loans. The study recommended that the real estate investment firms should minimize their reliance on the assets already owned by the borrowers as one of the major conditions for extending applied loans to them.
Authors and Affiliations
Wataka Benson Wafula, Eshiwani Barry Weche
Keywords
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- EP ID EP411168
- DOI 10.9790/487X-2005033644.
- Views 72
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