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Financial structure and growth of pension funds in Kenya

Author

Listed:
  • Omollo, Harold
  • Olweny, Tobias
  • Oluoch, Oluoch
  • Wamatanda, Joshua

Abstract

Financial structure choice and its impact on growth remains a great dilemma to all stakeholders. Whereas several studies have been done on this subject, more is yet to be established so as to ascertain the validity of the relationship between the financial structure and growth while factoring in an appropriate moderating variable like firm size in Kenya. The study investigates the confluence of financial structure and growth of pension funds management organizations in Kenya while considering confounding studies supporting, disagreeing and undecided views of other scholars. This study highlighted several empirical evidences, literature review, objectives and the research hypotheses. The study employed causal research design with secondary panel data from the financial statements of 49 pension firm organizations carefully identified according to Krejcie and Morgan (1970) table retrieved from a population of 68 registered pension scheme managers in Kenya as at December 31st 2018. Data was retrieved from the retirement benefit authority records for the period December 2009-2018.Model specifications linking both the Independent, dependent and the error term was applied together with statistical and diagnostic tests. The effect of financial structure on pension funds is not significant across all firms. It is also concluded that highly geared firms have significant relationship with equity returns and insignificant relationship with asset returns. In addition, highly geared firms tend to have high profitability and that the nature of the industry also determines the effect of financial structure on their growth.

Suggested Citation

  • Omollo, Harold & Olweny, Tobias & Oluoch, Oluoch & Wamatanda, Joshua, 2021. "Financial structure and growth of pension funds in Kenya," MPRA Paper 109217, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109217
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    File URL: https://mpra.ub.uni-muenchen.de/109217/1/MPRA_paper_109217.pdf
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    References listed on IDEAS

    as
    1. Miller, Edward M, 1977. "Risk, Uncertainty, and Divergence of Opinion," Journal of Finance, American Finance Association, vol. 32(4), pages 1151-1168, September.
    2. John M. R. Chalmers & Roger M. Edelen & Gregory B. Kadlec, 2001. "On the Perils of Financial Intermediaries Setting Security Prices: The Mutual Fund Wild Card Option," Journal of Finance, American Finance Association, vol. 56(6), pages 2209-2236, December.
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    Cited by:

    1. Roba Adan Abdi Boyante & Prof. Willy Muturi & Dr. Mouni Gekara, 2022. "Moderating Influence of Portfolio Rebalancing on the Relationship between Asset Allocation and Financial Performance of Pension Funds in Kenya," International Journal of Finance and Accounting, IPRJB, vol. 7(3), pages 56-67.

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    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance

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