Fund Liquidity and Financial Performance of Collective Investment Schemes in Nairobi County, Kenya

Purpose: Investment schemes in Kenya have a very low contribution to the country’s GDP as compared to other countries. Further, the investment schemes in Kenya have underperformed below the set benchmarks and which raises concerns as to what attracts the under-performance of these firms. It is not clear whether the fund liquidity affect investment schemes performance, and which can enhance the ability of the investment schemes to reach their set benchmarks. The objective of the study was to examine the effect of fund liquidity on financial performance of investment schemes in Nairobi County in Kenya. Methodology: The study adopted a descriptive research design. The study applied census study. The target population for this study was 25 investment schemes registered and licensed to operate in Nairobi County by the capital market authority of Kenya. The study used secondary data collection form to collect the data. The data was coded and imported into STATA software for analysis. Data presentation was done by use of tables and figures. Panel data regression and correlation analysis was used for inferential analysis. Test of hypothesis was done at 95% confidence interval. Findings: The study findings of the panel regression model indicated a positive and significant effect between fund liquidity and financial performance of investment schemes in Nairobi County. Unique Contribution to Theory, Practice and Policy: The study recommended strategies to improve inventory management and selling redundant assets to improve cash flow. Eliminating surplus equipment can provide a small amount of capital while also reducing the average cost of maintenance. Lastly, switching the short-term debt to long-term options to gain smaller monthly payments creates more time to pay off the overall debt.