An Empirical Evidence of Strategic Asset Allocation and Financial Performance of Projects Funded by Youth Enterprise Development Fund in Turkana County, Kenya

Ekaale Isaac^1, and Mwengei K. B. Ombaba²

¹Msc. in Finance and Accounting (Corporate Finance Option), Jomo Kenyatta University of Agriculture and Technology

²Lecturer, University of Eldoret

Cite this paper:
Ekaale Isaac and Mwengei K. B. Ombaba. An Empirical Evidence of Strategic Asset Allocation and Financial Performance of Projects Funded by Youth Enterprise Development Fund in Turkana County, Kenya. Journal of Finance and Accounting. 2024; 12(2):68-79. doi: 10.12691/jfa-12-2-3

Abstract

The Kenyan government expects that the projects funded by Youth Enterprise Development Fund perform well financially for the benefit of the youth. However, there is poor financial performance as the projects funded by Youth Enterprise Development Fund have been defaulting in loan repayment and the ideal loan recovery rate of 100% has never been achieved. This sought to determine the effect of strategic asset allocation on financial performance of projects funded by Youth Enterprise Development Fund in Turkana County, Kenya. The study was founded on modern portfolio theory. Descriptive cross-sectional survey research design was used. A total of 300 projects which are fully registered and funded by Youth Enterprise Development Fund in Turkana County, comprised the study population. The study involved managers from a sample of 172 projects which are registered and funded by Youth Enterprise Development Fund in Turkana County. Simple random sampling was used to select the projects whose managers took part in the actual study. A pilot study was conducted in order to test the reliability of the research questionnaire and ensure its validity. Content validity of the research questionnaire was ensured through consultations with the supervisor while reliability was tested using Cronbach’s alpha coefficient. Structured questionnaires were used to collect data. Both descriptive and inferential statistics were used for analyzing data. Descriptive statistics included frequency tables, percentages, means and standard deviations. Inferential statistics included multiple regression analysis and Pearson product moment correlation. Inferential statistics included multiple regression analysis and Pearson product moment correlation. It was noted that strategic asset allocation significantly predicts financial performance (β₃ = 0.561; p < 0.05). It was concluded that strategic asset allocation and tactical asset allocation significantly affect financial performance. It was recommended that strategic asset allocation should be enhanced in order to improve financial performance of projects funded by Youth Enterprise Development Fund in Turkana County, Kenya.

Keywords:
strategic asset allocation financial performance youth enterprise development

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]	Youth Enterprise Development Fund, R. (2019). Board performance report: June 2016 – May 2019. Nairobi, Kenya: Youth Enterprise Development Fund.
[2]	Sulaiman, E. D. M., Yusoff, Y. M., & Chelliah, S. (2010). Internationalization and performance: Small and medium enterprises (SMEs) In Malaysia. International Journal of Business and Management, 5(6), 27-37.
[3]	Memon, M. A., & Tahir, I. M. (2012). Size and operational performance of manufacturing companies in Pakistan using data envelopment analysis. Journal of Information Engineering and Applications, 2(4), 39-49.
[4]	Esteve, A. E., Peinado, L. S., & Peinado, E. S. (2008). Moderating influences on the firms’ strategic orientation-performance relationship. International Small Business Journal, 26(4), 463-489.
[5]	Santos, J.B., & Brito, L.A.L. (2012). Toward a subjective measurement model for firm performance. BAR, Rio De Janeiro,9(6), 95-117.
[6]	Zehira, C., & Yavuz, M. (2014). A field research on organizational learning, crisis management capability and firm performance. International Journal of Research in Business and Social Science, 3(3), 1-17.
[7]	Devinney, T. M., Yip, G. S., & Johnson, G. (2010). Using frontier analysis to evaluate company performance. British Journal of Management, 21(4), 921–938.
[8]	Brealey, A.R., Myers, C.S. & Allen, F. (2011). Principles of corporate finance (10th ed.). United States of America: Mcgraw-Hill/Irwin.
[9]	Brown, C.K., Garlappi, L., & Tiu, C. (2010). Asset allocation and portfolio performance: Evidence from University Endowment Funds. Journal of Financial Markets, 13(2), 268-294.
[10]	Brigham, E.F., & Houston, J.F. (2009). Fundamentals of financial management (12th ed.). Mason, USA: South-Western Cengage Learning.
[11]	Dziwok, E. (2014). Asset allocation strategy in investment portfolio construction– a comparative analysis. Journal of Economics & Management, 18(1), 124-132.
[12]	Louton, D., Mccarthy, J., Rush, S., Saraoglu, H., & Sosa, O. (2015). Tactical asset allocation for US pension investors: How tactical should the plan be? Journal of Asset Management, 16(7), 427-436.
[13]	Saunders, M., Lewis P., & Thornhill, A. (2009). Research methods for business students (5thed.). New Jersey, United States: Prentice Hall.
[14]	Damayanti, S.M., & Cintyawati, C. (2015). Developing an integrated model of equity mutual funds performance: Evidence from the Indonesian mutual funds market. GSTF Journal on Business Review, 4(1-2), 124-135.
[15]	Anudu, O., & Okojie, J. (2017).7 funds available for Nigerian Entrepreneurs in 2017.
[16]	Thulo, L. (2015). Your guide to the youth fund.
[17]	Mushaho, K.N., Mbabazize, M., & Shukla, J. (2015). The effect of capital budgeting investment decision on organizational performance in Rwanda: A case study of Bahresa Grain Milling Rwanda Ltd. International Journal of Small Business And Entrepreneurship Research, 3(5), 100-132.
[18]	Ahaibwe, G., & Kasirye, I. (2015). Creating youth employment through entrepreneurship financing: The Uganda Youth Venture Capital Fund. Kampala, Uganda: Economic Policy Research Centre.
[19]	Kagunda, T. (2011). Asset allocation by fund managers and the financial performance of unit trusts in Kenya (Master’s project). University of Nairobi, Nairobi, Kenya.
[20]	Amayo, W. (2018). Portfolio optimization and its effect on performance of commercial banks in Kenya (Master’s project). United States International University- Africa, Nairobi, Kenya.
[21]	Wamoto, J., Ayuma, C., & Chege, K. (2016). Entrepreneurial factors influencing the performance of government funded youth group enterprises in Turbo Sub-County Uasin Gishu County-Kenya. International Journal of Advanced Engineering Research and Science, 3(9), 224-235.
[22]	Mungai, E. N. (2013). Socio-cultural factors and entreprenuerial intentions of undergraduate students in Public Universities in Kenya (Masters project). University of Nairobi, Nairobi, Kenya.
[23]	Nielsen, E.K., & Jorgensen, P.L. (2008). Efficient portfolio selection in mean-variance-skewness space.
[24]	Omisore, I., Yusuf, M. & Nwufo, C.I. (2012). The modern portfolio theory as an investment decision tool. Journal of Accounting and Taxation, 4(2), 19-28.
[25]	Santacruz, J. (2011). Strategic asset allocation and portfolio performance. Journal of Management Research, 1(2), 1-10.
[26]	Brinson, P., Hood, L., & Beebower, L. (2016). Determinants of portfolio performance. Financial Analysts Journal, 42(1), 39–44.
[27]	Ariemba, J., Evusa, Z., & Muli, A.M. (2016). Effect of investment decision on financial performance of savings and credit cooperatives: The case of Kitui Central Sub-County, Kenya. Journal of Economics and Sustainable Development, 7(16), 56-64.
[28]	Mugenda, O M., & Mugenda, A. G. (2008). Research methods: Quantitative and qualitative approaches. Nairobi, Kenya: Acts Press.
[29]	Kumar, R. (2011). Research methodology: A step-by-step guide for beginners (3rd ed.). London, United Kingdom: SAGE Publications Ltd.
[30]	Yamane, T. (1967). Statistics, an introductory analysis (2nd ed.). New York: Harper and Row.
[31]	Kumar, R. (2014). Research methodology: A step-by-step guide for beginners (4th Ed.). Thousand Oaks, Carlifonia: SAGE Publications Inc.
[32]	Kothari, C.R. (2004). Research methodology: Methods and techniques (2nded.). New Delhi, India: New Age International Publishers Limited.
[33]	Ihantola, E., & Kihn, L. (2011). Threats to validity and reliability in mixed methods accounting research. Qualitative Research in Accounting & Management, 8(1), 39-58.
[34]	Khan, J.A. (2014). Research methodology. New Delhi, India: APH Publishing Corporation.