Revenue Diversification on Financial Sustainability of Public Universities in Kenya
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Date
2024-07
Journal Title
Journal ISSN
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Publisher
Journal of Finance and Accounting
Abstract
Public universities play a critical role through academic empowerment of the citizens and
actively participating in knowledge dissemination and research in society. However, despite
being the centers of knowledge creation and development, one of the significant challenges
facing public universities in Kenya is financial sustainability. This is evidenced by growing
debt from financial institutions, unremitted statutory deductions, and shrinking government
grants. Whereas proponents of sound financial management practices including revenue
diversification hold the practices as possible solutions for financial sustainability of every
organization, few studies have been done to ascertain this position in Kenyan public
universities. Therefore, this paper sought to assess the effect of revenue diversification on
financial sustainability of Kenyan public universities. The study used modern portfolio theory
and financial sustainability model to discuss the variables. A descriptive research design was
adopted while targeting 41 public universities for the study. Random sampling approach was
applied to select 22 out of the 41 public universities. Using a secondary data collection
template, secondary panel data was collected from the office of auditor general for the financial
years 2018/2019 to 2022 / 2021.The study found revenue diversification had a negative
significant impact on financial sustainability using gearing ratio and a positive significant effect
on financial sustainability using sustainability ratio in Kenyan public universities. The study
recommends that public universities should explore innovative alternative sources of revenue
and close revenue-generating units whose marginal costs are higher than marginal revenues.
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Citation
Kimathi, B. K., & Irungu, A.M. (2024).Revenue Diversification on Financial Sustainability of Public Universities inKenya. Journal of Financeand Accounting,4(3), 31-41.