Authors :
Theophilus Odhiambo Akal; Dr. Robert Kisavi Mule
Volume/Issue :
Volume 7 - 2022, Issue 11 - November
Google Scholar :
https://bit.ly/3IIfn9N
DOI :
https://doi.org/10.5281/zenodo.7435121
Abstract :
Building and construction firms contributes
immensely to a country’s economic development through
job creation, promoting investment and enabling affordable
housing. Thus, stakeholders are often preoccupied with the
industry’s performance and developmental stages and pace.
In Kenya, the building construction industry is currently
characterized by decline in capital investment, implying an
unhealthy industry. The industry has reported a steady
reduction in growth in the last decade, as evidenced by the
drop in value from Kshs.42.5 billion in 2011 to Kshs. 39.6
billion in 2020.As an illustration, the industry had a decline
in return on investment (ROI), from 13.68% in 2011 to
4.79% in 2020. The decline in growth and ROI warrants a
scholarly investigation. The study aims at establishing the
effect of inflation rates on financial performance of building
construction industry, Kenya. The researcher used
correlational research design to investigate the relationship,
direction and strength of variables. The study used
quarterly data which were secondary sourced from
industry records and publications for2011-2020, resulting
in 40 data points. The findings were that a correlation
existed among inflation rate and financial performance of
and construction industry in Kenya. A unit increase in
inflation rate resulted in a 0.424% increase in the financial
performance of the construction industry. The positive t
value of 4.005 and p ≤ 0.00 led to the conclusion on the
positive directionality of the relationship. Research findings
may be useful to industry’s private stakeholders and
government agencies by enabling them to take the right
policies, strategy and actionable steps or measures to
enhance the relationships that would enhance financial
performance. For instance, the government may work to
increase the value of its currency and manage cost of goods
(inflation).
Keywords :
Inflation Rate, Financial Performance, T – Statistics, F- Statistics.
Building and construction firms contributes
immensely to a country’s economic development through
job creation, promoting investment and enabling affordable
housing. Thus, stakeholders are often preoccupied with the
industry’s performance and developmental stages and pace.
In Kenya, the building construction industry is currently
characterized by decline in capital investment, implying an
unhealthy industry. The industry has reported a steady
reduction in growth in the last decade, as evidenced by the
drop in value from Kshs.42.5 billion in 2011 to Kshs. 39.6
billion in 2020.As an illustration, the industry had a decline
in return on investment (ROI), from 13.68% in 2011 to
4.79% in 2020. The decline in growth and ROI warrants a
scholarly investigation. The study aims at establishing the
effect of inflation rates on financial performance of building
construction industry, Kenya. The researcher used
correlational research design to investigate the relationship,
direction and strength of variables. The study used
quarterly data which were secondary sourced from
industry records and publications for2011-2020, resulting
in 40 data points. The findings were that a correlation
existed among inflation rate and financial performance of
and construction industry in Kenya. A unit increase in
inflation rate resulted in a 0.424% increase in the financial
performance of the construction industry. The positive t
value of 4.005 and p ≤ 0.00 led to the conclusion on the
positive directionality of the relationship. Research findings
may be useful to industry’s private stakeholders and
government agencies by enabling them to take the right
policies, strategy and actionable steps or measures to
enhance the relationships that would enhance financial
performance. For instance, the government may work to
increase the value of its currency and manage cost of goods
(inflation).
Keywords :
Inflation Rate, Financial Performance, T – Statistics, F- Statistics.
