EFFECTS OF GOVERNMENT CAPITATION AND TUITION FEES ON LIQUIDITY OF PUBLIC UNIVERSITIES IN KENYA
EFFECTS OF GOVERNMENT CAPITATION AND TUITION FEES ON LIQUIDITY OF PUBLIC UNIVERSITIES IN KENYA
Hillary Ngugi Mbugua - Department of Accounting and Finance, Kenyatta University, Kenya
Dr. James M. Gatauwa (PhD) - Department of Accounting and Finance, Kenyatta University, Kenya
Dr. Fredrick Waweru Warui (PhD) - Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
The financial challenges faced by public universities are a worldwide problem. Recent studies have shown how public universities cannot meet their liabilities when due. This has led to many universities almost facing insolvency due to many liabilities and fewer assets to cover them. The study on the liquidity of public universities has to be key to knowing how well our universities are equipped to perform better. How universities finance their operations is a key concern to stakeholders’ eager to solve the financial difficulties public universities face. The study had a general objective: to assess the effects of government capitation and tuition fees on the liquidity of public universities in Kenya. The study was advised by Agency theory and Keynesian economics theory. The study used a Causal research design. The study's population was comprised of 31 Chartered public universities in Kenya, and it covered a period of five years, from 2016 to 2020. A census of all public universities was undertaken due to the small population size. The data was analysed using descriptive analysis, including calculating means and standard deviation and inferential analysis using a panel data regression model. The study used secondary data, which was quantitative and collected from the Office of the Auditor-General. The study obtained permits for research from NACOSTI and ensured that all data collected was only used for the study. The study unveils intricate insights into university liquidity in that government capitation and tuition fees have minimal liquidity effects. These findings underscore the financial complexities within universities, highlighting the necessity for strategic financial planning and resource allocation to ensure stability and resilience amidst shifting regulatory and economic landscapes. The study recommends that universities Implement cost-effective financial controls and measures to mitigate potential liquidity. Strengthening monitoring and evaluation systems is advised to ensure effective financial management practices are adopted. Policymakers are urged to review funding allocation policies and establish financial resilience policies for public universities while promoting collaborative funding initiatives amongst universities.
