The effect of public infrastructure bond financing on government expenditure in Kenya
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Date
2015-08Author
Gikabia, Reuben
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Bonds are meant to promote economic growth through infrastructure development. Good
infrastructure helps in providing economic services efficiently, promoting economic
competitiveness and supports high productivity. Government expenditure is a term used
to describe money that a government spends. Expenditure occurs on every level of
government, from local city councils to federal organizations. There are several different
types of government expenditure, including the purchase and provision of goods and
services, investments, and money transfers. For some time, government funding was the
main source of financing for large infrastructure projects. However, the sole reliance on
government is not an appropriate or affordable way to fund such projects. Raising funds
from the capital or money market has become an alternative source, and bonds are one of
the most popular debt finance instruments used. The objective of the study was to
examine the effects of infrastructure bond financing on government’s expenditure in
Kenya. The study employed descriptive research design. This was in form of a cross
sectional survey design. The researcher collected secondary data for the period 2007 to
2014 from the Central Bank of Kenya, Kenya Revenue Authority and the Kenya National
Bureau of Statistics websites. Collected data was then entered into Statistical Package for
Social Sciences (SPSS) software whereby multiple linear regression and correlations
were run. The research findings showed that there is a relationship between amounts
raised via infrastructure bonds and government spending. The nature of the relationship
was a positive one in that increments in amounts collected via bond issued led to higher
government spending in the study period. The study also showed that there is a positive
relationship between total revenue collected and the amount of government expenditure.
The study also established that increments in inflation rates led to additional spending by
the government. This can be attributed to the high cost of commodities during times of
inflation. The study concluded that there is a strong relationship between infrastructure
bond and spending by the governments. Additionally, there was a strong relationship
between total revenue collected and government current expenditure. The study also
established that the amounts attained via government bonds and government expenditure
had increased over the study period. the study recommends that national government
should charily review the overall national spending and consequently allocate resources
to the various economic sectors that are better placed to encourage growth. The study
recommends that the national government ought to make investments in public bonds
more attractive to the population. The study suggested that further studies can be done on
the various factors that influence different expenditures by the various sectors and
possibly their effects to the economy and livelihood of the citizens at large
Publisher
University of Nairobi