The Effect of Mobile Transactions on the Financial Performance of Mutual Funds in Kenya

Abstract

Mobile telephony is among the momentous technological inventions in the world and has tremendously changed the way business is transacted in Kenya. Mutual funds, just as other financial institutions, have unearthed lucrative mobile transactions that seek to lure both local and foreign investors. However, little has been empirically proven on how the mobile transactions have affected the funds’ performance. Thus, the objective of the study was to determine the effects of mobile transactions on financial performance of mutual funds in Kenya. The study adopted a descriptive research design which assumed a correlation study approach. The target population was the 62 funds operators regulated by the Capital Market Authority as at December 2013. However, the study selected five mutual funds managers using convenient sampling who managed a total of fifteen mutual funds. Secondary data was collected on average amount of mutual fund, number of mobile transaction, amount of funds invested and Treasury bill rate from the funds’ annual reports and CBK offices for the periods 2009 to 2013. Descriptive analysis was adopted whereby statistics such as mean, standard deviations, minimum and maximum values, kurtosis and skewness assessed. Inferential analysis using multiple linear regression models was used to determine the relationship between mobile transactions and mutual funds’ performance. The results show the mutual funds experience returns as high as 2.21 with a standard deviation of 1.26. The average number of mobile transactions was 371.2 with a maximum of maximum of 3,402. The study concluded that mobile transactions play a significant role in determining the financial performance of mutual funds. Besides, large funds tended to perform better owing to economies of scale. The study recommended that CMA to lobby for increased mutual fund amounts through mobile transactions and fund managers to ensure good returns by investing in diversified portfolios as different types of funds performed differently