THE RELATIONSHIP BETWEEN LEVERAGE RISK AND PERFORMANCE OF SELECTED REAL ESTATE INVESTMENTS IN MERU COUNTY- KENYA
Keywords:Financial, investments, leverage, risk, real estates, performance
Purpose: The purpose of this study was to investigate the Influence of leverage risk on performance of selected real estates in Meru County Kenya.
Methodology: This study employed a descriptive research design. The target population comprised of 390 real estate owners and the sample size was 197 respondents. Stratified random sampling and purposive sampling procedures were used to select the sample size from the target population. Data was analyzed by use of SPSS version 23. Descriptive statistics and inferential statistics such as Regression, and Analysis of variance (ANOVA) were used to present the results in tables and figures.
Results: This study revealed statistically significant relationships between leverage risk and performance of real estate investments. This study established that Leverage risk had a statistically significant influence on real estate investment performance (r=.686, p<0.01), (f=12.29, p<0.01). However, Real estate investments was not affected by market risk since it had the least influence on its performance.
Unique contribution to theory, policy and practice: The study added value to Investors on necessity to evaluate leverage risk, as well as maintain a well-balanced capital structure when making real estate investment decisions. There is dire need for central bank of Kenya to amend lending rates specifically on mortgages. The study informed policy decision to the ministry of finance & central bank of Kenya on implementing fiscal and monetary policies that create an enabling environment. A further study on determinants of leverage in real estate investments need to be done.
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