Justin Ombui, Damaris Monari, Cromwel Kibiti, Muhoro Mwangi, Charles Kamau

ABSTRACT

Kenyan public universities are currently facing significant challenges, including budget cuts and reduced enrollment, primarily due to the increased number of universities. These challenges have intensified the pressure on these institutions. In order to meet their capital needs, it is essential for public universities to establish robust financial management systems. This study aims to comprehensively assess the relationship between working capital management and the financial performance of public universities in the coastal region of Kenya. Drawing upon established financial theories, this research seeks to provide insights into how different components of working capital impact the financial health of universities. The theoretical foundation of this research is based on well-known financial theories such as the Cash Conversion Cycle theory, Liquidity Preference Theory, Operating Cycle Theory, and Transaction cost economics theory. These theories will shed light on the dynamics that affect the financial sustainability of higher education institutions in the coastal region. Additionally, the study will explore the potential moderating influence of university-specific factors to gain a nuanced understanding of the unique context of the coastal region. To achieve these objectives, a mixed-method research design will be used, incorporating both quantitative and qualitative data analysis. Primary data will be collected through direct engagement with finance officers and other key managers in the target universities. Secondary data, spanning a five-year period (2016-2021), will also be acquired from the financial reports of the institutions. Descriptive analysis will be applied to both primary and secondary data to provide an overview of the key variables. Inferential analysis, including techniques such as Pearson correlation analysis and panel data regression, will be conducted exclusively on the secondary data to uncover potential relationships between working capital management and financial performance. The results of this study are expected to significantly contribute to the existing knowledge on how working capital management practices affect the financial performance of public universities in the coastal region of Kenya. By shedding light on the complex financial dynamics within these institutions, this research has the potential to spark academic and public discussions on effective financial management strategies. Ultimately, the findings could inform policy decisions and strategic planning within the higher education sector, promoting sustainable financial health for universities operating in similar contexts.

Key words: Financial Performance;Working capital Management; Public Universities