COMMERCIAL AND CLIMATE FINANCING FINANCIAL MODELS, REGULATORY ENVIRONMENT AND FINANCIAL PERFORMANCE OF WATER AND SEWERAGE COMPANIES IN KENYA
Abstract
Water and sewerage companies in Kenya play a vital role in delivering clean water and sanitation services, essential for public health and economic development. However, these companies face significant financial challenges, impacting their ability to deliver quality services. The study focused on the effect of commercial and climate financing financial models, regulatory environment and financial performance of water and sewerage companies in Kenya. The theoretical framework underpinning the study included the externalities and pecking order theory. The study employed a positivistic research paradigm with a correlational research design. Data was collected using audited financial statements. Data was analyzed quantitatively through regression analysis. Key findings revealed that commercial loans significantly enhanced financial performance, but only when regulatory environment was considered. Climate financing was also linked to better financial performance, specifically in return on equity (ROE) and return on assets (ROA). The study highlighted the importance of regulatory framework, showing a strong, positive, and statistically significant relationship between regulation and financial performance. However, the interaction between climate finance and regulatory environment did not have a significant impact on organizational performance. The study concluded that regulatory frameworks play a crucial role in optimizing the effects of commercial financing. It recommended that policymakers enhance regulatory frameworks to maintain market stability and improve the financial performance of water sector entities. Regulations should balance oversight with flexibility to prevent excessive bureaucracy. Furthermore, the study advised aligning climate finance initiatives with financial objectives.
Keywords; Financial Models, Commercial Financing, Climate Financing, Regulatory Environment, Financial Performance
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