Budgetary controls on financial performance on parastatal in Kenya

Abstract

Effective budgetary control measures are crucial for enhancing the performance of parastatals by promoting financial disciplines, ensuring efficient resource utilization, and supporting strategic decisions. The aim of the study was to determine the effect of budgetary controls on financial performance of parastatals in Kenya. The study was guided by three specific objectives i.e., to establish the effect of budget planning on financial performance of parastatals in Kenya; to determine the effect of budget monitoring and evaluation on financial performance of parastatals in Kenya; and to establish the effect of budget review on financial performance of parastatals in Kenya. This researcher focused on all parastatals in Kenya. The study was guided by three theories that informed the study variables; Theory of Financial Control, Stewardship Theory and Theory of Budgeting. The researcher adopted descriptive research design which was effective for in-depth investigation. The study target population was 2,000 employees based at the headquarter of the National Hospital Insurance Fund. The researcher was administered Yamane formula to arrive at a sample size of 333. The researcher administered stratified sampling technique. Data collection was primary and the researcher administered research questionnaires. Data was analyzed using SPSS version 25. Data was presented using chart, graphs and tables. The study findings showed that a total of 215 questionnaires were filled and returned for analysis out of 233. The findings showed that 60% of the respondents were male while 40% of the respondents were female. The study also found that R2=0.469 shows that there is a positive relationship between budget planning on financial performance; with an R2= 0.351 shows that there is a positive relationship between budget monitoring and evaluation on financial performance; and finally, R2= 0.415 shows that there is a positive relationship between budget review and financial performance. The study was recommended to both to policy and policy maker with aim of enhancing budgetary control measures which has long term benefit on the performance of parastatals in Kenya.