Determinants of Cost of Capital: Kenyan context
DOI:
https://doi.org/10.59413/Keywords:
Capital Arrangement, Cost of Capital, Profitability, Liquidity, LeverageAbstract
The purpose of this paper was to look at the determinants of the cost of capital for a firm. The study conducted a literature review with the goal of identifying the factors that influence the cost of capital for a firm. The research showed that profitability, liquidity, tax, growth, size, and age of the company are among the major determinants that influence the cost of capital for a firm. Further the research showed a positive correlation between the cost of capital and profitability, liquidity, growth, size, and age of the company. The capital arrangement of a firm is determined on account of the pecking order theory and trade-off theory while bearing in mind the cost elements associated with it. In Kenya, economic stability and political stability are the primary determinants that determine the cost of capital for a firm. This determining factor influences the availability and cost of credit offered by financial institutions in Kenya.
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Copyright (c) 2023 George Onyiego Kengere, Manasseh Njagi, Patricia Luvuno Chonga, Charles Guandaru Kamau (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
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