Journal of Business & Economic Policy

ISSN 2375-0766 (Print), 2375-0774 (Online) DOI: 10.30845/jbep

How Socially Responsible Investment affect Performance of Mutual Funds in Kenya
Dr. Cyrus Iraya

This study aimed at establishing the effect of Socially Responsible Investments (SRI) on performance of mutual funds in Kenya. A hypothesis was formulated and tested on a population of one hundred and fourteen (114) mutual funds in Kenya that were either licensed by Capital Market Authority or were members of Aspen Network of Development Entrepreneurs. A positivistic research philosophy and correlational descriptive research designs were adopted in the study. Preliminary statistical tests were undertaken. These included Cronbatch alpha; descriptive statistics such as the mean, standard deviation, coefficient of variation, kurtosis and skewness; Sharpe ratio, ethical coefficient and DEA technical efficiency coefficient; and correlation analysis. Hierarchical multiple regression analysis was then used to test the hypothesis. The response rate was 60.5%.The findings are that there is a statistically significant relationship between SRI and performance (Adjusted R2 = 0.694, F= 52.528, p< 0.05). Since the findings of this study indicate that there is a positive relationship between SRI and performance, fund managers can justify including SRI in their portfolio. This study helps corporate managers to understand the impact of their corporate social responsibility on the value of the firm which is important because many companies spend part of the shareholders’ wealth on social responsibility with the hope of creating social value and attracting socially responsible investors to the firm.

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