An Assessment of Financial Risk on Growth of Private Middle Level Colleges in Kenya: A Case Study of Nakuru Town

Private middle level colleges play a significant a role in providing education in Kenya. The changing business environment in Nakuru Town has brought challenges in this sector and this has resulted in the emergence of new middle level colleges and closure of other private middle level colleges (PLMCs). PMLCs have therefore been left vulnerable to closure and even in some cases liquidation and eventually closure. The purpose of the study was to assess the effect of financial risks on the growth of private middle level colleges in Nakuru Town. The study specifically objected to assess the effect of liquidity risk on growth of PMLCs. As such the study was guided by two variables: liquidity risk and growth of PMLCs. The study thus adopted descriptive survey research design. The target population was limited to 45 accountants of the 45 PMLCs in Nakuru town. The study employed census survey of the target population and as such the sample was similar to the target population. A structured questionnaire was used to collect primary data which was exclusively relied on. The researcher undertook a pilot study prior to the main study in order to assess both the reliability and validity of the research instrument. Reliability was tested using the Cronbach alpha coefficient whilst validity was determined by seeking expert judgment of the University’s supervisors. SPSS tool was used in electronic data processing and analysis. Data was analyzed using descriptive statistics and inferential statistics. The findings were presented in form of summary statistics. It was established that there exists a significant relationship between liquidity risk and growth of PMLCs. It was thus concluded that liquidity risk significantly affects PMLCs’ growth. The study recommended that PMLCs should minimize the liquidity risk by ensuring prompt fees payment and offsetting current liabilities.