Factors Influencing the Use of Lease Financing in Public Institutions in Kenya: A Case of the National Treasury of Kenya

As governments institutions continue the search for ways of improving efficiency and achieving cost reduction, more are considering equipment leasing as an alternative to buying everything from equipment, autos to fire trucks and airplanes. However, various studies offer mixed results in relation to federal and private companies leasing. This study therefore sought to establish the various factors that influence the government to adopt lease financing and whether it reduces cost or not. The study also sought to determine the influence of availability of financial resources, cost reduction, agency cost and cost of borrowing on the use of lease financing in public institutions in Kenya. This research study used a case study design and a descriptive research design. The target population of this study was 293 staff working in the National Treasury of Kenya. The study made use of stratified random sampling to select 30 % of the target population from the target population. The sample size of this study was therefore 88 respondents. This study used primary and secondary data. Structured questionnaires were used in this study to collect primary data. The questionnaire was administered by use of a drop off and pick up later method. Qualitative data was obtained from the open-ended questions. Content analysis was used in processing qualitative data and results were presented in prose form. On the other hand, the quantitative data in this research was analyzed by descriptive statistics and inferential statistics using Statistical Package for Social Sciences (SPSS version 21). Descriptive statistics included mean, standard deviation, frequencies and percentages. Data was then presented in tables, charts and graphs. The study also used correlation analysis to establish the relationship between the dependent variable and independent variables. The study established that availability of financial resources and agency cost had an inverse influence on the use of lease financing in public institutions. On the other hand, cost reduction and cost of borrowing had a positive influence on the use of lease financing in public institutions. The study therefore recommends that public institutions should adopt lease financing in obtaining properties and equipment like offices, machines and vehicles. In addition, the government should come up with policies that will guide how and when public institutions should lease to reduce costs of running public institutions and consequently reduce government expenditure.