MODERATING EFFECT OF GOVERNMENT REGULATIONS ON THE RELATIONSHIP BETWEEN MORTGAGE CONTRACT TERMS AND PERFORMANCE OF REAL ESTATE FIRMS IN KENYA
Abstract
Purpose of the Study: This study sought to explore the relationship between mortgage contract terms and performance of real estate firms in Kenya with government regulations moderating this relationship.
Problem Statement: Real estate firms in Kenya are major drivers of the economy and have the capacity to contribute more positively than is currently the case. But in order to survive in a turbulent and dynamic business environment, a supportive government regulatory framework is necessary. Therefore, it is hoped that by having favorable government regulations the relationship between mortgage contract terms and performance of real estate firms may be enhanced. The need to link mortgage contract terms with performance of real estate firms is crucial for firms seeking superior performance. However, there has been little documented evidence on the relationship between mortgage contract terms and performance of real estate firms. Thus, the relationship remains blurred. This is the rationale for conducting this study.
Study Methodology: This study employed hierarchical moderated multiple regression (MMR) analyses and structural equation modeling (SEM) to test hypotheses and fit the theoretical models. The study sample comprised of 138 real estate managers drawn from firms registered with Kenya Property Developers Association (KPDA).
Results of the study: The study revealed that government regulations significantly moderated the relationship between mortgage contract terms issues and performance of real estate firms in Kenya.
Conclusion and Policy Recommendation: The study concluded that by embracing government regulations, real estate firms in Kenya are expected to enhance their competitiveness and simultaneously provide affordable housing units whilst still attaining the required return on investment. The study recommended that the Government should come up with favorable regulations that would provide the needed strategic fit for real estate firms by matching their activities and resources with the appropriate regulations that control the environment in which they operate.
Keywords: Adjustable Rate Mortgages (ARMs), Fixed Rate Mortgages (FRM), Government Regulations (GR) and Real Estate Firms.
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