Economic and Innovative Factors Influence on Funding of the Supply-Side of Housing in Nairobi, Kenya

Abstract

Housing impact on an economy is undisputed. Economic factors comprising market forces, cost of inputs, the macro economy and the cost of funding are one set of factors that impacts on the funding of the supply-side of housing.  Financiers’ reactionary actions to encourage uptake of credit is undertaken by use of innovation and technology. This paper sets to establish the relationships between both economic and innovative factors, and funding of the supply-side of housing in Kenya and also the moderating effect of the major stakeholders. Using an explanatory form of approach in research design a survey was conducted using questionnaires to collect data from a random sample of 212 branches in Nairobi of financial institutions drawn from a population of 43 commercial banks, 9 deposit-taking MFIs and three major financiers of housing. Factor analysis, correlation analysis and ordinal logit regression were used to determine the relationships. A negative relationship between economic factors and funding of housing was found, while innovative financing and technological factors were found to have no influence. A positive moderating effect of stakeholders on the relationships between both economic factors, and innovative financing and technological factors on one side, and funding of housing was established. The implication being that economic factors play a bigger role in impacting housing and a stable economy is conducive in encouraging investments in housing, with government acting more as an enabler. Innovative financing and technology act as facilitators only.