FACTORS AFFECTING ADOPTION OF STUDENT MANAGED

INVESTMENT FUNDS AMONG BUSINESS SCHOOL IN KENYA

071523 OGOLLA STEPHEN OUMA

RESEARCH THESIS SUBMITTED TO MOI UNIVERSITY BUSINESS

SCHOOL IN PARTIAL FULFILLMENT FOR THE AWARD OF A MASTER
OF COMMERCE DEGREE OF MOI UNIVERSITY

APRIL, 2024

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 DECLARATION
I declare that this is my own original work and to the best of my knowledge it has not
been submitted for a degree award in any other university or institution of higher
learning.

Signature…………..…………………………
Date…………………………..
Ogolla Stephen Ouma

This research project has been submitted for moderation with my approval to a
University Supervisor
Signature…………..…………………………
Date…………………………..

Dr Alfred Kitawi
Moi University Business School.

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Contents
DEDICATION ............................................................................................................... v
ACKNOWLEDGEMENTS .......................................................................................... vi
ABSTRACT ................................................................................................................... 6
LIST OF ABBREVIATIONS AND ACRONYMS ...................................................... 2
LIST OF TABLES ......................................................................................................... 3
LIST OF FIGURES ....................................................................................................... 4
CHAPTER ONE ............................................................................................................ 5
INTRODUCTION ......................................................................................................... 5
1.1 Background to the study.................................................................................. 5
1.1.1 Starting a SMIF ............................................................................................. 11
1.1.2 Rationale for business schools in Kenya ....................................................... 14
1.2 Problem Statement ........................................................................................ 15
1.3 Research Objectives ...................................................................................... 17
1.4 Research Questions ....................................................................................... 17
1.5 Scope of the study ......................................................................................... 18
1.6 Justification of the Study ............................................................................... 18
1.6.1 Business Schools and other Academic Institutions of Higher Learning ....... 19
CHAPTER TWO ......................................................................................................... 20
LITERATURE REVIEW ............................................................................................ 20
2.1 Introduction ................................................................................................... 20
2.2 Theoretical Framework ................................................................................. 21
2.2.1 Experiential Learning Theory ................................................................ 21
2.2.2 Financial Literacy Theory ...................................................................... 23
2.2.3 John Dewey’s Influence Theory ............................................................ 24
2.3 Empirical Review .......................................................................................... 25
2.4 Research Gap................................................................................................. 29
2.5 Conceptual Framework ................................................................................. 30
2.6 Operationalization of variables ......................................................................... 30
CHAPTER THREE ..................................................................................................... 33
RESEARCH METHODOLOGY................................................................................. 33
3.1 Introduction ................................................................................................... 33
3.2 Research Philosophy ..................................................................................... 33
3.3 Research Design ............................................................................................ 34
3.4 Population...................................................................................................... 34
3.5 Sample ........................................................................................................... 35
3.5.1 Sampling Frame ..................................................................................... 35
3.5.2 Sampling Technique .............................................................................. 36
3.5.3 Sample Size ............................................................................................ 36
3.6 Data Collection .............................................................................................. 37
3.7 Reliability and validity .................................................................................. 38
3.8 Data Processing and Analysis ....................................................................... 38
3.8.1 Serial Correlation Test ........................................................................... 40
3.8.2 Normality Test ....................................................................................... 40
3.9 Research Validity and reliability ...................................................................... 41

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 3.10 Ethical Considerations................................................................................... 41
CHAPTER FOUR ........................................................................................................ 42
DATA ANALYSIS AND PRESENTATION OF FINDINGS ................................... 42
4.1 Introduction ................................................................................................... 42
4.2 Response rate................................................................................................. 42
4.3 Demographic characteristics of the participants ........................................... 43
4.4 The influence of a supportive framework on the adoption of SMIFs ........... 44
4.5 The influence of capital on the adoption of SMIFs ....................................... 45
4.6 The influence of investment clubs on the adoption of SMIFs ...................... 47
4.7 Model Diagnostics......................................................................................... 50
4.7.1 Reliability Statistics ............................................................................... 51
4.7.2 Regression Analysis ............................................................................... 52
4.7.3 Model Goodness of Fit........................................................................... 52
4.8 Chapter Summary.......................................................................................... 53
CHAPTER FIVE ......................................................................................................... 55
DISCUSSION, CONCLUSION AND RECOMMENDATION ................................. 55
5.1 Introduction ................................................................................................... 55
5.2 Summary ....................................................................................................... 55
5.3 Discussion ..................................................................................................... 56
5.3.1 Influence of initial capital on the adoption of SMIFs ................................... 56
5.3.2 The Influence of a supportive framework on the adoption of SMIFs ........... 58
5.3.3 The Influence of Investment Clubs on the adoption of SMIFs ..................... 59
5.4 Conclusion..................................................................................................... 60
5.5 Recommendations ......................................................................................... 62
5.6 Limitations of the study................................................................................. 63
5.7 Suggestions for further study ........................................................................ 63
References .................................................................................................................... 64
APPENDICES ............................................................................................................. 70

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 DEDICATION
With utmost love, appreciation and reverence, I dedicate this research project to my
parents Alex and Rose Ogolla and my siblings.

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 ACKNOWLEDGEMENTS
I would like to express my sincerest appreciation and gratitude to the following
people who played a role in my journey to complete this research project:
To God my almighty father for his abundant graces and favour that enabled me to
complete this research project.
My supervisor Dr Alfred Kitawi for his guidance, support and encouragement
throughout my journey to complete this research project. His humble and accurate
direction was very much appreciated.
Lastly my parents for their continued support and prayers. All this could not have
been possible without their support.

ABSTRACT
Industry practitioners have noted that there is a widespread industry skills gap in Kenya.
Business Schools in Kenya seem to rely on internships as the primary means for
students to gain practical skills in their various areas of study. Though widely used,
internships are not effective in imparting sufficient practical skills and experience to
finance students. These limitations can be overcome by introducing student Managed
investment funds (SMIFs). This study evaluated the factors that affect the adoption of
student managed investment funds by Kenyan Business Schools as a tool of experiential
learning for finance students. The study focused on several indicators such the influence
of initial capita on adoption of SMIFs, the Ease of raising initial capital for a SMIF, the
influence of supportive frameworks and the investment activities of the finance clubs.
The study adopted a descriptive research design where a survey of Kenyan Business
Schools was done, and data was collected using stratified random sampling. The study
investigated the factors influencing Kenyan business schools' adoption of student-

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managed investment funds (SMIFs). The survey revealed that some of the participants
needed more accurate information about SMIFs, indicating a need for better awareness
of the organization's existence, operationalization, and range of goods. Factors such as
capital, university features, and the presence of investment clubs had little impact on
adopting SMIFs. Financial resources positively impacted the adoption of SMIFs, but
lack of funding or insufficient capital allocation could hinder its implementation. The
study also found that proper institutional tone and norms make adopting SMIF more
accessible. The presence of investment clubs had little impact on the adoption of
SMIFs, suggesting that the presence of these clubs was slightly affected by the adoption
of SMIFs in the model. The study's findings imply that while investment clubs had a
relatively minor impact on the acceptance and growth of SMIFs, initial funding,
knowledge of SMIFs, and the presence of supportive frameworks all significantly
impacted the adoption and development of SMISFs.

LIST OF ABBREVIATIONS AND ACRONYMS

SMIF: Student Managed Investment Fund
CMA: Capital Markets Authority

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 LIST OF TABLES
Table 3.1: The overall study population…………………………………………….28
Table 3.2: The number of finance students from the six Universities………………28
Table 3.3: Sampling…………………………………………………………………29
Table 4.1: Response Rate……………………………………………………………34
Table 4.2: Demographic characteristics……………………………………………..35
Table 4.3: The ease of obtaining initial capital for an SMIF………………………..37
Table 4.4: The ease of obtaining initial capital for an SMIF………………………..38
Table 4.5: The influence of capital on the adoption of SMIFs……………………...39
Table 4.6: The influence of investments clubs on the adoption of SMIFs………….40
Table 4.7: Descriptive statistics……………………………………………………..40
Table 4.8: Reliability statistics……………………………………………………...41
Table 4.9: Regression analysis…………………..………………………………….42

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 LIST OF FIGURES
Figure 2.1: Conceptual framework……………………………………………24
Figure 4.1: Normality test……………………………………………………..44
Figure 4.2: Serial correlation test……………………………………………...45

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 CHAPTER ONE

INTRODUCTION

1.1 Background to the study

Student-managed investment funds, or SMIFs, have been more popular throughout the
world as an excellent instrument for hands-on financial education in recent years. A
study by Hatherly & Klasa (2018) found that over 200 colleges globally had
implemented SMIF programs, indicating a sharp increase in their use in business
schools. Studies by Lawrence, (2008); Kubik, (2018); Boughton & Jackson, (2019)
reveal that today there are over 400 SMIFs worldwide. SMIFs have been widely
adopted in North America, Europe, and Asia-Pacific as awareness of their educational
benefits has grown. The use of SMIFs is still relatively new in East Africa, especially
Kenya, although it is gaining ground.

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A highly educated and competent labor force is essential for African nations like Kenya
to develop their economy and combat poverty on the continent. According to
Mohammed (2014), industry professionals have observed a significant skills gap in
Kenya. He agrees that practical skills help reach levels of productivity and
competitiveness envisioned in Vision 2030 will be impossible. According to David
(2013), students should get the essential skills for employability through the educational
system, allowing companies to provide job-specific on-the-job training. Hanna &
Lindamood (2010) maintain that adoption of SMIFs in the Kenyan business schools
will offer students practical experience in investment management, equipping them
with valuable skills in financial analysis, portfolio management, and risk assessment.
Research indicates that hands-on learning experiences, such as managing real
investment portfolios, enhance students' understanding of financial markets and
improve their academic performance.

The first student-managed investment fund (SMIF) was established at Gannon

University in 1952, according to Lawrence (1994). With the majority of SMIFs located
at US and Canadian business schools, there are currently over 400 SMIFs around the
globe (Lawrence, 2008; Kubik, 2018; Boughton & Jackson, 2019). The SMIF, of which
there are several varieties, is an experiential approach to finance education that involves
students in real-money decision-making and the assessment of investment portfolios.
Research on the formation of SMIFs in the African area and Kenyan schools is scarce
despite a sizable body of work on the essential components of SMIFs existing in the
US and Canada. In this regard, looking at this topic helps in awareness creation among
other Kenyan business schools that have yet to initiate programs in the creation and
adoption of SMIFs within their curriculum.
Peng, Dukes & Bremer (2009) identified Value line investment surveys and the Wall
street journal as the widely used investment advisory services. However, they have
stated that a few SMIFs use or have access to these services. This fact proves that most
business schools and already established SMIFs need an adequate supportive
framework to facilitate the program's adoption and substantive growth. This lack of
adoption of SMIF programs by Kenyan business schools is thus attributed to the need
for a more supportive framework. On the other hand finding competent instructors for
SMIFs is a crucial supportive activity for the program's growth by the educational

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institutions, as Lin (2022) further argues that it is difficult to locate suitable instructors
for SMIFs. It is abundantly evident that, in the Kenyan educational system, academic
institutions still need to embrace the SMIFs program by providing endowment support
or employing instructors with expertise in that subject to facilitate the program's
acceptance into our institutions.

As indicated, studies by Lawrence (2008) noted that the number of SMIFs and the size
of the funds they managed grew rapidly in the 1990s and 2000s as the sources of
investment funds quickly expanded. Lawrence noted that initial funding sources for the
SMIFs included individual donors, company sponsorships, foundations, and university
endowments. Further, Twenty-eight percent of SMIFs assessed in studies by Lawrence
(2008) had more than one fund, each with a particular goal (growth, value, income,
mixed). 10% prioritized growth, 23% concentrated on value, and most of those with a
single fund prioritized a combination of outcomes. Gullapalli (2006) reports in his study
that some school administrators try to limit the size of their SMFs due in part to the fact
that some donors to the schools might not “be comfortable knowing that a large
percentage of their money is managed by students.” This, in turn, exacerbates the
problem of lack of funding for SMIFs, thus hampering their growth and adoption.

This concern by the university donors creates an acute shortage of initial funding for
SMIFs. This factor might be applicable to the Kenyan situation in regard to the adoption
of SMIFs by Kenyan business schools. The donors' unwillingness might be one of the
reasons it has yet to be possible for Kenyan business schools to adopt SMIFs. The lack
of initial and sufficient funding for the adoption of SMIFs has substantially hampered
the adoption of the program especially in the Kenyan business schools and the schools
in the entire African region, this is evidenced by studies indicating that most SMIFs
have only been started in the USA and Canada. According to Lawrence (1994), raising
the initial capital is one of the hardest things to do when starting a student-managed
investment fund. This sheds light for the Kenyan and African business schools on
available funding sources to offset this program.

According to Lawrence (1994), the most challenging part of starting a student-managed

investment fund is getting the initial funding. He points out that the fund often depends
on either persuading university endowment officials to set aside a certain amount of the

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endowment for student administration or finding a significant donor who is prepared to
stipulate that students administer the fund. Investment clubs at universities and other
higher education institutions influence the growth and utilization of student investment
money. According to Lawrence (1994), there was a greater likelihood of student-
managed investment funds developing at schools with active investing clubs.

As an extracurricular activity, investment clubs can offer a valuable foundation for a

financial curriculum (Grinder, Cooper & Britt 1999). All that is needed to become a
member of an investment club is a desire to learn about investing and a readiness to
invest one's own money. Grinder, Cooper & Britt (1999) argue that when attracting
first- and second-year students at their university, finance departments frequently need
help. First- or second-year students sometimes need to be made aware of the benefits
of earning a degree in finance because most finance courses are provided at the junior
and senior levels.

According to Grinder, Cooper & Britt (1999), investment clubs can help mitigate this
issue by aggressively seeking out new members. Orientation for new students and early
term registration are good times to recruit. The club must have a noticeable presence
on campus to successfully recruit new members. Consistently recruiting new members
requires committed faculty sponsors to assume a leadership position in the recruitment
process. The club's existence will inevitably spark members' interest in finance once
they are informed about it and start participating in club activities (Grinder, Cooper &
Britt 1999). Dues are typically collected by most investing clubs either monthly or
quarterly. The securities for the club's portfolio are then bought with these monies.
Grinder, Cooper & Britt (1999) argue that, to educate the club on investing techniques,
unique visitors, such as local stockbrokers or financial advisors, are sometimes invited
to meetings. In addition to other resources, clubs can benefit from instructional
materials provided by the National Association of Investors Corporation (NAIC).

Studies by Grinder, Cooper & Britt (1999) found that members frequently get
incredibly excited when the club starts to assemble a portfolio and as the portfolio's
value fluctuates in response to club actions and market swings. They are active in the
search for fresh investment opportunities. Students gain a solid foundation of
knowledge from the animated debates about prior investing triumphs and failures that

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frequently arise on their own. Students may learn much about money and have fun in
this beautiful informal environment created by interaction and excitement. A student's
participation in an investing club may influence them to take more business or finance
courses, even if they decide not to major in finance. Furthermore, club participants—
regardless of their significance—will better grasp personal money management
because themes like budgeting and credit utilization are frequently discussed at
meetings (Grinder, Cooper & Britt 1999).

For those who want to study finance, joining an investing club will provide them with
invaluable real-world experience before starting official coursework. Grinder, Cooper
& Britt (1999) maintain that Club members will already be familiar with a variety of
subjects, such as asset allocation, security selection, efficient market theory, exchanges,
stocks and bonds, and financial markets. Students who talk about their experiences in
the investing club during class frequently contribute to noticeably increased levels of
engagement. Grinder, Cooper & Britt (1999) assert that Finance professors can also
engage with students outside of the classroom through investment clubs. Faculty can
participate by sponsoring the club, giving it money to invest, or advising the club on
investments. Such contact may benefit the recruitment and retention of students in the
finance program. Nonetheless, instructors should never forget that these advantages
come second to teaching club members wise investing concepts they may use in their
investing endeavors.

Peer learning is natural and efficient since the students are able to acquire a combination
of program experiences with portfolio investments experiences (Lin, 2022). However,
she adds that the drawbacks should be considered because, over a semester, a club is a
less stable organization than a class. Her research suggests that members of a club
turnover may be far higher than that of a class. Students might put in less work in clubs
than in a for-credit course since they approach them with a different seriousness.
Freeriding could be more evident in clubs where their labor is not evaluated and
awarded credits. This study is thus significant for Kenyan schools as they can have prior
information on the advantages and shortfalls of the adoption of clubs and develop
strategies that will make clubs more effective in adopting and growing SMIFs for
experiential learning.

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While popular, internships need to be revised to provide finance students with real-
world experience and practical skills. Implementing student-managed investment funds
(SMIFs) can help overcome these restrictions. Studies by Rees & Shah (2006) found
that participation in SMIFs can significantly boost students' employability in the
finance industry. Employers increasingly value candidates with practical experience in
investment management, and involvement in SMIFs provides students with a
competitive edge in the job market. Oliver (2010) points out that a student can never
truly become a fully competent employee because there is little information to process
during a brief internship. In this regard, it is highly recommended by the Kenyan
business schools to initiate SMIFs programs.

Kenyan institutions' use of student management investment funds is imperative as it is

a crucial instrument for augmenting experiential learning among students. Student-
managed investment funds, as some academics have noted, are essential for the skill
development of finance students because they help students become financially literate,
prepare for careers, and stay current with market performance and global economic
trends. According to Rees & Shah (2006), participating in SMIFs can significantly
increase students' employability in the finance sector. Students who participate in
SMIFs have an advantage over other applicants in the job market, as employers are
looking for people with real-world expertise in investment management (Rees & Shah,
2006). However, Stock & Pfeifer (2017) contend that knowledge of financial markets
and investing concepts is crucial in the modern international economy.

Student investment clubs and funds are a very important part of the financial education
process (Grinder, Cooper &Britt, 1999). Investment clubs provide a practical base for
a finance program to be effectively taught in universities. Lawrence (1994) and Grinder,
Cooper, and Britt (1999) reported that investment clubs aid in teaching freshmen the
advantage of pursuing a degree in finance. They also stated that some of the benefits
are as follows: they help students meet with practitioners such as stock brokers,
financial planners, and fund managers, and provide students with an environment where
students increase their knowledge base and better their communication skills.

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1.1.1 Starting a SMIF
After starting a SMIF several supporting items are crucial. This helps in making the
SMIF more successful and effective. (Tichenor, 2014). These supporting factors will
be crucial for Kenyan Business Schools to be able to operate successful SMIFs for
finance students. This is what starting a SMIF will entail.

Alumni development is one of the most important factors that facilitate starting of
SMIFs. For a university operating a SMIF, developing the alumni network should be a
high priority. Alumni often serve as speakers, advisors, and/or consultants in the funds.
University research is another factor that plays a role starting of SMIFs. Strong research
programs often provide the fund with early access to Innovation. In the absence of
strong science research at the university, the fund needs to define a clear strategy for
assuring deal flow.

Porter (1986) identifies University geography a critical factor in the formation of

SMIFs. According to Porter (1986), volume on global competitive advantage has
application to starting a SMIF. According to Porter, skills and resources cluster
geographically and interact with demanding consumers to continually refine products.
Universities situated in communities with thriving commercial/industrial cultures will
be better situated to form and run SMIFS. Additionally, formation of partners is very
important for the development of SMIFs. In most cases, the school usually owns the
fund. However, by allowing investors the option of investing directly into the fund as a
limited partner, the investor /donor could more closely tailor his personal financial
planning objectives by deciding whether to donate and take a tax write-off or invest
now and perhaps donate later. This could be especially attractive to donors who still
want to help the school.

The presence of Advisory Board is plays a key role in the formation and development
of SMIFs in the learning institutions. About 58% of universities have an advisory board
associated with their programs. All these boards have outside investment professionals
and alumni serving as a valuable resource in a counseling capacity. This allows students
to interact with professionals and showcases the program to the local community. In
many cases, students make formal presentations to the boards to sharpen their
presentation and analytical skills. (Lawrence, 2008).

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Enabling student participation during the formation of SMIFs is one of the important
factors that influence the successful and development of SMIFs in the universities.
Approximately 71% of the programs in the US (45% of foreign programs) are
structured as part of a formal class. The number of credit hours a student can earn ranges
from 1 to 12. Unlike many other university programs, most SMIFs carefully control the
level of student participation. Although a few schools allowed more than 100 students
to manage the portfolios each year, the average fund in the US had only 29 student
managers per year (23 students for foreign funds). For approximately 90% of SMIFs,
students were responsible for making all investment decisions. In the other 10% of
programs, advisory boards or a faculty member also shared in the decision-making. Of
the classes, 42% of programs allow only undergraduate students, 10% permit only
graduate students and 48% allow both levels of students. (Lawrence, 2008). There is
prior academic work in finance the student should have before entering the fund.
Ideally, the fund should be the last activity in an undergraduate or graduate program.
However, in practice, undergraduates participate throughout their senior year and
MBAs in the second year of their program. They require corporate finance and
investments as normal prerequisites. It clearly would be desirable for the students to
have completed other courses in portfolio theory, options and futures, and so on before
beginning the SMIF program. (French, 1991)

Another factor that greatly affected the adoption of SMIFs is the faculty and
Professional Involvement. Lawrence (2008) notes that faculty are closely involved with
SMIFs at all levels. Because so many of the programs are relatively new, many of the
faculty involved today with SMIFs worked hard to obtain the original funding. The
study found that the average assessment was that the instructional load was 50% higher
than a traditional class, or the equivalent of teaching a 4.5 credit hour course rather than
a 3-hour course. Given the nature of SMIFs, many of the programs have local
investment professionals closely involved. The most direct role for outside
professionals is to serve as an adjunct faculty member and run the actual program. Even
when the program is being taught by a full-time faculty member, it is commonplace to
have professionals serve on advisory boards and be guest speakers. Frequent contact
between the various parties ensures that current practice is quickly incorporated into
the classroom and students leave better prepared to apply their knowledge and skills.

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Trading Rooms was also identified as one of the important factors for the adoption of
SMIFs. A growing contingent of programs are operating trading rooms to add even
more realism to student learning. Many of the universities with SMIFs have invested
up to $1 million to fully furnish and equip trading rooms. This has been done with the
belief that this development has raised the bar in attracting top students and community
financial support. There are other universities with trading rooms that do not have
SMIFs and simply simulate trading activities. (Lawrence, 2008). In many of the
facilities, glass windows or walls are installed so that tours or outside individuals can
observe the proceedings. Many programs utilize sophisticated software packages such
as Baseline, Bloomberg, Reuters/Bridge, and Morningstar. Maintenance and
technology upgrades are also important, as significant funds are necessary to keep the
technology current. Without a continuing endowment for support and upgrades, the
technology can become obsolete rather quickly. (James, 2010)

Another critical factor for the adoption of SMIFs as identified by French (1991)
Management Support. French (1991) ascertained that the business dean and indeed the
university administration must be supportive of the program if it is going to be
introduced. Also, for such a program to prosper, the director and faculty advisors must
be given significant course relief. (James, 2010). Further, Program manual and
guidelines were also identified as important factors for the adoption of SMIFs. Before
any money is invested, organizers should develop a complete program manual. This
document, probably 25 to 50 pages in length, should address the following topics:
educational objectives, organizational structure, operating rules and procedures,
determination of investment objectives and policy, accountability and reporting
requirements, admission requirements and procedures, and limitations. A carefully
written and generally agreed upon document is evidence that faculty members are ready
to begin a high accountability program in an academic environment that is normally
loosely structured. (French, 1991). Furthermore, James (2010) emphasizes the
importance of having the program’s details spelled out in proper legal documentation.
This extends far beyond investment restrictions and staffing matters (including formal
descriptions of both the director's and visiting professors’ roles).

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Availability of Student Investment Clubs in universities and colleges is another factor
that determines the development and use of student investment funds. Lawrence (1994)
noted that schools that had active investment clubs were more likely to eventually
develop student investment funds. Grinder, Cooper and Britt (1999) were of the view
that investment clubs would enable finance students learn to make investment decisions
that were not very complex. They noted that investment clubs did not require the
complex decision-making process involved in running student investment funds. This
is perhaps because investment clubs only risked their funds whereas student investment
funds managed donor funds and at times the institution’s endowment fund. Investment
clubs are thus an important starting point for student investment funds.

According to Pankow (2008) “Student Investment Clubs generally are developed with
a group of people (average size is 12 to15) who share social interests plus a desire to
learn more about investing by investing in the stock market. Such clubs usually attract
students who want to be better off financially in five to ten years plus learn the basics
of investing in the stock market. Investment clubs encourage you to invest regularly
and knowledgeably, and to understand the various risks associated with investing”.

1.1.2 Rationale for business schools in Kenya

The six Kenyan business schools selected for this study are the officially registered by
The Association of African Business Schools (AABS, 2024) and are deemed
appropriate for this research subject. Many schools may need to be made aware of the
potential advantages and possibilities of SMIF programs. The study intends to
investigate if there are a supportive framework that would facilitate the adoption of
SMIFs in the Kenyan business schools. A supporting framework comprising
institutional support, regulatory backing, and resource distribution plays a significant
role in influencing business schools' adoption of SMIFs. Knowing how different
support components affect SMIF adoption enables schools to maximize resources and
pinpoint areas needing development. This variable informs strategic decision-making
and resource allocation by illuminating institutional preparedness and capacity to
undertake SMIF initiatives.

Business schools' adoption of SMIF is significantly influenced by their ability to obtain

early funding. The availability of financing sources, funding channels, and investment

14
possibilities directly impacts schools' capacity to launch and maintain SMIF programs.
Examining how money affects the adoption of SMIF offers valuable insights into the
financial options and challenges that business schools encounter. These insights guide
fundraising, partnership development, and financial management initiatives.

Investment clubs offer venues for student participation, teamwork, and skill
development, making them ideal catalysts for SMIF adoption. By comprehending how
investment clubs affect SMIF adoption, business schools may use preexisting student
networks, encourage peer-to-peer learning, and cultivate an investing awareness and
engagement culture. This variable emphasizes the significance of grassroots activities
in advancing finance education and the role of student-led campaigns in encouraging
SMIF adoption.

Investigating these factors is intriguing because of Kenya's distinctive context, marked

by a fast-changing financial landscape, rising market prospects, and complex socio-
economic dynamics. Kenyan business schools have unique possibilities and problems
that are impacted by cultural views on finance education, market volatility, regulatory
frameworks, and resource accessibility. Identifying and comprehending how these
contextual elements interact in Kenya is crucial to developing specialized tactics to
encourage SMIF adoption.

1.2 Problem Statement

Although over 400 programs are using student-managed investment funds (SMIFs)
around the world, and they are widely used in North America, Europe, and Asia-Pacific,
their use in East Africa, especially Kenya, is still quite limited (Lawrence, 2008; Kubik,
2018; Boughton & Jackson, 2019). SMIFs are becoming increasingly popular as an
essential tool for practical financial education. Though they have grown, SMIFs are still
starting to appear in East Africa, particularly in Kenya, where economic development
and competitiveness are hampered by a significant skills gap (Mohammed, 2014).
According to studies, students' employability and financial literacy are improved by
experiential learning through SMIFs (Hanna & Lindamood, 2010). Employers in
business and educational institutions are among the stakeholders worried about
graduates' lack of practical skills. This gap may be closed by implementing SMIFs at
Kenyan business schools, which would provide students with invaluable experience in

15
investment management and better equip them for the workforce (Rees & Shah, 2006).
However, adopting these programs in Kenya would still be difficult due to a lack of
investment clubs, early financing, supporting structures, and qualified teachers (Lin,
2022).

With more than 400 programs operating, mainly in North America, Europe, and Asia-
Pacific, student-managed investment funds (SMIFs) have grown in popularity around
the globe (Lawrence, 2008; Kubik, 2018; Boughton & Jackson, 2019). Nevertheless,
despite increased knowledge of their educational benefits, their adoption in East Africa,
especially Kenya, still needs to be expanded (Hatherly & Klasa, 2018). Studies reveal
essential gaps in the conceptual, methodological, and contextual elements of SMIFs in
Kenya. In keeping with Vision 2030, Mohammed (2014) and David (2013) stress the
vital need for practical skills to improve productivity and competitiveness in Kenya.
More research is needed on using SMIFs in Kenyan business schools, despite Hanna
and Lindamood's (2010) contention that they help close the skills gap by giving students
practical experience in investment management. Significant obstacles to SMIF
implementation in Kenya include a need for initial finance and an unsupportive
framework. Donor reluctance and low endowment support are significant obstacles that
exacerbate financing problems, according to Lawrence (1994) and Gullapalli (2006).
Furthermore, Lin (2022) highlights the challenge of locating qualified teachers for
SMIF programs. According to Peng, Dukes, and Bremer (2009), many SMIFs need
access to crucial investment advising services, making program expansion even more
difficult. Kenyan educational institutions must devise plans to close these gaps by
obtaining funds, hiring qualified teachers, and offering extensive support structures
enabling SMIF programs to be successfully implemented and sustained in their
curricula.

With a focus on three crucial areas, this study attempts to close the gap in the adoption
of SMIFs by Kenyan Business Schools which is greatly influenced by factors such as
the lack of awareness of Student management Investment Funds by the Kenyan
Business Schools, lack of Initial capital for the adoption and development of SMIFs,
lack of Investment clubs for the adoption and development of student-managed
investment funds (SMIFs) at Kenyan business schools and the lack of supportive
systems for the adoption of student managed investment funds in the Kenyan Business

16
Schools. Its primary goal is to ascertain how a supporting framework impacts SMIF
adoption. Despite the widespread acceptance of SMIFs worldwide, adequate support
systems have hindered their adoption in Kenya (Lin, 2022). Through tools like the Wall
Street Journal and Value Line Investment Survey, Kenyan business schools will
become more aware of the capabilities and information available through SMIFs. Next,
the research assesses how capital affects the adoption of SMIF. According to Lawrence
(2008) and Gullapalli (2006), initial financial issues are a substantial obstacle to
implementing SMIF in the learning institutions. It will be feasible to raise sufficient
awareness among students and educational institutions and recommend some of the
financing sources that are accessible for establishing SMIFs in Kenyan business schools
using the results of this study. Finally, it looks into how investing clubs affect the uptake
of SMIF. Investment clubs are essential for encouraging students' interest in and
knowledge of finance (Grinder et al., 1999). However, they are rare in Kenyan business
schools. This study will highlight the value of joining an investment club, draw
attention to business schools and students, and even identify some of the most essential
talents for investment club administration. The study intends to close these gaps to
improve Kenyan graduates' employability and practical financial education, eventually
boosting the nation's economic growth and competitiveness (Rees & Shah, 2006;
Mohammed, 2014).

1.3 Research Objectives

The general objective of the study is to establish factors affecting the adoption of SMIFs
by Kenyan Business Schools.
The specific objectives of this study are:
i. To determine the influence of a supportive framework on the adoption of
student managed investment funds among business schools in Kenya
ii. To evaluate how capital influences the adoption of student managed investment
funds among business schools in Kenya.
iii. To investigate the influence of investments clubs on the adoption of student
managed investment funds among business schools in Kenya.

1.4 Research Questions

i. What are the influences of supportive framework on adoption of student
managed investment funds?

17
 ii. How does capital influence the adoption of student managed investment funds?
iii. What is the influence of investment clubs on the adoption of student managed
investment funds?

1.5 Scope of the study

The main aim to be achieved in this study is to assess the factors affecting the adoption
of SMIFs by Kenyan Business Schools. This study is based on an analysis of Kenyan
Business Schools. These are the universities that offer Finance and Finance related
courses. According to the available studies on the adoption of SMIF by the Kenyan
business schools, it is evident that the Kenyan schools have done very little in regard to
initiating the adoption of SMIFs in the Kenyan education system. This thus calls for a
more studies to be conducted in this topic to create awareness and enhance the adoption
of SMIFs by the Kenya business schools. The variables that were studied and evaluated
are effects of supportive framework, ease of obtaining initial capital, and the investment
activities of the finance clubs. The study was conducted from November 2023 to May
2024.

1.6 Justification of the Study

This study assesses factors affecting the adoption of SMIFs by Kenyan Business
Schools. By studying factors affecting SMIF adoption, Kenyan business schools can
stay attuned to industry trends and best practices in finance education. Ultimately, this
study benefits businesses and students by ensuring that educational offers stay current
and adaptable to the changing demands of the banking sector. Furthermore, SMIFs
prepare students for professions in finance and related industries by providing them
with hands-on experience in investment management. It is possible to ensure that
business schools provide their students with the necessary training to thrive in the
financial industry by looking at the elements that affect the adoption of SMIF. Lastly,
by providing SMIF programs, business schools can recruit staff and students more
successfully. By investigating the elements that promote SMIF uptake, educational
institutions may use these programs as a differentiator and set themselves apart from
other instruction suppliers. Hence this study will be largely beneficial to the following
Stakeholders and Parties:

18
1.6.1 Business Schools and other Academic Institutions of Higher Learning
This study shall establish the factors affecting the adoption of SMIFs by Kenyan
Business Schools. The findings of this study shall thus be useful to these institutions in
many ways. The study shall create awareness about SMIFs and their impact as a tool
of experiential learning which will improve their curricula to be more effective and
experiential for finance students if they implement this concept. This will in turn
improve the quality of education offered by such Institutions. In addition, the results
of this study will enable these institutions to improve the quality of graduates that they
produce by imparting practical skills and experience to their students.

1.6.2 Students studying Finance

Students studying finance courses shall also benefit from the findings of this study.
They shall be able to understand the weaknesses of internships and how SMIFs can be
used not only as an alternative but also as a solution to those problems. Furthermore,
Finance students will be able to understand the role of SMIFs in imparting practical
skills in finance. This will enlighten finance students on ways of improving the quality
of education offered to them to improve their readiness for the employment industry.
Finally, finance students will be provoked to lobby for Student managed Investment
Funds in their various institutions of higher learning.

1.6.3 Employers

This study has established internships fail at imparting practical skills to students and
how SMIFs can be used as a substitute and/or complement for a better means of
experiential learning to produce a higher caliber of finance graduates. This study will
enable employers to discover that SMIFs are a better alternative to internships for
finance students because SMIFs offer better practical skills and experiential learning.
In a bid to obtain highly skilled finance graduates, employers will pressurize institutions
of higher learning to set up SMIFs and even participate in the process by donating initial
funds to be used in setting up such funds. This may be a good way to offer support.

1.6.4 Researchers

A study assessing the factors affecting the adoption of SMIFs by Kenyan Business
School for finance students may attract the interest of researchers who are keen on
improving the practical skills of students studying finance. In addition, the information

19
from this study shall form a basis for literature for other researchers seeking to carry
out studies about SMIFs in Kenya and Africa in the future.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction
This chapter majorly discusses the theoretical and empirical literature on Student
Managed Investment Funds (SMIFs), learning, and related areas such as internships.
The study majorly considered experiential learning theory. The four models of
experiential learning are also discussed. The Four models are discussed to clearly
explain what action-based learning entails and how it has evolved over time. The
theoretical framework is a justification for the importance of experiential learning and
the Empirical literature supports the benefits of using SMIFs as a tool of experiential

20
learning. The chapter also includes a conceptual framework to illustrate the link
between the variables.

2.2 Theoretical Framework

This study draws heavily from the theory of experiential learning. This theory is very
relevant to this study as it explains the benefits of learning by doing and it also vivifies
what action-based learning entails. To further illustrate what experiential learning
entails, the four models of experiential learning are also discussed.

2.2.1 Experiential Learning Theory

Experienced knowledge is "knowledge gained through direct encounter with a subject,
person, or thing," according to Burnard (1989). The action lies at the heart of
experiential learning. Learning by doing entails a first-hand experience with the
phenomena being studied instead of only thinking about abstract ideas. It uses first-
hand knowledge of the phenomena to support a hypothesis or idea. According to several
writers, learning cannot occur in a vacuum; concepts must be integrated with learners'
experiences (Boud et al., 1993; Gass, 1992; Keeton & Tate, 1978). A better strategy for
promoting first-hand knowledge and experience among students at Kenyan business
schools is for such institutions to implement student-managed investment funds. It
would be simple to accomplish this adoption if there were a framework to assist,
sufficient starting capital, investment clubs available, and students and Kenyan business
schools were made well aware of the existence of SMIFs. These factors have the most
significant influence on whether or not SMIFs are used to support experiential learning.
In Kenya, many students and institutions still need to include the SMIFs program in
their curricula to support experiential learning and hands-on training to improve
students' practical abilities.

John Dewey was the most well-known proponent of this idea (1938). He underlines the
necessity of a connection between education and experience. Dewey emphasizes the
need for both having—the ability to interact with life's events—and knowing—the
capacity to analyze those happenings. A planned event with meaning the learners
themselves reinforce is what makes a learning experience more than merely a chance
encounter. Despite the knowledge on the importance of merging knowledge with
experience, many business schools in Kenya, east Africa and even the African continent

21
have shown laxity in adopting the SMIF program in their education systems to facilitate
the art of practice-based learning among their students.

According to Kolb (1984), there ought to be a connection between the work students
do in the classroom and the future tasks for which they are expected to be prepared. It
is necessary to "translate abstract ideas of academia into the concrete, practical realities
of these people's lives."" Students must put what they have learned in class to the test
in practical settings. Kolb thinks recent college grads are not ready for the workforce.
In order to provide a connection to reality and better prepare graduates for life
situations, he reiterates the necessity for facilitators to include real-world experiences
in the classroom.

The two main components of experiential learning, often known as learning by doing,
are action and reflection. Field-based experiences, prior learning assessments, and
experiential classroom-based learning are the three areas of study often covered by
experiential learning (Lewis & Williams, 1994). The first student-managed investment
fund (SMIF) was established in 1952 at Gannon University in the United States,
according to studies by Lawrence (1994). There are more than 400 SMIFs worldwide,
with a significant portion of them headquartered in US and Canadian institutions
(Lawrence, 2008; Kubik, 2018; Boughton & Jackson, 2019).

Due to the small number of universities, including Strathmore and the University of
Nairobi, setting the pace for implementing the SMIF program, it is evident that many
Kenyan schools still need to do so. The paucity of research on implementing more
programs in neighborhood schools further supports this assertion. Several reasons
contribute to the lack of or sluggish adoption of SMIFs, including the inability of
investment clubs to advance the program's development, a lack of initial funding for
SMIF adoption by Kenyan schools, and a lack of awareness of the concept among
Kenyan institutions. This has made it more difficult for Kenyan institutions, particularly
business schools, to adopt the practice of experiential learning because many
institutions have yet to do so.

22
2.2.2 Financial Literacy Theory
In keeping with this approach, Gallery, Newton, and Palm (2011) framed financial
knowledge as an investment in human capital, and several empirical surveys proved
that to become informed, one must know a great deal more. The authors demonstrate
how economic results are shaped by financial literacy. According to dual-process
theories, which support financial literacy theory, the conduct of individuals with high
levels of financial literacy may be influenced by the relative dominance of intuition and
cognition.

Dual-process theories accept that both cognitive and intuitive processes can influence
a choice. While there are numerous variations among dual-process theories, they all
recognize two primary processing processes or systems. According to Stankovich and
West (2000), the first system is quick, unconscious, and dependent on intuition,
whereas the second system is sluggish, aware, and under control. According to
Stankovich and West (2000), the second system is in charge of analytical and logical
thought, which is necessary to carry out a financially literate investment plan
constantly. The financial literacy problem continues to be fascinating in both
established and emerging countries, and the recent fast changes in the financial
environment have generated great interest in this area.

Financial literacy, according to Atkinson and Messy (2005), is the culmination of an

investor's knowledge of financial concepts and products, as well as their capacity and
assurance to recognize opportunities and risks in the financial world, make wise
decisions, know when to seek help and take other practical steps to enhance their
financial well-being. Financial literacy is crucial in empowering and educating
investors by providing them with essential financial information for their business. This
knowledge allows investors to assess goods and make well-informed judgments. It is
often anticipated that increased financial literacy will aid in resolving the current
challenges facing advanced credit markets (Lusardi & Oliver, 2006).

Investors with financial literacy are better equipped to withstand difficult economic
times by employing risk-reduction techniques, including conserving money,
diversifying their holdings, and acquiring insurance. Financial literacy makes it easier
to make decisions about timely bill payment, effective debt management that raises

23
potential borrowers' creditworthiness and supports economic growth, stable financial
institutions, and the decrease of poverty. Additionally, it offers better control over one's
financial destiny, more efficient use of financial services and goods, and less
susceptibility to dishonest schemes or too enthusiastic sellers. Financial authorities
must raise the effectiveness and calibre of financial services in order to compete with
an informed populace (Falicov, 2001).

According to Locke and Mann (2005), investors must practice discipline and stick to
their investment plan. Considering these ideas, financially knowledgeable investors
who follow their gut feeling are more likely to stray from their plans. However, there
is also proof that involuntary decision-making is superior.

2.2.3 John Dewey’s Influence Theory

Dewey used the pragmatic approach in his teaching. In his opinion, pragmatism views
action as a bridge connecting application and cognition. "To attribute a meaning to
concepts, one must be able to apply them to existence" (Dewey, 1925, p. 1). According
to Dewey, reason is an ordered and efficient process; ideas are the product of action,
and ideas aid in improving control over that activity. According to him, learning "is a
process of living and not a preparation for future living" (Dewey, 1897). "The
educational end and the ultimate test of the value of what is learned is its use and
application in carrying on and improving the common life of all" (Dewey, 1934, p. 1).
According to Dewey, learning imparts culture, offers alternative perspectives on the
world, and lets pupils investigate these ideas through first-hand experience (Bruner,
1966).

According to Dewey, experience is the primary source of learning. He supported the

idea that education and life experience have a meaningful connection. (1938 Dewey;
1984 Kolb). According to Keeton and Tate (1978), experiential learning is more than
just thinking about an encounter or speculating about the possibilities of acting upon it;
it entails a first-hand interaction with the phenomena under study. As provided by
Dewey, the theory is in support of the adoption of the SMIFs in the Kenyan business
schools. Since Dawey emphasized the value of combining education and experience,
educational institutions must support programs that allow students to adopt SMIFs. In
these programs, students can apply what they have learned in the classroom and gain

24
analytical and practical experience skills. Based on current information, Kenyan
educational institutions still need to catch up in implementing SMIFs, which hurts
students since they graduate and enter the workforce with little to no financial
understanding.

2.3 Empirical Review

Bhattacharya and McClung (1994) addressed how student investment funds may be an
excellent tool for developing investment skills in the markets, as was the case in India.
On student investment funds, however, it appears that no research has been done in
Africa. Finance books in East Africa do not need to mention student investment funds.
There isn't a student investment fund at any university or other higher education
establishment in Kenya, despite Nairobi's ambitions to become Africa's premier
financial services hub. So, there needs to be more qualified graduates in the financial
services and investment sector (Capital et al., 2012; Otuki, 2014).

Student investment funds have shown to be an effective tool for bridging the gap
between classroom learning and real-world applications at educational institutions
including Harvard Business School, Princeton, Washington, Ohio State, and Fisher
Business School, among others. (1988, Lawrence). There is a growing skills gap
because Kenyan business institutions are behind other universities in using student
investment money to give their graduates practical skills. Thus, universities must match
the information and abilities they impart with those needed by businesses (David,
2013). Although the student-managed funds have several advantages for the university
and the college, Kenya's business colleges and universities have yet to have one. As
outlined by Bhattacharya and McClung (1994), student investment funds would be
excellent tools for developing market investment abilities, as was the case in India.

The intricacy of the decision-making process and the sorts of students active in
investing clubs and student-managed funds distinguish the two significantly, according
to Grinder, Cooper, and Britt (1999), even if both are valuable experiential learning
aids. As members of an investing club risk their pooled assets, they make judgments in
a largely unrestricted setting, unlike student investment funds, according to Grinder,
Cooper, and Britt (1999) and Lawrence (1994). The portfolio sizes of investment clubs
were less than those maintained by student investment funds (Lawrence, 1994). In

25
contrast, clubs had far smaller portfolio values than student investment funds, whose
median fund value was $200,000. He added that student investment funds have
restrictions on their goals, even though investing clubs are free to establish their own.
Donors and institutions that donate money for student investment funds typically have
specific goals in mind when establishing the fund. These goals might be teaching,
giving kids scholarships, etc. Thus, every choice must align with the predetermined
objectives (Lawrence, 1990).

A study on the combination of student investment and student investment clubs was
conducted by Grinder, Cooper, and Britt (1999). It was recommended that students
participate actively throughout their time at university, with juniors and second-years
studying personal finance as a bridge to an investing club and senior members handling
the investment fund.

Student-managed investment funds allow students to get a more in-depth and

sophisticated grasp of the ideas practiced in business and class. In contrast, student
investment clubs are the conceptual basis for finance studies. In 1999, Grinder, Cooper,
and Britt. By participating in SMIFs, students learn various skills on an individual and
group level. Students first acquire the ability to work on their own. With complete
control over the investment portfolio, students develop skills that cannot be taught in
the classroom through research, pitching, voting, recruiting, and maintaining
relationships with the advisory board. According to Grinder (1999), these competencies
include the following: Recognizing the essential activities and carrying them out,
Taking the required actions with concrete consequences, and actively managing a
portfolio. Additionally, students can network with professionals in the sector, which
increases the likelihood of finding work after graduation. For example, former
employees of HSRI are employed by Wall Street businesses like Cambridge Associates
and Prudential Capital.

To give finance students a helpful ability that will help them advance in their jobs even
after graduation, Kenyan business schools need to fill the vacuum left by requiring a
robust enough Supportive System for the SMIFs. In the same vein, Kenyan business
schools must bridge a vacuum caused by the absence of early funding and investment
clubs to encourage using SMIFs. Mohammed (2014) asserts that these deficits have left

26
half-trained university graduates in dire need of more analytical and practical abilities
due to inadequate practice at their institutions. An essential means of giving students a
better platform to progress their knowledge and build practice-based skills is through
investment clubs and beginning cash. This deficit has prevented students from properly
developing their specialty areas and becoming prepared professionals.

According to Lawrence (1994), the most challenging part of starting a student-managed

investment fund is getting the initial funding. He points out that the fund often depends
on either persuading university endowment officials to set aside a certain amount of the
endowment for student administration or finding a significant donor who is prepared to
stipulate that students administer the fund. According to Saunders (2015), lump sum
contributions generated the majority of funds established before 1990. The earliest
reports of using endowment monies from the University for Student Management came
from Tater (1987) and Lawrence (1990). According to a survey on the first funding of
student investment funds, the university endowment provided 24% of the money,
individuals and families provided 34%, and other sources accounted for 42% (Neely &
Cooley, 2003). It might be challenging to secure the first cash, mainly if the donors
think the students need to handle the money better or if they place tight restrictions on
how it is used.

African countries such as Kenya need a highly skilled and educated workforce to grow
their economies and reduce the high poverty rates in the continent. According to
Mohammed (2014), policymakers, experts, and business professionals agree that Kenya
needs more industrial skills. He agrees that without practical skills, reaching the levels
of productivity and competitiveness envisioned in Vision 2030 will be impossible. He
also pays attention to the complaints made by professionals in the industry regarding
university graduates' deficiencies in technical skill mastery related to their training as
well as their inadequacies in mastering critical real-world competencies like project
management, leadership, customer service, decision-making, work attitude, and
presentation, among other things.

David (2013) discovered that university graduates from Kenyan institutions were less
competitive in the labor market due to gaps in their training, which needed to be more
skills demanded by employers. He contends that education should provide young

27
people with the essential skills for employment so that companies may provide job-
specific on-the-job training. According to his research, the curriculum at universities
and other postsecondary institutions should be reviewed to include career skills in
topics and activities. Additionally, the research states that for graduates of local
postsecondary institutions to remain competitive in the job market, they must be
equipped with skills like "communication, leadership, decision-making, and critical
thinking."

Grinder, Cooper and Britt (1999) argue that student-managed investment funds provide
students with a formal “financial laboratory” where the finance theory in investments
and portfolio management can be applied, allow students to interact with their fund
donors and the schools’ endowment associations, and require students to learn how to
make informed and responsible decisions in a manner that cannot be taught in the
traditional classroom setting.

Financial literature widely acknowledges that student investment funds are among the
best tools for educating students on finance and investments. Cox and Goff (1996)
argued that student investment funds and other such activities were not only important
in effectively educating students on finance and investments but also helped to develop
graduates who were more likely to develop the investments industry. Many universities
and business schools have successfully employed the use of student investment funds
to produce graduates who are competent and highly skilled (Saunders, 2008; Lawrence,
2008). Lawrence (2008) found out that universities and business schools that
incorporated student investment funds in their curricula were more likely to produce
more qualified and experienced graduates than those that did not. He however noted
that most student-managed funds are highly concentrated in North America and Europe
with a few in Asia.

Lawrence (1994) asserts that obtaining initial capital is the most difficult aspect of the
creation of a student-managed investment fund. He notes that the fund is generally
dependent on a major donor willing to specify that the fund be managed by students or
convincing university endowment administrators to allocate a portion of the
university’s endowment for student management. Saunders (2015) notes that most
funds that started before 1990 were created by lump sum gifts. Using University’s

28
endowment funds for student management was first reported by Tater (1987) and
Lawrence (1990). A survey of the initial funding of student investment funds found that
34% of the initial funding came from individuals and families, 24% from university
endowment, and 42% from other sources (Neely& Cooley, 2003). Obtaining the initial
funding may be quite a challenge especially if the donors do not believe that students
can effectively manage the funds or attach strict conditions on their use.

From the above research it is safe to conclude that due to the inherent limitations of
internships, they may not offer the students a wholesome learning experience or impart
practical skills. However, Student Managed investment funds (SMIFs) can be used not
only as an alternative to internships but also as a solution to the major limitations of
internships for finance students because research seems to agree that student-managed
investment funds are one of the most effective and successful means of experiential
learning. Due to their wide applicability and practicality in teaching and learning
finance and investments, student investment funds are increasingly used by universities
and colleges to impart practical skills and as a means of gaining experience. Despite
their wide use in Europe and North America over the years, Kenyan business schools
have not adopted Student Managed investment funds (SMIFs) even though there is
consensus among industry practitioners that many graduates are acutely lacking in
experience and practical skills. Therefore, this study seeks to establish the factors
affecting the adoption of SMIFs by Kenyan Business schools for finance students.

2.4 Research Gap

From the above research it is safe to conclude that due to the inherent limitations of
internships, they may not offer the students a wholesome learning experience or impart
practical skills. However, Student Managed investment funds (SMIFs) can be used not
only as an alternative to internships but also as a solution to the major limitations of
internships for finance students because research seems to agree that student-managed
investment funds are one of the most effective and successful means of experiential
learning. Due to their wide applicability and practicality in teaching and learning
finance and investments, student investment funds are increasingly used by universities
and colleges to impart practical skills and as a means of gaining experience. Despite
their wide use in Europe and North America over the years, Kenyan business schools
have not adopted Student Managed investment funds (SMIFs) even though there is

29
consensus among industry practitioners that many graduates are acutely lacking in
experience and practical skills. For that matter, there is a research gap on the adoption
of SMIFs by the Kenyan business schools. Therefore, this study seeks to establish the
factors affecting the adoption of SMIFs by Kenyan Business schools for finance
students.

2.5 Conceptual Framework

A conceptual framework can be described as an elaborate network of associations
between the dependent and independent variables considered as pertinent to the
problem being addressed by the study (Kothari, 2009).

2.6 Operationalization of variables

Aspect Sub-aspects Literatur Measure Instrument Specific

e Source d questions in
through the
instrument
Availabilit Institutional Lin (2022) Likert Questionnair "To what
y of a support, Peng, scale (1 e extent do
Supportive Mentorship Dukes & to 5) you agree
System programs, Bremer that your
Financial (2009). institution
advisory Gullapalli provides
services, (2006) adequate
Advisory support for
Board, SMIFs?”

30
 student To what
participation extent does
, the
Availability university
of trading offer
rooms mentorship
programs o
students
involved in
SMIFs?",
"Do you
have access
to financial
advisory
services for
SMIFs?"
Availabilit Fundraising, Lawrence Likert Questionnair Does the
y of initial individual (2008) scale (1 e university
capital donor Gullapalli to 5) offers
funding, (2006) financial
company assistance or
sponsorships grants to
, support
foundations, SMIF
and operations.
university What are the
endowments available
means of
raising initial
capital for
adoption of
SMIFs
Availabilit The Grinder, Likert Questionnair What is your
y of knowledge Cooper scale (1 e understandin
investment of and Britt to 5) g of
clubs investment (1999) investment
clubs clubs?
The Which of the
influence of three factors
Investment below has
clubs on the strongest
SMIFs influence on
Opportunitie the use of
s offered by SMIFs
investment Investment
clubs clubs
organize
events,
workshops,
or guest

31
 lectures to
enhance
students'
knowledge
and skills in
investment
management
for SMIFs.
Adoption Potential Lawrence, Binary Questionnair To what
of Student benefits of (2008); scale e extent do
Managed participating Kubik, (Yes/No), you
Investment in a SMIF (2018); Likert understand
Funds The Boughton scale (1 the potential
(SMIFs) operational & to 5) benefits of
procedures Jackson, participating
and (2019) in a SMIF
guidelines Hanna & To what
for Lindamoo extent do
managing a d (2010) you
SMIF understand
the
operational
procedures
and
guidelines
for managing
a SMIF

32
 CHAPTER THREE
RESEARCH METHODOLOGY

3.1 Introduction
This chapter sets out the research design, methodology, and procedures of investigation.
The chapter details the research design, population of the study, sample and sampling
techniques, research instruments, data collection procedures, data processing, and
analysis.

3.2 Research Philosophy

Several writers have debated various research philosophies, also called paradigm
debates, which have influenced how knowledge has evolved (Alzheimer Europe, 2009).
An ontological research philosophy paradigm that is more in line with human dynamics
was used in this study (Agyeman, 2010). According to Agyeman (2010) and Remenyi,
Williams, Money, and Swartz (1998), positivistic research focuses on observable and
testable units. It suggests that the researcher is working with an observable social reality
and that the final result of this reality should be the derivation of laws or law-like
generalizations.

The philosophical approach of post-positivism, which holds that social reality exists
"out there" and can be assessed scientifically, serves as the foundation for this
investigation. Post-positivism acknowledges that while complete objectivity might not
be achievable, due to this, the researchers could still strive for objectivity by employing
rigorous methods and systematic observation. The researcher employed a nomothetic
that facilitates the application of statistical approaches for analyzing data obtained

33
through quantitative research methods, including surveys (Castro-Schilo & Ferrer,
2013).

3.3 Research Design

A reseracher can get the best data by creating an acceptable study design (Creswell,
2012). A descriptive study approach was employed to evaluate the variables influencing
the uptake of student-managed investment funds. Since data would only be gathered
once, this architecture is suitable. According to Kothari (2009), a descriptive survey
design is suitable when gathering information to address queries about the present
circumstances affecting the adoption of student managed investment funds by kenyan
business schools. The approach was also employed since it fully captures the features
of a population and entails the meticulously prepared depiction of events and
occurrences, making it more exact and accurate.

3.4 Population
According to Saunders, Lewis, and Thornhill (2009), the population of a particular
research is the whole set of persons, events, or objects with a common observable aspect
or trait. Lawrence (2008) states that business schools host 99% of SMIFs. This study's
population comprises the six Kenyan business schools that hold accreditation and
registration from the Association of African Business Schools (AABS). You can see
the complete list of schools in Appendix 1.

Patten (2017) suggests that the different things, items, people, or events that have
similar features and are relevant to the research comprise the study's population. Studies
by Creswell & Creswell (2017) found that the population is the total of all cases that
met a predetermined set of criteria and refers to all persons, events, or objects with a
specific observable attribute. The study's target population consists of 297 finance
students from six Kenyan universities and 30 finance teachers from those universities.
This number comprised the total number of both degree and master’s finance students
from all the six universities who were later sampled.

This particular group of participants was chosen for the research study because, as the
SMIFs program is entirely housed within the Department of Finance Management, it
made sense to include them, given their knowledge of financial matters and the fact that
some of them have participated in the program and are familiar with all it entails. Patten

34
 (2017) maintains that the study's population consists of various objects, people, events,
or things that share characteristics and are pertinent to the investigation. Creswell &
Creswell (2017) found that the population refers to all individuals, events, or things that
exhibit a specific observable property and is the sum of all cases that satisfy a
predefined set of criteria. The study's target group comprises 30 finance lecturers and
297 finance students from six Kenyan institutions.

The Population of study Population Percent

Finance Lecturers 30 9
Finance Students 297 91
Total 327 100
Table 3.1: The overall study population

United States Mount

Strathmor
Universitie University International Kenyatta Kenya Tota
e Business JKUAT
s of Nairobi University University Universit l
School
Africa y
Number of
finance
50 61 48 35 57 46 297
students per
University
Table 3.2: The number of finance students from the six Universities

3.5 Sample
The Association of African Business Schools (AABS) has registered and recognized
six business schools, which were surveyed as part of the study. The six are the
following: Mount Kenya University School of Business and Economics; Kenyatta
University School of Business; United States International University Africa -
Chandaria School of Business; Jomo Kenyatta University of Agricultural Technology
(JKUAT); Strathmore Business School; and University of Nairobi School of Business
The study sample was chosen using a stratified random sampling approach. Finance
students and instructors make up the two strata. The method was selected because it
provides a more representative and trustworthy sample by considering the various
participant classifications. The following was the study's sampling strategy.

3.5.1 Sampling Frame

According to Creswell (2006), a sampling frame is a list of things, people, or
organizations from which a sample size is chosen. According to Yin (2014), a sampling
frame is a list or other tool used to define the population of interest for a researcher.
However, according to Saunders et al. (2016), a sampling frame is a collection of

35
 components that a researcher can use to choose a sample of the target population. The
sample frame for this study includes 30 instructors of finance and 150 finance students
across the six universities which led to a study sample of 180 participants.
Number Strathmore University JKUAT United States Kenyatta Mount Total
per Business of Nairobi International University Kenya
University School University University
Africa
Finance 5 5 5 5 5 5 30
Lecturers
25 25 25 25 25 25 150
Finance
Students
Total 180
Table 3.3: Sampling

3.5.2 Sampling Technique

According to Crewell (2014), a sampling technique is a statistical procedure that entails
choosing a subset or sample from a given population of interest to draw conclusions
about that population statistically and make observations about it. Sampling, as defined
by Yin (2014), is the process of choosing a subset for a study by looking at a small
portion of the population. A stratified random sampling was employed to obtain the
sample for this study. With stratified random sampling, a population is divided into
discrete units called strata according to shared characteristics, and the selection process
is carried out in a manner typical of the entire population. Stratified random sampling,
according to Cooper & Schindler (2015), guarantees that the sample reflects the
diversity of the population by allowing a researcher to include subjects from all
subgroups. The stratification in this study was carried out according to the faculty rank
in Kenyan universities. The sampling strategy was considered for the study because it
allowed the researcher to guarantee the representation of the total population and reduce
selection bias.

3.5.3 Sample Size

According to Yin (2014), sample size is the number of participants selected from a
population and studied to draw conclusions and inferences about the entire population.
A sample size, however, is defined by Creswell (2014) as a subset of subjects chosen
from the general population that is thought to be representative of the entire population
for a particular study. Slovin's Formula was used to calculate the study's sample size.
Using the population size (N), margin of error (Ꜫ), and sample size (n), this Formula is

36
computed. If a researcher wants to determine the correct sample size but lacks
comprehensive information on the behavior of a particular population or its distribution,
they can use Slovin's Formula. A researcher can select a sample of the population with
the appropriate level of accuracy by using the Formula. The sample size is determined
by applying the Formula in this way
N
𝑛=
1 + N (e2)

Where n=Sample size, N= Total population of Finance lecturers and students in all
the business schools

e= Margin of error (0.05)

The study sample is therefore 180, and is calculated as follows:

180

𝑛=
1 + 180(0.052)

𝑛 =180/1.45 = 124

3.6 Data Collection

The primary instrument for data collection in this research is a questionnaire. The
questionnaire has both closed and open-ended questions. According to Neuert et al.,
(2021), open-ended questionnaire prevent researchers from asking the participants
leading questions and multiple-choice questions that could prevent participants from
freely responding to the questions. A descriptive statistics data analysis was used to
analyse both the data from open-ended and the closed-ended questionnaires. The
closed-ended questions provide the respondent with options from which to choose
while the open-ended questions are used to probe further and allow the respondent to
provide additional details. The questionnaire provided a clear details on how to answer
the questions too.

The choice of questionnaires as a data collection tool was arrived at after close and in-
depth consideration of the research goals and the target groups. A questionnaire was
chosen as the primary instrument of data collection because it enables the collection of
a lot of information from many respondents over a short period. The respondents are

37
perceived to be literate and thus information required could easily be described in
writing.

Only primary data was used in this study. The primary responders were initially served
with an introductory letter from the researcher outlining the purpose of the study and
requesting their consent to be included. After that, the researcher gave the
questionnaires to finance professors and students at the many institutions that are the
subject of the study. The primary responders were also given the surveys. To save time
and make the surveys more easily accessible to the responders, these were sent online.
A duration of two weeks was allotted to the responders to answer the questions. The
researcher considered giving the respondents two weeks to respond to the questions
was sufficient.

3.7 Reliability and validity

To test the reliability and validity of the questionnaire, a pre-test was carried out. The
validity of the questionnaire was also be conducted through a pilot testing of the
questionnaire samples. This was conducted by administration of the questionnaire to 10
respondents, not in the study sample. By administering this questionnaire pilot test, the
researcher ensured that the questions to the respondents stay within the parameters and
goals of the study and do not deviate from the context. Ensuring that the questions asked
don't delve into the participants' personal affairs also guaranteed that the participants'
privacy is respected. Lastly, before the questionnaire is given to the participants, the
pilot testing ensured that basic questionnaire errors are found and fixed and that the
appropriate number of questions is reached.

3.8 Data Processing and Analysis

Data from the questionnaire was summarized, edited, coded, tabulated and analyzed.
Descriptive statistics, including mean, median, and standard deviation, was used in the
study to arrange, describe, and summarize a data collection of study participants'
characteristics. Studies by Livingston, (2004) found that these approaches offer concise
summaries of the research sample and the measures obtained from the study sample,
therefore they were considered crucial for the research. Regression analysis, and more
significantly, multiple linear regression, was the inferential statistics used in this study.
While employing regression analysis, the researcher used the 0.05 significance level in
comparing and finding out the results. This is feasible for the study since the researcher

38
may utilize continuous explanatory variables, and handling more than two explanatory
variables at once is made more accessible by multiple regression.

Additionally, regression analysis reduces the extra work required by survey researchers
to test or compute the impact of several independent factors on a dependent variable
and arrange them in tables (Zapotichna, 2021). Editing of data involved going through
the questionnaires to find out whether the respondents responded to the questions and
whether there were any blank responses. Simple tabulation was used and it involved
counting the number of items that fall into various categories. Information about the
scores of each variable were presented in tables and charts to make it easy for people
to understand the findings. The researcher intends to employ thematic data analysis to
represent the qualitative data. Specifically, this was the thematic data analysis for the
codebook. Since the researcher may adopt this extremely flexible approach to
qualitative data analysis to match the objectives of various investigations, it is regarded
as a viable data analysis method. Terry et al. (2017) state that using thematic analysis
allows the researcher to get fresh conclusions and ideas from the study data.

This study evaluates the likelihood of business schools to adopt SMIFs as a teaching
technique based on availability of a supportive network, capital and active investment
clubs. Given that the pilot study showed that no business school has adopted SMIF, this
study thus proceeded to evaluate the likelihood of these schools adopting SMIFS. The
readiness to adopt SMIF was measured using a 1-5 Likert scale. A school was deemed
ready to adopt SMIF if it had a score greater than 3. This implies that the readiness to
adopt was a binary variable which justified the application of a multiple regression. We
therefore evaluate the likelihood of a school adopting SMIF teaching approach using
the following equation.
Y =β0+β1X1+β2X2+β3X3 + e
Where; Y= Adoption of SMIFs
β0= Constant Term or the Intercept
β1X1+β2X2+β3X3+β4= Beta Coefficients for influence of a supportive framework on
the adoption of SMIFs, initial capital influences the adoption of SMIFs and the
influence of investments clubs on the adoption SMIFs.
X1 = influence of a supportive framework on the adoption of SMIFs
X2 = initial capital influences the adoption of SMIFs

39
X3= influence of investments clubs on the adoption SMIFs
e = Error term.
Model Diagnostics
The study employed the following tests to determine the model’s goodness of fit;

3.8.1 Serial Correlation Test

In statistics, the association between observations of the same variable across
predetermined times is described by serial correlation. There is no connection, and
every observation is independent of every other observation if the serial correlation of
a variable is 0. On the other hand, if a variable's serial correlation skews toward one,
then future observations are impacted by past values, and the variables are serially
connected. A serially linked variable is, in essence, not random; instead, it follows a
pattern. The researcher can prevent erroneous findings by using the serial correlation
test. Integrating serial correlation tests into the research methodology amplifies the
validity and resilience of the statistical analysis, resulting in more precise and
dependable research findings.
Correlation matrix

X1 X2 X3 Y
X1 1 -0.1252259... 0.00022405... -0.3192215...
X2 -0.1252259... 1 0.60410879... -0.7360113...
X3 0.00022405... 0.60410879... 1 -0.5761879...
Y -0.3192215... -0.7360113... -0.5761879... 1

Serial Correlation
Breusch-Godfrey Serial Correlation LM Test:
Null hypothesis: No serial correlation at up to 2 lags

F-statistic 7.229883 Prob. F(2,49) 0.0018

Obs*R-squared 12.53215 Prob. Chi-Square(2) 0.0019

3.8.2 Normality Test

The purpose of the normality test was to verify that the sample data came from a
normally distributed population. This test made it possible to draw reliable statistical
conclusions when evaluating a certain predicted study result (Field, 2009). The

40
normality of the residuals was evaluated using the Kolmogorov-Smirnov (K-S) test in
this study. Generally speaking, the gathered data was taken to be normal. In case the p-
value obtained exceeded the significance level of 0.05, it was deemed that the sample
data was normal. In case the p-value obtained was lower than the pre-established 0.05,
it suggested that the sample data did not follow a normal distribution.

3.9 Research Validity and reliability

To provide researchers the chance to identify and address various possible issues with
research instruments, a pilot study was conducted to pre-test the dependability of the
instruments; finding methods to enhance the instruments was another benefit of pilot
testing. The content validity of the employed questionnaires was examined in this study.
This was determined by asking three additional participants—eventually withdrawn
from the primary research—to complete a pilot version of the study questionnaire. By
spotting possible problems in the questionnaire and fixing them before distributing
them to the participants, the results of the pilot run were utilized to validate and enhance
the instruments. Similarly, the reliability test was conducted using Cronbach's alpha
coefficient approach. A pilot test was conducted before the actual test to ensure the
reliability of every component of the research instruments. Kothari (2008) states that
an instrument is deemed acceptable when its alpha coefficient is 0.70, and any
components that score lower than 0.70 require reorganization before doing the field
exercise.

3.10 Ethical Considerations

Ethical considerations such as confidentiality, approval, anonymity, feedback and
avoidance of deception are very important issues in research. Permission was sought
from the relevant authorities and letters granting permission was also requested.
Informed consent was assured by explaining to the participants the nature of the study
and providing them with an option to participate in the study or not. In order to maintain
respondents' confidentiality, the researcher declared to them that the study would only
be conducted to further academic objectives. To anonymize data utilized in a study, the
researcher changed or removed any personally identifying information from a dataset,
such as names, addresses, and personal identifiers.
The researcher provided the participants with special codes or pseudonyms to conceal
their identities and preserve the data's integrity. Encryption and password protection are

41
data security techniques that would further ensure confidentiality. Anonymization of
data allowed the researcher to follow ethical norms and safeguard participant privacy
while facilitating the analysis and sharing of study findings without jeopardizing
confidentiality or putting participant identity in danger. Feedback was provided to
participants who were interested in the results of the study. Trochim (2006) insisted that
researchers should acknowledge the sources of information used in their studies. The
researcher has acknowledged all sources of information from other scholars.

CHAPTER FOUR

DATA ANALYSIS AND PRESENTATION OF FINDINGS

4.1 Introduction
This chapter presents the analysis conducted to evaluate the factors affecting the
adoption of SMIFs by Kenyan Business Schools and the findings of that analysis based
on the research objectives. The analysis commences by analyzing the response rate of
the study and then providing the descriptive statistics relating to the variables of the
study. Finally, a relationship analysis is conducted using the correlation matrix and a
regression model.

4.2 Response rate

This study targeted all six accredited Business Schools in Kenya with respondents being
Finance lecturers/ Researchers and the finance students of the schools. 65.99% (63) of
the targeted finance students responded and 60% (18) of the finance lecturers targeted
responded to the questionnaire of this study. The total response rate was 65.56% (81).
A response rate of 60% from a non-random sample is considered representative in
academic research (Baruch and Holtom, 2008). Mugenda and Mugenda (2003) also
contend that a response rate of 60% or above is adequate for research.
Table 4.1: Response Rate
Sample Response Percentage
Population Rate Response
Finance Students 104 63 65.99
Finance Lecturers 20 18 60

42
This table shows that, of the 180 students and lecturers in the targeted sample frame,
104 students and 20 lecturers from the finance department were selected as samples. Of
these, 63 students, or 65.99 percent of the student population, could reply to the study
questionnaire. Similarly, of the 30 lecturers in the targeted sample frame from the six
universities, 20 lecturers were selected as samples, and 18 could reply to the study
questionnaire. This represents sixty percent of the selected finance lecturers. According
to Mugenda and Mugenda (2003), a response of 60% or more is sufficient for a research
study to conclude the study's findings; hence, this is feasible for a research study.

4.3 Demographic characteristics of the participants

The study's data indicates that 22.22% of participants were finance teachers from the
six institutions, with the remaining 77.77% being finance students from the six
universities. According to the study's data, 61.11% of the lecturers who participated in
the research were men. In comparison, the remaining 38.88% were women from the
various institutions where the study was done. Furthermore, the data shows that, of the
63 finance students who participated in the survey, 60.32% were men and 39.68% were
women. Regarding educational attainment, 12 academics (66.66%) in finance held a
PhD, while the remaining lecturers (33.33%) were qualified with a master's degree.
However, of the finance students, 63 (100%) of the students were pursuing a degree in
finance.

Lastly, the data shows that most research participants (students) were between 31 and
40, with 26 students falling within this age range. This was closely followed by 19
students, who were the least numerous among the participants, falling between the ages
of 20 and 30, 15 students between the ages of 41 and 50, and finally, the students
between the ages of 51 and 60 were 3. Additionally, it was shown that most of the
lecturers who took part in the study were senior lecturers, with eight of them
representing the age range of 50–60. These were followed by five lecturers representing
the age range of 41–50, four lecturers representing the age range of 30-41, and one
lecturer representing the age range of 20–30.
Table 4.2: Demographic characteristics
Total Sex Age Level of Education
Number Male Female 20- 31- 41- 51- Degree Masters PHD
30 40 50 60
Lecturers 18 11 7 1 4 5 8 6 12

43
 Students 63 38 25 19 26 15 3 63
Total 81 49 32 20 30 20 11 63 6 12

4.4 The influence of a supportive framework on the adoption of SMIFs

The table shows that two respondents who combined account for 2.5% of all the
respondents stated that the influence of the supportive framework of SMIF was very
low. This points to the conclusion that only a limited number of individuals in the
sample think that the framework of support does not play much role in favor of the
growth of SMIFs. Underlying these perceptions are several considerations ranging from
late adoption to resource shortage to lack of awareness of the advantages of
SMISs. After this, the responses to 4 respondents, with a total count of 4.9%, indicated
that the influence was lower, too.

On the contrary, it is somewhat more significant than those who hold it as extremely
low; however, we can see that this figure maintains small values among the respondents
who consider that supportive frameworks have a limited prominence in this matter.
These elements might be in the form of support from the sponsoring organization, the
lack of funding, or impeding access to the required time, space, and funds. However,
15 people (18.5% of the sample) who took part in the survey assumed the influence was
neutral in the context of SMIF adoption. These contexts could result from ambivalence
or divergent episodes faced by survey respondents when applying for such support in
the SMIF visitation process.

Nevertheless, 35 out of the interviews, comprising a total of 43.2%, revealed a high

level of influence of a supportive framework on SMIF. This implies that most survey
groups are convinced that business environment support is highly effective in the
growth of SMIF adoption. Institutional considerably and overburdened systems may be
among the accountability factors. Lastly, 25 respondents, equal to 30.9 percent of the
sample, indicated a high power of supportive frameworks. A substantial portion of
concerned respondents suggests that a notable subgroup of respondents believe support
structures are crucial in applying SMIF. The causes of this phenomenon could include,
for instance, a comprehensive institutional support system and effective funding
programs with a potential strategic play in SMIF implementation.
Supportive Framework Descriptive Statistics

44
 N Minim Maximu Mean Std.
um m Deviation
The university provides adequate resources and 81 1 5 1.20 .803
infrastructure to support the establishment of
SMIFs.
The university offers relevant courses and training 81 1 4 1.51 1.016
programs to prepare students for SMIF
participation.
Faculty members are accessible and supportive in 81 1 4 1.67 1.203
guiding SMIF activities.
There are regular workshops and guest lectures 81 1 5 1.47 1.399
organized to enhance students' knowledge in
investment management for SMIFs.
The university has adequate trading rooms for 81 1 5 1.89 .567
SMIF activities
The university facilitates networking 81 1 5 1.64 1.393
opportunities with industry professionals for
SMIF participants
The university encourages collaboration and 81 1 5 1.33 .982
teamwork among SMIF members.
The university offers mentoring or coaching 81 1 4 1.95 1.008
programs to support students' growth in SMIF
activities.
The university provides ongoing administrative 81 1 5 1.76 1.088
support, partnership for SMIF operations, such as
logistics and paperwork.
Valid N (listwise) 81
Source: Research data 2024
According to the descriptive data, most participants believed the institution needs to
provide a sufficient framework for Student Managed Investment Funds (SMIFs).
Respondents had low opinions on the availability of resources, courses, faculty
assistance, workshops, trading rooms, networking opportunities, collaboration,
mentorship programs, and administrative help, with mean values ranging from 1.20 to
1.95 across various support metrics. These perceptions are pretty variable, based on the
standard deviations. These results point to severe deficiencies in the support
infrastructure required to create and sustain SMIFs at the institution.

4.5 The influence of capital on the adoption of SMIFs

According to the survey, two respondents, or 2.5% of the total, thought that capital had
a very low impact on adopting SMIF. This indicates that a tiny percentage of

45
respondents said there is little to no influence of capital availability on promoting the
adoption of SMIFs. This impression may result from a lack of finance, restricted access
to money, or the belief that capital has little bearing on encouraging the adoption of
SMIF. It was also discovered that five respondents, or 6.2% of the sample, thought the
impact was low. Even so, this still shows a tiny portion of respondents who believed
capital had a relatively poor influence on SMIF adoption, even if it was somewhat
higher than those who thought it was very low. This impression may be influenced by
several things, such as a lack of finance, difficulty obtaining financial resources, or the
belief that other variables significantly impact SMIF adoption.

Additionally, ten respondents, or 12.3% of the sample, believed that capital had a
neutral impact on the adoption of SMIF. This implies that a sizable percentage of
respondents thought capital had a neutral effect on adopting SMIF. This neutrality may
have its roots in conflicting experiences or a need for more clarity on the contribution
of capital to the adoption of SMIF. Furthermore, 34 respondents—or 42% of the
sample—thought that capital greatly impacted SMIF. This suggests that most
respondents believed money availability greatly influenced SMIF adoption
encouragement. This perspective may arise from several factors, including recognizing
the significance of financial resources for establishing and managing SMIFs, the
conviction that enough money facilitates investment opportunities, and the
comprehension that finance availability is essential for drawing members.

Nonetheless, thirty respondents—or 37% of the sample—thought the effect was very
high. This implies that a sizeable portion of respondents felt that cash availability is a
critical factor in encouraging the adoption of SMIF. This perception may arise from
several factors, such as the conviction that sufficient capital is necessary to overcome
entry barriers, the knowledge that financial resources support portfolio growth and
investment diversification, and the awareness that funding access improves the
legitimacy and sustainability of SMIF initiatives.
Capital Descriptive Statistics
N Minim Maximu Mea Std.
um m n Deviati
on

46
There are clear guidelines and processes for accessing 81 1 5 1.31 .814
and managing the initial capital for SMIF activities.
The university offers financial assistance or grants to 81 1 5 1.25 .799
support SMIF operations.
There are opportunities for SMIF members to raise 81 1 5 1.40 1.164
additional capital through fundraising or external
partnerships.
The university provides guidance and support in 81 1 4 1.33 .944
seeking sponsorships or donations for the SMIF.
The university facilitates connections with potential 81 1 5 1.67 1.375
investors or organizations interested in supporting the
SMIF financially.
The university offers financial management training 81 1 4 1.18 .611
and resources to help SMIF members effectively
handle the initial capital.
The university provides ongoing support in 81 1 4 1.18 .611
monitoring and evaluating the use of the initial capital
for SMIF activities.
The university encourages transparency and 81 1 5 3.04 1.515
accountability in the management of the initial capital
for SMIF activities.
Investment clubs offer mentorship or guidance from 81 1 4 2.95 1.380
experienced members to support students in the
process of SMIF adoption.
Valid N (listwise) 81

According to the descriptive data, the university's initial capital access and management
structure for SMIF operations needs to be revised. The majority of the respondents'
mean values, which fall between 1.18 and 1.67, show that they are highly dissatisfied
with a wide range of services, including financial support, chances for fundraising,
advice on obtaining sponsorships, and training in financial management. The
significant standard deviations in certain regions indicate considerable variation in
these perceptions. Accountability and transparency scored higher overall (3.04),
suggesting an improved reputation in this area. Significant adjustments are required to
strengthen capital support for SMIFs.

4.6 The influence of investment clubs on the adoption of SMIFs

According to the descriptive data, 18% of the total respondents, or 15, said that
investment clubs had a very low effect over adopting SMIF. This implies that a sizable
fraction of participants thought investing clubs had a low influence over SMIF

47
adoption. The belief that investment clubs are ineffective in encouraging the adoption
of SMIFs, a lack of knowledge or comprehension of these clubs' role in promoting
SMIFs, or a lack of involvement or engagement with club activities are all potential
causes of this attitude. Furthermore, 35 responders, or 43.3% of the sample, thought the
impact was low. This still shows a sizable portion of respondents who believed
investing clubs had a relatively minor influence on SMIF adoption, even though their
perception was more significant than those who thought it was extremely low. This
perception may be influenced by several factors, such as the belief that investment clubs
concentrate on different investment strategies or goals, the lack of integration of
investment club activities into SMIF programs, or the lack of collaboration or
cooperation between investment clubs and SMIF initiatives.

The survey also discovered that 14 respondents, or 17.3% of the sample, had no opinion
about how investing clubs affected the adoption of SMIF. This implies that a significant
proportion of participants believed that investing clubs had a neutral impact on the
SMIF. This neutrality might be due to respondents' differing experiences or viewpoints
on how healthy investment clubs work to encourage SMIF adoption, their ambiguity
over the clubs' involvement in SMIF programs, or their lack of exposure to investment
club events. According to the survey, ten respondents, or 12.3% of the sample, thought
the effect was high. This suggests that just a tiny percentage of respondents thought
investing clubs greatly influenced SMIF adoption promotion.

The belief that investment clubs are essential in promoting interest in and participation
in SMIF activities, the active cooperation or partnership between investment clubs and
SMIF programs, or the efficient use of investment club networks and resources to
support SMIF initiatives are all possible explanations for this perception. Lastly, seven
responders (8.6% of the sample) said the impact was very high. This shows that a small
percentage of respondents thought investment clubs were significant in encouraging the
use of SMIF. This perception may stem from several factors, such as the effective
integration of investment club activities into SMIF programs, the active participation
or leadership of investment club members in SMIF initiatives, or the conviction that
investment clubs offer invaluable resources, expertise, or support to help SMIF
initiatives be adopted and successful.

48
 Investment Clubs Descriptive Statistics
N Minim Maximu Mean Std.
um m Deviatio
n
The university provides established investment 81 1 5 1.40 1.164
clubs that serve as a platform for students
interested in SMIF adoption.
Investment clubs offer opportunities for students 81 1 4 2.04 1.360
to learn about investment strategies, portfolio
management, and financial analysis.
Investment clubs provide a supportive 81 1 5 2.11 1.560
environment for students interested in forming
or joining a SMIF group.
Investment clubs facilitate networking with like- 81 1 4 1.40 .955
minded peers who are interested in investment
and finance-related activities
Investment clubs organize events, workshops, or 81 1 5 2.11 1.560
guest lectures to enhance students' knowledge
and skills in investment management for SMIFs.
Investment clubs provide opportunities for 81 1 4 1.18 .611
students to collaborate and share investment
ideas and experiences related to SMIF adoption.
Investment clubs assist in the formation and 81 1 5 1.85 1.205
management of SMIFs, providing guidance on
legal, operational, and organizational aspects.

Investment clubs offer mentorship or guidance 81 1 4 2.67 1.441

from experienced members to support students
in the process of SMIF adoption.
Investment clubs collaborate with faculty 81 1 4 1.84 1.344
members or industry professionals to provide
insights and guidance for SMIF activities.
Valid N (listwise) 81

Perceptions of investment clubs' effect on SMIF adoption at the university are typically
low to moderate, according to the descriptive data. Survey participants' mean scores,
which vary from 1.18 to 2.67, suggest that although investing clubs offer certain
chances for networking, teamwork, and education, they are not abundant. Given the
standard deviations' indication of considerable variation in perceptions, the
comparatively low mean scores imply that investment clubs are not generally effective
in promoting the adoption of SMIF. Regarding mentoring and guiding, the highest

49
mean score of 2.67 indicates that people see this factor considerably more favourably
than others. The support that investment clubs provide for SMIF initiatives may be
improved overall.

4.7 Model Diagnostics

To ensure that the model fitted is appropriate the following diagnostic tests were
conducted; normality and serial correlation test.

Normality Test Series: Standardized Residuals

Sample 1 81
16
14 Observations 81

12 Mean 0.002870
Median 0.237826
10
Maximum 2.030648
8 Minimum -2.482848
Std. Dev. 0.870453
6
Skewness -0.800766
4
Kurtosis 4.115154
2
0 Jarque-Bera 9.362501
-2 -1 0 1 2 Probability 0.009267

Figure 4.1: Normality test

The above results shows a Jarque-Bera Statistic of 9.3625 with a corresponding P-
value of 0.0093. This probability is less than 0.05 implying that the residuals are not
normally distributed.
Serial Correlation Test
The table below presents Q-statistic correlogram testing for serial correlation at
various lags.

50
Date: 08/20/22 Time: 11:19
Sample: 1 59
Included observations: 59
Autocorrelation Partial Correlation AC PAC Q-Stat Prob*

1 0.071 0.071 0.3149 0.575

2 -0.150 -0.156 1.7292 0.421
3 -0.109 -0.088 2.4960 0.476
4 0.085 0.079 2.9644 0.564
5 0.021 -0.020 2.9948 0.701
6 -0.093 -0.084 3.5822 0.733
7 -0.097 -0.070 4.2300 0.753
8 -0.292 -0.328 10.246 0.248
9 0.002 -0.005 10.247 0.331
10 0.043 -0.058 10.382 0.408
11 0.089 0.037 10.975 0.445
12 -0.098 -0.083 11.713 0.469
13 0.143 0.174 13.324 0.423
14 0.133 0.038 14.736 0.396
15 -0.005 -0.041 14.738 0.470
16 -0.118 -0.169 15.900 0.460
17 -0.035 -0.030 16.007 0.523
18 0.155 0.109 18.120 0.448
19 -0.021 0.008 18.158 0.512
20 -0.150 -0.141 20.226 0.444
21 -0.177 -0.054 23.179 0.335
22 -0.120 -0.196 24.589 0.317
23 0.115 0.074 25.920 0.305
24 0.117 -0.036 27.330 0.289

*Probabilities may not be valid for this equation specification.

Figure 4.2: Serial correlation test

At all the lags considered the bars lie in between the 95% confidence bounds. The P-
values at all the lags exceed 0.05 implying that there is no serial correlation in the model
estimated.

4.7.1 Reliability Statistics

Reliability Statistics
Cronbach's
Alpha N of Items
.779 4
Table 4.6: Reliability statistics

The results of a reliability test show how consistent a scale or metric is internally. A
moderate to high degree of dependability is demonstrated in this instance by Cronbach's
Alpha value of 0.779. Higher values on this scale of 0 to 1 denote increased internal
consistency between the elements. With four items in the analysis, the reliability
coefficient of 0.779 indicates that the scale's items have a reasonable degree of
dependability when gauging the underlying construct. While 0.7 is usually regarded as
satisfactory, it's important to remember that higher values, like 0.8 or above, are
preferable for better reliability.

51
4.7.2 Regression Analysis

Variable Coefficient Std. Error z-Statistic Prob.

C -7.645607 2.996138 -2.551821 0.0107

CAPITAL 1.534019 0.643578 2.383579 0.0171
SUPPORTIVE_SYSTEM 1.221104 0.487843 2.503066 0.0123
INV_CLUBS 0.167485 0.680895 -0.245977 0.8057

McFadden R-squared 0.410206

Total observations 81
Prob (LR statistic) 0.000001

Table 4.7: Regression analysis

4.7.3 Model Goodness of Fit

The table above presents the results of the logistic regression analysis. The results
indicate an overall significant model with a P-value of 0.000. The model has a
McFadden R-squared of 41.02%. The rule of thumb is that a McFadden R-squared of
0.2-0.4 represents a good model. This implies that the model generated is a good fit for
the data in this study. The P-values associated with the regressors are all significant at
a 5% significance level, save for investment club activities.

The coefficients in the regression analysis shown above, with all other variables held
constant, show the estimated impact of each independent variable on the dependent
variable. The conclusions are interpreted as follows:

C (intercept): The coefficient of -7.645607 means that the predicted value of the
dependent variable is -7.645607 when all other independent variables are zero. When
all other predictors are missing, the dependent variable's baseline level is represented
by this intercept term.

Capital: The coefficient of 1.534019 indicates that, while leaving other factors constant,
the dependent variable (adoption of SMIFs) is predicted to rise by around 1.534019
units for every unit increase in capital (probably beginning capital available for
investment). At the 0.05 level, this variable is statistically significant.

52
Supportive system: The coefficient of 1.221104 shows that, while leaving other factors
constant, the dependent variable is predicted to rise by around 1.221104 units for every
unit increase in the supportive system (availability of supporting systems). At the 0.05
level, this variable likewise demonstrates statistical significance.

Investment clubs: The existence of investment clubs, or investment clubs, appears to

have a positive but statistically insignificant impact on the dependent variable,
according to the coefficient of 0.167485. This indicates that the existence of investing
clubs relatively unaffected the adoption of SMIFs in the model.

With a McFadden R-squared of 0.410206, the model's independent variables can

account for around 41.02% of the variation in the dependent variable. The dependent
variable is significantly impacted by the independent variables when taken as a whole,
according to the LR statistic, which has a p-value of 0.000001, suggesting that the
whole model is statistically significant at the 0.05 level.

Thus, while the availability of investment clubs does not have a statistically significant
influence, the results indicate that the availability of beginning cash and supportive
structures has a considerable beneficial effect on adopting SMIFs.

4.8 Chapter Summary

This chapter explained how data was analysed in order to meet the research objectives.
The chapter presented results obtained from the data collected including regression,
correlation, descriptive statistics and diagnostic tests computed. The first objective was
to determine the influence of a supportive framework on the adoption of SMIFs. The
results indicated that if a university has access to a supportive framework their
likelihood of adopting SMIFs is highly increased. The second objective evaluated how
capital influences the adoption of SMIFs. Results showed that with every additional
unit of capital the likelihood of the business schools adopting SMIFs increases. The
third objective was to investigate the influence of investments clubs in the adoption of
SMIFs. The results portrayed a positive association between investment club activities
and likelihood of SMIFS adoption.

53
The relationship was found not to be statistically significant. This meant that investment
clubs do not strongly influence the adoption of SMIFs. Surprisingly, some participants
said getting the first SMIF funding from Kenyan business schools was difficult. This
was a blatant sign that the Kenyan universities needed to make more attempts to start
and run the SMIF program within their institutions. This was illustrated by the students
who showed it was challenging to obtain funds for the SMIFs.

54
 CHAPTER FIVE

DISCUSSION, CONCLUSION AND RECOMMENDATION

5.1 Introduction
This study examined the factors affecting the adoption of student managed investment
funds by Kenyan business schools. Chapter One defined keywords, offered context,
and provided the problem definition and study objectives. Chapter Two reviewed
relevant literature and established a research framework. Chapter three covered
research methods and provided research findings. Chapter Four provided this study's
research findings. The study data were examined and debated, allowing academics to
compare them to Kenyan and other international studies on the same topic. This chapter
summarized the study to draw conclusions and make recommendations for resolving
the main research challenges and suggesting future research.

5.2 Summary
This study examined the variables influencing Kenyan business schools' adoption of
student-managed investment funds. This study shows the effects of a few factors that
influence Kenyan universities' adoption of SMIFs. The initial capital was discovered to
be one of the elements positively affecting the adoption of SMIFs. It was found that
financial resources support and facilitate Kenyan business schools’ adoption of the
SMIF program. However, it was also shown that Kenyan business schools’
implementation of SMIF needs to be improved by a lack of funding or insufficient
capital allocation. However, it was also demonstrated that Kenyan universities'
frameworks strongly support Kenyan the adoption of the SMIF.

The adoption of the SMIF program by universities is made more accessible when
responsible institutions set the proper supportive frameworks. This was made clear by
finding a positive correlation between the independent and dependent variables. Lastly,
about the last factor—the presence of investment clubs—the study's results showed that
these clubs had little impact on the institutions' adoption of the SMIF program. It was
revealed that the factor had little bearing on the adoption of the SMIF. Regression
analysis supported this as well, showing a coefficient of 0.167485, indicating that the
adoption of SMIFs in the model was slightly affected by the presence of investing clubs.

55
5.3 Discussion

5.3.1 Influence of initial capital on the adoption of SMIFs

The study looked at opinions on how capital affects the uptake of student-
managed investment funds (SMIFs). Opinions from respondents varied, showing
differing viewpoints on how financial resources affect the adoption of SMIFs. A
negligible percentage of participants believed that money did not affect the adoption of
SMIFs. This impression may result from several things, such as a general lack of
funding options, limited access to financial resources, or the conviction that capital has
little bearing on adopting SMIFs.

A higher percentage of respondents thought capital had a more significant influence.

This opinion might be impacted by difficulties acquiring financial resources or a
general lack of funding that would otherwise enable a more robust adoption process. A
significant proportion of participants viewed money's influence on the adoption of
SMIF as neutral. This neutrality may be explained by divergent observations or
personal experiences with capital's function or by an unclear knowledge of capital's
position in the adoption process.

However, most respondents acknowledged that capital significantly influenced the

adoption of SMIF. This majority opinion represents an understanding of how vital
financial resources are to creating and operating SMIFs. They pointed out that having
enough money makes investments easier, is essential for drawing in new members, and
guarantees the long-term viability of these institutions.

The survey also looked at how vital capital availability is for adopting Student Managed
Investment Funds (SMIFs), and the results showed that respondents had different
opinions on this matter. A sizable segment of participants said that the availability of
cash was essential in promoting the use of SMIFs. This notion results from the
knowledge that having enough wealth is necessary to overcome obstacles to entrance,
maintain portfolio expansion, and allow investment diversification. Furthermore, the
participants acknowledged that having access to finance improves the credibility and
durability of Small and Medium-Sized Initiatives.

56
The results are consistent with earlier research, especially Lawrence's (1994) study,
which emphasized the difficulties in securing startup funding for student-managed
investment funds. Lawrence said that getting the first financial commitment is
sometimes the most challenging part since it requires persuading university endowment
officials to give the money required to start the program.

In regard to accessing the initial capital, a few respondents said getting the initial capital
for SMIFs was easy. Strong institutional backing and advantageous market
circumstances contributed to this ease. It may have been made simple for another group
of responders by the presence of preexisting financial resources or encouraging
networks that made the procedure easier. A sizable percentage of respondents had no
opinion, which suggests that they had differing opinions or were ignorant of the
procedure. This neutrality raises the possibility that opinions and experiences with
getting SMIF first financing could differ significantly.

However, some respondents said getting an initial investment took a lot of work. These
individuals probably faced difficulties, including restricted financial means or
governmental limitations that complicated the procedure. Lastly, a sizable percentage
of respondents stated that it took a lot of work to get early funding, citing significant
obstacles, including budgetary limitations or administrative roadblocks. This
organization draws attention to the significant challenges encountered by those seeking
to create SMIFs.

The study's overall conclusions imply that getting initial funding for SMIFs is widely
seen as problematic, with many participants reporting severe obstacles and a significant
number viewing it as somewhat demanding, thus making the initial capital for adoption
of SMIFs a very significant factor. These outcomes are consistent with those of
Lawrence (1994), who found that getting early money was the most challenging part of
setting up an SMIF. Lawrence pointed out that initial funding is frequently contingent
upon donors' willingness to contribute, and those donors may request that the monies
be administered solely by the student body. This emphasizes how difficult it is to get
start-up capital for SMIFs.

57
5.3.2 The Influence of a supportive framework on the adoption of SMIFs
The study aimed to determine how respondents felt supporting frameworks affected the
development of supported management information systems (SMIFs). The results
indicated that these frameworks had varied degrees of effect. Only a tiny percentage of
respondents thought that supporting frameworks had little effect on the expansion of
SMIF. This impression may result from the systems' delayed acceptance, a lack of
resources, and people's general ignorance about SMIFs. Still, compared to those who
ranked it extremely low, the impact of supporting frameworks was regarded as
considerably more critical but still relatively tiny. Some factors influencing these
beliefs are inadequate money, a lack of support from sponsoring groups, and restricted
access to essential resources.

On the other hand, a significant proportion of participants expressed a neutral opinion

concerning the impact of supporting frameworks on the adoption of SMIF. This
ambivalent attitude implies that although some respondents acknowledged the potential
value of supporting frameworks, they did not think it was a crucial element in
developing SMIFs. However, a sizable percentage of respondents said that supporting
frameworks substantially impacted the expansion of SMIF. This group stressed how a
supportive company climate may support SMIF adoption and development. This view
was shown to be primarily influenced by institutional support systems and these
frameworks' capacity for effective resource management and allocation.

Finally, a sizable portion of respondents stated that supporting frameworks significantly

impacted the effective use of SMIFs. This viewpoint reflects the understanding that
robust institutional support networks and successful financing initiatives are essential
to the uptake and long-term viability of SMIFs. The study emphasizes how critical
supporting frameworks are to the development of SMIFs, as seen by the large
percentage of respondents who recognized this. The results indicate that SMIF
acceptance and success might be further supported by strengthening support networks,
optimizing resource allocation, and raising awareness.

Several supporting elements are essential for the establishment of effective Student
Managed Investment Funds (SMIFs) at Kenyan business schools. One of the most
important ones is alumni development, which is enlisting the help of former students to

58
promote the fund by speaking, advising, and consulting. Robust university research
initiatives are also important since they give early access to technologies. Universities
located in commercially busy locations have an edge when it comes to geographic
location. For leadership and community engagement, forming alliances and assembling
an advisory board of alumni and outside investment experts are crucial.

Since most programs follow a traditional classroom format, student engagement is

essential. All investment choices are typically made by students, and program
frameworks allow for varying degrees of undergraduate and graduate engagement. Due
to the substantial instructional commitment required by these programs and the frequent
use of adjunct professors or professionals as guest speakers, faculty and professional
engagement is essential. Although trading rooms demand a significant expenditure to
maintain the current equipment, they improve the reality of student learning. A
thorough program handbook detailing goals and processes, together with management
support from university administration, are essential for a SMIF's success. Student
investment clubs can also help SMIFs grow since they give students a foundation in
investing fundamentals before they manage donor cash.

5.3.3 The Influence of Investment Clubs on the adoption of SMIFs

Many viewpoints were expressed by those who participated in the study, which looked
at how investing clubs were thought to affect the uptake of student-managed investment
funds (SMIFs). A significant proportion of participants believed that investing clubs
minimally impacted the adoption of SMIFs. This impression may arise from the
conviction that clubs need to do a better job of encouraging SMIFs, from a lack of
knowledge about their function, or from little participation in club events. Furthermore,
a sizable fraction of the sample believed that investing clubs had little to no impact,
indicating that many respondents only noticed a small impact from these clubs on the
adoption of SMIF.

Interestingly, some respondents were indifferent and had no view on how investing
clubs affected the adoption of SMIF. This neutrality might result from a lack of
exposure to investment club activities, varying experiences, or uncertainty about the
clubs' participation in SMIF initiatives. Conversely, a lower proportion of participants
thought that investing clubs significantly influenced the adoption of SMIF. This group

59
sees investment clubs as crucial to generating interest in SMIF activities, actively
participating in SMIF programs, and efficiently using club networks and resources.
Finally, a tiny proportion of respondents said that investment clubs significantly
influenced the acceptance of SMIFs, indicating that some saw these groups as essential
to the formation and expansion of SMIFs.

The results corroborate Lawrence's (1994) and Grinder, Cooper, and Britt's (1999)
observations that schools with active investment clubs are more likely to develop
student investment funds. Moreover, the study shows that although investment clubs
impact SMIF adoption, they are generally viewed as having a minimal impact, in
contrast to the more significant impacts that Grinder, Cooper, and Britt (1999) noted.

5.4 Conclusion Commented [U1]: mention which theory is validated by the

results
This study examined factors affecting the adoption of student managed investment
funds by Kenyan business schools. The findings offer important information on
respondents' understanding of Student Management Investment Funds (SMIFs). The
study findings affirms the ideologies of the experiential learning theory which suggests
that experienced knowledge is "knowledge gained through direct encounter with a
subject, person, or thing," according to Burnard (1989). This theory contends that
experiential learning is fundamentally action-based, meaning that students'
participation in real-world applications relevant to their field of study is crucial to their
education and career advancement. According to the principle of experiential learning,
learning by doing involves becoming involved with the processes being studied directly
rather than just thinking about theoretical concepts. The notion of experiential learning
bases a concept or hypothesis on first-hand understanding of the phenomenon. Several
authors contend that knowledge cannot be acquired in a vacuum and that concepts must
be combined with learners' experiences (Boud et al., 1993; Gass, 1992; Keeton & Tate,
1978). Therefore, experiential learning theory supports Kenyan business schools' grave
need to do all within their power to create an atmosphere that is both favorable and
required for the adoption of SMIFs.

The study findings also shed essential light on respondents' perceptions of how difficult
it was to get initial capital for Student Management Investment Funds (SMIFs). A small
percentage of participants thought the procedure was simple due to supportive

60
frameworks and good market circumstances. Furthermore, a more significant
proportion found it simple, presumably due to pre-existing financial means or
supportive networks. A sizable fraction thought that the process of acquiring funds was
moderately easy. On the other hand, a significant portion of respondents said the
procedure was challenging, pointing out several barriers, such as scarce financial
resources or bureaucratic difficulties. The findings highlight the difficulty of getting
funds for SMIFs and the problems people may have when trying to obtain their first
capital. The study's findings indicate that it is suitable for educational institutions to
start the SMIs process and look for funding sources for these initiatives. Academic
institutions might help the SMIFs by granting them a university endowment or looking
for donor funding. In turn, this would enable them to get things started.

Additionally, the study looked at the investment activities that may be made to assist in
SMIF funding. Investment clubs are among the most noteworthy activities covered in
the survey. The results offer significant perspectives on how respondents assess
investing clubs' impact on Student Management Investing Funds (SMIFs) uptake. A
sizeable percentage expressed doubt or said the influence of investing clubs on SMIF
adoption was negligible. This impression might result from several things, including
different investment approaches, a lack of integration with SMIF initiatives, or a lack
of cooperation.

A sizable segment of the participants, indicating confusion or lack of exposure to

investment club operations, restated the neutral opinion regarding the impact of the
investment clubs on the SMIFs. A minority, on the other hand, felt that the effect was
tremendous or very high, indicating the potential contribution of investment clubs to
the promotion of SMIF activities. These results highlight the viewpoints and possible
factors influencing people's opinions on investment clubs and their participation in
SMIF projects. Colleges should utilize the study's findings as a guide for starting these
investing clubs within their institutions to facilitate the SMIFs, which will help the
student body engage more in experiential learning. This would facilitate the student's
integration of classroom learning with practical professional experience.

The survey's findings point to differing opinions on how supporting frameworks have
impacted the expansion of student managed investment funds (SMIFs). A tiny

61
percentage of respondents said that the assistance had very little to no impact and
blamed problems including delayed adoption, a lack of resources, and ignorance for
this. Owing to varying experiences with the supporting frameworks, a somewhat larger
group perceived the effect as neutral. Supportive frameworks, according to a sizable
majority of respondents, have a high to very high effect on SMIF growth. This suggests
that a lot of people think that strong institutional backing, efficient finance, and all-
encompassing support systems are essential for SMIF adoption and operation to be
successful. Overall, the findings indicate that most respondents acknowledge the value
of a supportive framework in promoting SMIF growth, despite some reservations.

5.5 Recommendations
Universities could create educational initiatives, such as workshops or programs, to
raise faculty and student understanding of the value and function of investment clubs
in encouraging the adoption of SMIF. Giving information on investment clubs, how
they fit into SMIF objectives, and how clubs and SMIF projects may work together are
a few examples of how to do this.

To optimize their influence on adoption promotion, educational institutions must

support and foster active collaboration and partnerships between investment clubs and
SMIF programs. Provide venues or platforms for frequent communication, information
exchange, and cooperative projects between club members and SMIF stakeholders.
Working together will make incorporating investment club activities into SMIF
programs easier and fully use their resources and knowledge to assist SMIF efforts.

Universities should initiate focused awareness initiatives to raise awareness of SMIFs,

especially among those classified as "very unaware" and those who fall into the "neither
aware nor unaware" category. Use various communication platforms, including
workshops, seminars, and social media, to spread the word about the goals, advantages,
and prospects of Small-scale Microfinance Initiatives.

Education institutions could improve the current SMIF support systems by giving
people and groups engaged in SMIF activities more resources, direction, and
mentoring. This might involve setting up specific financing schemes, facilitating

62
networking events, and providing training courses on practical SMIF implementation
techniques.

5.6 Limitations of the study

Due to financial constraints, the study concentrated on six Universities in Nairobi and
its neighborhoods. The six universities were the only universities registered with The
Association of African Business Schools, thus limiting the study to only six institutions
requiring to be more limited in order to represent many other universities in Kenya.
This prevented the study from reaching many more institutions that could have
provided valuable data. Additionally, the study's time frame could have been extended
in order to conduct in-depth research on the study variables, which led the researcher
to overlook some most important research areas. Because the participants were usually
working, it was difficult to schedule a time to administer the questionnaire, and the
sample size was restricted to 180 individuals from the six universities. This might have
limited the researcher’s ability to acquire valuable information that would have added
value to the research findings. Finally, the study should have interviewed more finance
than just 18. This could have given the researcher to get more valuable information
since the lecturers are presumed to possess most experience and knowledge regarding
SMIFs than the students.

5.7 Suggestions for further study

This research examined the factors influencing Kenyan business schools' adoption of
student-managed investment funds. The study looked at six business schools to address
the research issues. A comparison analysis could have been done between Kenyan
business schools and other business schools in Africa. More thorough research
produces more trustworthy results. Finally, while the study looked at what influences
Kenyan business schools' adoption of student-managed investment funds, examining
factors influencing adoption of SMIFs' in business schools in other African countries is
essential.

63
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 APPENDICES
Appendix 1: List of Business Schools in Kenya

1. Strathmore Business School

2. University of Nairobi - School of Business

3. United States International University Africa - Chandaria School of Business

4. Kenyatta University

5. Mount Kenya University

6. Jomo Kenyatta University of Agricultural Technology

Source: The Association of African Business Schools (AABS, 2024)

Appendix 2 : Questionnaire (Finance lectures)

Factors affecting the use of Student Managed Investment Funds (SMIFs) as an

alternative to Internships: A case study of Strathmore University

Lawrence (1994) defines a student investment fund as a fund “where university

students have full discretion over the management of a real dollar portfolio”. The
students have access to a real-time fund to invest in capital and money markets.

SECTION A: Background Information

1. Gender
 Male
 Female
 Prefer not to say
2. Age
 20-30
 31-40
 41-50
 51-60
3. Level of education
 Masters
 PHD
4. Name of business school

…………………………………………………………………………………….

5. How long has the Faculty been in operation?

 Less than 2 years
 2-5 years
 Over 5 years

70
SECTION B: Student Investment Funds

6. Which of the following methods does your Faculty use to impart practical
skills to students studying finance or finance-related courses?
 Internships
 Investment games and challenges
 Student investment clubs
 Others (Please
specify)……………………………………………………….
7. Which activities of SMIFs are you conversant with?
 Investments
 Research
 Portfolio management
 None of the above
8. Are SMIFs and investment clubs the same thing?
 Yes
 No
9. Does your faculty apply the student-managed investment fund in teaching and
learning finance?
 Yes
 No
 If no please proceed to section C
10. Did the student-managed investment fund start as a student investment club?
 Yes
 No
11. For how long has the student-managed investment fund been running?
 Less than one year
 One year
 Two years
 More than two years

Section C

12. How would you raise the initial investment capital for a SMIF?
 Institutional Donors
 Family donations
 School endowment fund
 Others (Please
specify)……………………………………………………….
13. What are some of the challenges you expect to experience while raising the
initial investment capital?
 Lack of willing donors
 Inadequate funds
 Short repayment periods

71
  Other (please
specify)………………………………………………………….
14. How much do you think you would be able to raise for the SMIF?
 Ksh 500,000
 Ksh 1,000,000
 Ksh 2,000,000
 Above ksh 2,000,000
15. To what extent do you think initial capital influence the adoption of SMIFs by
the business school?
16. How long do you think it will take to obtain those funds?
 months
 6 months
 12 months
 More than 12 months
17. Which of the three factors below has the strongest influence on the use of
SMIFs as an alternative to internships?
 Availability of supportive frameworks
 Availability of initial capital
 Use of investment clubs
18. Are there any other difficulties you expect to experience when starting the
investment fund?
 Yes
 No

If yes briefly explain

…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
……………………………………………………………………

19. What are some of the available supportive frameworks for adoption and
development of SMIFs within the business school?
20. Could you mention some of the influences of supportive frameworks on
adoption and development of SMIFs?
21. What is your understanding of investment clubs?
22. What is the contribution of investment clubs on the adoption and development
of Student Managed Investment Funds?
23. Factors affecting the adoption of SMIFs by Kenyan business schools

Factors affecting the adoption of Strongly Strongly

SMIFs by Kenyan Business Schools disagree Disagree Neutral Agree Agree
The university provides adequate resources
and infrastructure to support the
establishment of SMIFs.

72
The university offers relevant courses and
training programs to prepare students for
SMIF participation.
Faculty members are accessible and
supportive in guiding SMIF activities.
There are regular workshops and guest
lectures organized to enhance students'
knowledge in investment management for
SMIFs.
The university has adequate trading rooms
for SMIF activities
The university facilitates networking
opportunities with industry professionals for
SMIF participants
The university encourages collaboration and
teamwork among SMIF members.
The university offers mentoring or coaching
programs to support students' growth in
SMIF activities.
The university provides ongoing
administrative support, partnership for SMIF
operations, such as logistics and paperwork.

24. Availability of capital for adoption of SMIFs

Availability of Capital for Adoption of Strongly Strongly

SMIF disagree Disagree Neutral Agree Agree
There are clear guidelines and processes for
accessing and managing the initial capital for
SMIF activities.
The university offers financial assistance or
grants to support SMIF operations.
There are opportunities for SMIF members to
raise additional capital through fundraising
or external partnerships.
The university provides guidance and
support in seeking sponsorships or donations
for the SMIF.
The university facilitates connections with
potential investors or organizations interested
in supporting the SMIF financially.
The university offers financial management
training and resources to help SMIF
members effectively handle the initial
capital.
The university provides ongoing support in
monitoring and evaluating the use of the
initial capital for SMIF activities.

73
The university encourages transparency and
accountability in the management of the
initial capital for SMIF activities.
Investment clubs offer mentorship or
guidance from experienced members to
support students in the process of SMIF
adoption.

25. Availability of investment clubs

Strongly Strongly
Availability of Investment Clubs disagree Disagree Neutral Agree Agree
The university provides established
investment clubs that serve as a platform for
students interested in SMIF adoption.
Investment clubs offer opportunities for
students to learn about investment strategies,
portfolio management, and financial analysis.
Investment clubs provide a supportive
environment for students interested in
forming or joining a SMIF group.
Investment clubs facilitate networking with
like-minded peers who are interested in
investment and finance-related activities
Investment clubs organize events,
workshops, or guest lectures to enhance
students' knowledge and skills in investment
management for SMIFs.
Investment clubs provide opportunities for
students to collaborate and share investment
ideas and experiences related to SMIF
adoption.
Investment clubs assist in the formation and
management of SMIFs, providing guidance
on legal, operational, and organizational
aspects.
Investment clubs offer mentorship or
guidance from experienced members to
support students in the process of SMIF
adoption.
Investment clubs collaborate with faculty
members or industry professionals to provide
insights and guidance for SMIF activities.

26. Adoption of SMIFs

Strongly Strongly
Adoption of SMIFs disagree Disagree Neutral Agree Agree
I understand the potential benefits of
participating in a SMIF, such as gaining real-

74
 world investment experience and enhancing
my financial skills.
I am interested in joining or forming a SMIF
group at my institution.
I am aware of the concept and purpose of
Student Managed Investment Funds
(SMIFs).
I have the necessary knowledge and skills to
actively participate in a SMIF, including
investment analysis, portfolio management,
and financial research.
I believe that participating in a SMIF would
provide valuable networking opportunities
with industry professionals and potential
employers.
I am confident in my ability to contribute
effectively to a SMIF group and make
informed investment decisions.
I perceive SMIF participation as a valuable
addition to my academic and professional
development.
I have access to the necessary resources and
support (such as faculty guidance, financial
data, and investment tools) to engage in
SMIF activities effectively.
I have a clear understanding of the
operational procedures and guidelines for
managing a SMIF at my institution

Thank you for your time.

Appendix 3: Questionnaire (finance students)

75
Factors affecting the use of Student Managed Investment Funds (SMIFs) by
business universities as an alternative to Internships for finance students: A case
study of Strathmore University

Lawrence (1994) defines a student investment fund as a fund “where university

students have full discretion over the management of a real dollar portfolio”. The
students have access to a real time fund to invest in capital and money markets.

SECTION A: Background Information

1. Gender
 Male
 Female
 Prefer not to say
2. Age
 20-30
 31-40
 41-50
 51-60
3. Level of education
 Degree
 Masters
 PHD
4. Name of business school

…………………………………………………………………………………….

5. Which course are you pursuing??

………………………………………………………………………………………..

SECTION B: Student Investment Funds

6. Which of the following methods does your faculty use to impart practical
skills to students studying finance or finance-related courses?
 Internships
 Investment games and challenges
 Student investment clubs
 Student managed investment funds
 None
 Others (Please specify)
……………………………………………………….
7. Do you know what a student-managed investment fund is?
 Yes
 No
8. Which activities of SMIFs are you conversant with?

76
  Investments
 Research
 Portfolio management
 None of the above
9. Do you understand the difference between a SMIF and an investment club?
 Yes
 No
10. Does your faculty apply the student-managed investment fund in teaching and
learning finance?
 Yes
 No
 If No do not answer questions 8 and 9
11. Did the student-managed investment fund start as a student investment club?
 Yes
 No
12. For how long has the student-managed investment fund been running?
 Less than one year
 One year
 Two years
 More than two years
13. Does your Faculty have an Investment club?
 Yes
 No
 If NO do not answer section C

Section C

14. What is your understanding of investment clubs?

15. How long has the investment club been in operation?
 1 year
 2 years
 3 years
 More than 3 Years
16. Which students are in charge of managing the investment club?
 First years
 Second years
 Third years
 Fourth years
 Any elected students
17. Does the investment club engage in real-time and actual investing?
 Yes
 No
 If No do not answer question 14 and 15
18. Which investment strategy does the investment club employ?

77
  Active investment strategy
 Passive investment strategy
 Both active and passive investment strategies
19. How does the investment club make its investment decisions?
 Students decide independently
 Students are guided by their lecturers and industry practitioners
20. Does the investment club manage portfolios for clients?
 Yes
 No
21. Which of the three factors below has the strongest influence on the use of
SMIFs as an alternative to internships
 Availability of supportive frameworks
 Availability of initial capital
 Use of investment clubs
22. Do the investment activities consist part of the coursework?
23. What is the contribution of investment clubs on the adoption and development
of Student Managed Investment Funds?
24. What are some of the available supportive frameworks for adoption and
development of SMIFs within the business school?
25. Could you mention some of the most significant influences of supportive
frameworks on adoption and development of SMIFs?
26. Factors affecting the adoption of SMIFs by Kenyan Business Schools

Factors affecting the adoption of Strongly Strongly

SMIFs by Kenyan Business Schools disagree Disagree Neutral Agree Agree
The university provides adequate resources
and infrastructure to support the
establishment of SMIFs.
The university offers relevant courses and
training programs to prepare students for
SMIF participation.
Faculty members are accessible and
supportive in guiding SMIF activities.
There are regular workshops and guest
lectures organized to enhance students'
knowledge in investment management for
SMIFs.
The university has adequate trading rooms
for SMIF activities
The university facilitates networking
opportunities with industry professionals for
SMIF participants
The university encourages collaboration and
teamwork among SMIF members.
The university offers mentoring or coaching
programs to support students' growth in
SMIF activities.

78
The university provides ongoing
administrative support, partnership for SMIF
operations, such as logistics and paperwork.

27. Availability of capital for adoption of SMIFs

Availability of Capital for Adoption of Strongly Strongly

SMIF disagree Disagree Neutral Agree Agree
There are clear guidelines and processes for
accessing and managing the initial capital for
SMIF activities.
The university offers financial assistance or
grants to support SMIF operations.
There are opportunities for SMIF members to
raise additional capital through fundraising
or external partnerships.
The university provides guidance and
support in seeking sponsorships or donations
for the SMIF.
The university facilitates connections with
potential investors or organizations interested
in supporting the SMIF financially.
The university offers financial management
training and resources to help SMIF
members effectively handle the initial
capital.
The university provides ongoing support in
monitoring and evaluating the use of the
initial capital for SMIF activities.
The university encourages transparency and
accountability in the management of the
initial capital for SMIF activities.
Investment clubs offer mentorship or
guidance from experienced members to
support students in the process of SMIF
adoption.

28. Availability of Investment clubs

Strongly Strongly
Availability of Investment Clubs disagree Disagree Neutral Agree Agree
The university provides established
investment clubs that serve as a platform for
students interested in SMIF adoption.
Investment clubs offer opportunities for
students to learn about investment strategies,
portfolio management, and financial analysis.

79
Investment clubs provide a supportive
environment for students interested in
forming or joining a SMIF group.
Investment clubs facilitate networking with
like-minded peers who are interested in
investment and finance-related activities
Investment clubs organize events,
workshops, or guest lectures to enhance
students' knowledge and skills in investment
management for SMIFs.
Investment clubs provide opportunities for
students to collaborate and share investment
ideas and experiences related to SMIF
adoption.
Investment clubs assist in the formation and
management of SMIFs, providing guidance
on legal, operational, and organizational
aspects.
Investment clubs offer mentorship or
guidance from experienced members to
support students in the process of SMIF
adoption.
Investment clubs collaborate with faculty
members or industry professionals to provide
insights and guidance for SMIF activities.

29. Adoption of SMIFs

Strongly Strongly
Adoption of SMIFs disagree Disagree Neutral Agree Agree
I understand the potential benefits of
participating in a SMIF, such as gaining real-
world investment experience and enhancing
my financial skills.
I am interested in joining or forming a SMIF
group at my institution.
I am aware of the concept and purpose of
Student Managed Investment Funds
(SMIFs).
I have the necessary knowledge and skills to
actively participate in a SMIF, including
investment analysis, portfolio management,
and financial research.
I believe that participating in a SMIF would
provide valuable networking opportunities
with industry professionals and potential
employers.
I am confident in my ability to contribute
effectively to a SMIF group and make
informed investment decisions.

80
 I perceive SMIF participation as a valuable
addition to my academic and professional
development.

I have access to the necessary resources and

support (such as faculty guidance, financial
data, and investment tools) to engage in
SMIF activities effectively.
I have a clear understanding of the
operational procedures and guidelines for
managing a SMIF at my institution

Thank you for your time.

81