Title: Effect of Liquidity Control on the Service Delivery Efficiency of County Governments in Kenya
Authors: John Kirika Kamau, Joshua Matanda, Florence Memba
Volume: 10
Issue: 4
Pages: 34-51
Publication Date: 2026/04/28
Abstract:
Effective fiscal management is critical to boosting public sector performance, particularly in developing nations. In Kenya, the 2010 Constitution ushered in a devolved system of governance, making fiscal accountability and efficient service delivery increasingly important. Research shows a strong connection between fiscal management and the efficiency of service delivery, underscoring the role of sound financial practices in improving public services. The study anchored on the liquidity preference theory This study employed a descriptive research design encompassing all 47 Kenyan counties. Secondary data was extracted from audited financial statements covering fiscal years 2013/2014 to 2020/2021. The data was analyzed using STATA 27.0, incorporating descriptive statistics (percentages, frequencies, measures of central tendency and dispersion) and inferential techniques such as correlation, univariate regression, and diagnostic tests. Panel regression models were used to assess the influence of fiscal management and the moderating effect of county population size on the efficiency of service delivery. From the analysis there was a positive and significant effect of cash flow management on service delivery efficiency of county governments in Kenya while account payables had a positive but insignificant effect on service delivery efficiency of county governments in Kenya. In conclusion liquidity control had a Positive and significant effect of cashflow management on service delivery efficiency of county governments in Kenya, thus indicating that county governments had capabilities to meet their short-term obligations and positively impacted service delivery efficiency. However, there is a need for county government to exercise caution through optimization and correction of situations where cashflow management ratios are above or below recommended threshold of 2:1