Socio-economic Attributes and Characteristics of the Wealth Portfolios of Salaried Middle and Upper Income Employees in Kenya

Julius M. Muia, Gituro Wainaina


Personal wealth as denoted by accumulated net assets is a key
ingredient of a people’s standards of living. This is because wealth
facilitates consumption, especially in old age, cushions people against
adversities such as illness and unemployment as well as enables further
wealth creation through access to bank credit. The assets that comprise
wealth include cash and bank balances, properties, shares in
cooperatives and listed companies, life assurance policies, accrued
pension benefits, corporate bonds, and treasury bills and bonds.
This article examines size and composition of the wealth portfolios
of salaried middle and upper income employees in Kenya in order to
find out personal attributes that are key determinants of the portfolios.
Primary data was obtained from questionnaires that were administered
on a stratified random sample of 1,067 salaried middle and upper
income employees in Kenya in mid 2010, the time of survey. The
preliminary tests employed the Kaiser Mayer-Olkin (KMO) and
Bartlett’s Test based on correlation and partial correlation as well as

the results of Bartlett’s Test of sphericity to test for the presence of
correlations among variables. For this paper, the results KMO measure
of sampling adequacy of 0.758 was acceptable, since it was higher
than the recommended minimum of 0.50. Additionally, the Bartlett’s
Test of sphericity recorded an acceptable p-value of 0.000, which was
lower than the test value of 0.05 percent, thereby indicating that there
is correlation between the variables.
To establish the determinants of the wealth portfolios of employees
in Kenya, 21variables were used. These variables were analyzed using
factor analysis procedure and in order to achieve a simple and
meaningful structure, that is, have a nonzero loading of the explained
variance for each individual factors, varimax rotation was done. As a
result, six critical factors were established as the determinants of wealth
portfolios of salaried middle and upper income employees, which
include earning capacity, life cycle factors, investment objective,
employee’s cultural background, employees’ risk taking behavior and
savings. The findings largely conform to theory and corroborate
evidence from prior studies.

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