An empirical review of factors affecting revenue collection in nairobi county, kenya

Purpose of the Study

The main objective of this research was to examine effect of selected factors affecting revenue collection in Nairobi city county government

LITERATURE REVIEW


Theoretical Review


Portfolio Theory

As indicated by portfolio theory, diversification lessens risk or variability, given that different stocks in an investment portfolio don't move in the very same direction or the price changes of different stocks are not exactly flawlessly related (Zigrand, 2010). There are two sorts of risks we have to recognize: unique (unsystematic risk) and market risk (systematic risk). The unique risk comes from the antagonistic conditions that encompass a specific organization or industry.

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This risk can be wiped out by diversification. In any case, the market risk can't be disposed of through diversification and it originates from the vast hazards which influence all organizations. For a very much broadened portfolio, the main thing that matters is the risk that financial specialists can't dispose of – the no diversifiable ones. Since a solitary security's commitment to the (market) risk of the entire portfolio relies on upon how touchy the security is to the market developments (measured by beta), the risk of an all-around expanded portfolio equals the average beta of the securities included in the portfolio” (Fustey, 2011).

In the event that the portfolio risk is driven by the betas of each different security, it suggests that diversification can't just wipe out the stand-alone risk, additionally adjust the market risk of the portfolio by changing the mix of different securities. With regards to government finance, the possibility of revenue diversification is like investment diversification. We may consider the different revenue sources or tax bases as an administration's investment portfolio and every tax as one of the securities in the Portfolio.