School of Business
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Item Relationship Between Foreign Direct Investments And Economic Growth In Kenya.(KCA University, 2014) Githio, Stephen N.Since the end of cold war and fall of the communism in late 1980`s, many counties have been restructuring the economies to make them more competitive in globalised world. These countries have looking for alternatives that can help the economies grow and achieve a desired level capable of sustaining the bulging populations. One of the major areas that have been considered for this is to increase the level of foreign direct investment. This has lead to an increased interest in the issue of foreign direct investments (FDI) and the role it plays in the overall economic development, among various stakeholders both at national and international levels. The increase of FDI to various countries particularly developing countries like Kenya has continued to fuel debate on their development potential in recipient countries. The part played by foreign direct investments foreign direct investments in supporting growth of economy has been the area under discussion for a considerable period of time among various groups of people with interest in economy including those who receive and are beneficiaries of foreign direct investments in general and Kenya specifically. These discussions have also resulted in many studies being carried out assess not only the effects and impact of FDI to economic growth but also the relationship between FDI and economic growth. Despite this, the numbers of empirical studies that examine the relationship between economic growth and foreign direct investment in Kenya are few and not very conclusive, creating a literature gap on the same subject. This study therefore, sought to establish the relationship between foreign direct investments and economic growth in Kenya and establish, using causal study whether changes in the foreign direct investments cause changes in the economic growth or whether changes in GDP causes changes in foreign direct investments. The general objective of this study therefore was therefore to evaluate the relationship between foreign direct investment and economic growth of Kenya. To achieve this objective this study applied the time series analysis. The conclusion of this study is that there is a positive relationship foreign direct investments and economic growth in Kenya. The study also concludes the there are no causation links between the foreign direct investments and economic growth in Kenya.Item Effects of mobile money transfer services on economic growth in Kenya(Kca University, 2016) Nyasimi, Esther W.The mobile money transfer service is an aspect of a broader concept emerging in the electronic payment and banking industry referred to as Mobile Money. Economic growth is measured in nominal terms. This study sought to establish the effect of mobile money transfers on economic growth in Kenya. The objective of the study was to establish the effect of mobile money transfer service on economic growth in Kenya. This phenomenon is keenly being achieved through Mobile Money Transfer Services initiative already taking significant and positive direction in Kenya. This study employed explanatory research design which focuses on why questions by developing casual explanations. An explanatory survey design shows how variables relate to each other. It aimed at establishing a cause and effect between variables. The dependent variable was economic growth for the year 2007 to 2015 (7 years or 28 quarters). The independent variables were mobile money transfer agents, mobile money transfer customer enrolments, mobile money transfer transaction frequency and mobile money transfer deposit value. The choice of the years was because of data availability. The target population accessible was 7 years. The sample size of the study was 7 years. This implied that a census methodology was used because of the mobile money transfer existence was short. The study used secondary data sources to gather information relevant in reaching the research objectives. The secondary data was collected from the CBK and the (KNBS) Kenya National Bureau of Statistics reports. The study’s data collection source was justified by the fact that data on mobile money transfer agents, mobile money transfer customer enrolments, mobile money transfer transaction frequency and mobile money transfer deposit value were available in the CBK while the same works hand in hand with KNBS in making such statistics and estimation. The scope of the study determined the effect of mobile money transfer on economic growth. The geographical scope of the study was Kenya. Both regression analysis and time series analysis were used to analyze the data. There was no Co-integration between economic growth and mobile money agents, customers, frequency of transfer as well as the value of money transferred. VAR modeling impulse response revealed that number of agents, customers and frequency of transactions have a long run positive shock on economic growth while both interest rate and exchange rate impacts it negatively. There is need to intensify the need for adaption of mobile money transfer services among those who have not adapted them. The study recommends that the policy makers take mobile money transfer into consideration when drafting policies. This was because of the indirect relationship of mobile money transfer to economic growth through the provision of job opportunities, increased financial deepening and financial inclusion. Further, the study recommends that the government set up mechanism and framework to support innovation and offer substantive regulation in the mobile money transfer market to safeguard and offer security to the service users.Item Effect Of Public Debt On Economic Growth In Kenya(Kca University, 2016) Achwoga, Gideon N.A developing country like Kenya compliments its revenue through public borrowing. The successive governments have always acquired huge sums of public debt to finance national development plans in Kenya. High levels of public debts have mixed effects on economic growth. This examines the effects of public debts on economic growth. Data spanning from 1963 to 2015 was used. The study sought to establish the effect of domestic and foreign public debt on economic growth in Kenya. A descriptive research design was applied. Secondary data obtained from World Bank Sources, Central Bank of Kenya, International financial statistics like the International monetary fund and Kenya National Bureau of Statistics was used for analysis. Data was analyzed using EVIEWS version 7.2. The findings indicated that economic growth is negatively and significantly related to external debt. The results indicated significant and negative associations between GDP and domestic debt. Multiple regression analysis indicated that economic growth is positively and significantly related to domestic debt. The association between debt service and GDP was positive but not significant. Other results also indicated that the association between debt service and GDP was positive and significant. Exchange rate had a negative and insignificant association with GDP. In light of the results and conclusions discussed in the foregoing paragraphs, the government and policymakers in Kenya should consider the following recommendations to improve public debt management. First, the governments should establish and adopt an optimal balance between external and domestic debt to maintain steady economic growth. Although domestic debt had no significant effect on GDP in the short run and a positive effect on GDP in the long run, it cannot be relied on entirely since a rapid increase in borrowing locally has the potential of crowding-out private investments. Second, the negative effect of exchange rate on economic growth is a signal to the central bank and Policy makers that they need to stabilize the local currencies for instance by improving exports. Since debt service causes exchange rate, proper management of debt service is hence a key priority for the government. The study also recommends that prudential fiscal management measures are required to avoid an unnecessary increase in overall public debt. A reduction in borrowing will enable the country to use a greater proportion of their tax revenues for investments rather than repaying loans, thereby increasing economic growth. Furthermore, real exchange depreciation raises the debt burden and negatively relates to GDP. There is thus the need to ensure that exchange is not over-devalued in order to balance two effects.Item Effect Of Public Expenditure On Economic Growth In Kenya: 1963 2015(Kca University, 2017) Muguro, Julia W.This study sought to examine the effect of public expenditure on economic growth in Kenya between 1963 and 2015. To establish which specific components of government expenditure, have significant effects on economic growth. Public expenditure was disintegrated into two major components; development and recurrent expenditure. The dependent variable was economic growth expressed as real GDP while the independent variables were the expenditure components. The study used secondary data extracted from Economic Surveys, Statistical Abstracts published by the Kenya National bureau of Statistics, Kenya Institute of Public Policy Research and Analysis and the Ministry of Devolution and Planning. The study applied Vector Auto Regression estimation technique using annual time series data for the period 1963 to 2008 to evaluate the effect of government expenditure on economic growth. The study used a Distributed Lag Model with lagged explanatory variables to explain the relationship between economic growth and public expenditure. The ARDL was used to test the causal link between public expenditure and economic growth in Kenya during the period. The long run regression results showed that the effect of public expenditure components on economic growth was non- significant. The study recommended that the government encourage programs that foster increased public investment for increased economic growth.Item Effect Of External Financial Inflows On Economic Growth In Kenya(KCA University, 2018) Bwire, Joseph W.The purpose of this study was to investigate whether external financial inflows had a positive or a negative effect on economic growth in Kenya. The problem that prompted this study was the realization that previous studies were based on cross country research and as such do not factor in the country specific effects of the components to economic growth. This study therefore looked at Kenya as a specific country and tried to incorporate both private capital inflows and philanthropy and other official flows. The main objective of the study was to examine the effects of external financial inflows on economic growth in Kenya. The specific objectives were; establish the effect of Foreign Direct Investment inflows on economic Growth of Kenya; analyze the effect of Government borrowing from multilaterals on economic growth of Kenya; determine the effect of Foreign Aid inflows on economic growth of Kenya and determine the effect of migrant remittances on economic growth of Kenya. To achieve the objectives an ARDL model was used, preliminary unit root test, co-integration tests. The study sampled a period of 54 years starting from year 1963 to year 2017. Secondary data for analysis was collected from Central Bank of Kenya; Kenya National Bureau of statistics and the World Bank. The findings of this study were expected to form a basis for policy formulation for both policy makers and stakeholders in relation to FDI, Foreign remittances, foreign aid and government borrowing from multilaterals with a view of improving the economic growth to double digits and ultimate realization of vision 2030. The study found that FDI, MR, FA, GB explained significant proportion (89.32%) of the variation in GDP. Further, an increase in the FDI increases the GDP same to MR. Increase in FA decreases the GDP similar to GB. The study concluded that the country should make use of non-tax instruments such as specification on local content of inputs to enhance its benefits from FDI. Second, remittances could cause negative effects by recipient households spending more on luxury goods and leaving little for unproductive savings and investment. In addition, foreign aid can be enhanced positively to affect economic growth through various components such as loans, multilateral and bilateral aid flows, grants and technical cooperation. Further, high levels of debt depress economic growth as external debt slows growth after reaching a threshold level. It is recommended that technology transfer to firms need to be taken into consideration by the government to ensure that there are spillovers to the domestic firms and therefore GDP of the country can be increased in the process. There is also need for human capital accumulation which can reduce or mitigate poverty by increasing income and living standards. In addition, the foreign aids can be more efficiently used to improve their effect on GDP. Finally, the study therefore recommends that more investment by the government is needed to reduce external borrowing.Item Effect Of Macroeconomic Variables On Portfolio Risk Of Commercial Banks Listed On Nairobi Securities Exchange(KCA University, 2014) Kisoi, Stephen M.This study sought to establish the effect macroeconomic variables on Portfolio Risk of commercial banks listed on the NSE for the period 2004 to 2013 and sought to empirically establish the impact of interest rates, exchange rates and economic growth on portfolio risk in Kenya. In construction of portfolio investors rely on various indicators which are expected to determine the risk and return of the investments. However, the situation in Kenya is such that investors seem to ignore the determinants of risk and return of investments. This is evidenced by instances where investors use the gut feeling or use herd behavior when picking stocks for instance during the KenGen and Safaricom IPO. The research used secondary quarterly data for 11 financial institutions listed at the NSE and adopted an explanatory research design. In order to achieve the stated objectives the research adopted a time series multivariate regression analysis. Engle-Granger Cointegration tests was performed and the empirical results indicated that the variables were cointegrated and an Error Correction Model (ECM) was thus adopted. The Error Correction Model indicated that 52 percent of the variation in portfolio risk was explained in changes in the Interest rate, foreign exchange rate and GDP growth rate and that the Interest rate had a negative and significant relationship with the portfolio risk whereas the other variables were insignificant. The research concluded that despite the observed relationship between the variables policies designed should be meticulously be designed so as to maximize on the returns from investment in various portfolios as policies play a very crucial role in informing investors’ decision to undertake investment opportunities. Based on the study findings, two recommendations were provided based on the objectives of the study. First given that the relationship between interest rates and portfolio risk was negative and significant it is recommended that despite the fact that an increase in interest rate is associated with a decline in the portfolio risk a policy aimed at reducing the portfolio risk faced by investors should consider among other things such as inflation rates as an increase in the interest rate with the intention to reduce the portfolio risk by investors may end up discouraging investors from investing in these portfolios. Secondly, given the significant positive relationship between GDP growth and portfolio risk, it is recommended that in making decisions of whether to invest in portfolio stocks listed at the NSE, investors should consider the economy’s overall performance as proxied by the GDP growth rate. Despite the fact that the relationship was positive for the period of study, the dynamic nature of the stock market should also be considered so as to ensure that sound investment decisions are made.