Theses and Dissertations
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Item Relationship between macroeconomic factors and the stock market development in Kenya(KCA University, 2025) Karanja, Grace N.Stock markets constitute an essential component of modern economic systems, serving as mechanisms for capital allocation, savings mobilization, and the promotion of economic development. They offer corporations a structured avenue to raise capital for expansion, enhance market liquidity, facilitate price discovery, and contribute to both the creation and distribution of wealth. In Kenya, the interplay between macroeconomic indicators and stock market development warrants comprehensive investigation, particularly in light of the growing significance of financial markets in the country’s economic architecture. This study sought to examine the relationship between selected macroeconomic variables specifically Gross Domestic Product (GDP) growth, inflation, interest rates, and exchange rates and their influence on the development of the Kenyan stock market. The investigation was anchored in prominent theoretical models such as the Efficient Market Hypothesis (EMH), Arbitrage Pricing Theory (APT), and the Three-Factor Model. These frameworks offered foundational perspectives for interpreting the interactions between economic fundamentals and financial market performance. Using a mixed-methods approach, the study combined quantitative analysis with time series data from 2000 to 2023 on a quarterly basis. The statistical analysis was conducted using STATA 12, employing a multiple linear regression model under the ordinary least squares (OLS) methodology to identify significant relationships among the variables of interest. Primary data sources included financial disclosures from listed firms on the Nairobi Securities Exchange (NSE), macroeconomic data from the Central Bank of Kenya and the Kenya National Bureau of Statistics, as well as exchange rate information obtained from the International Monetary Fund (IMF) and the World Bank. The analytical process commenced with a descriptive statistical assessment, encompassing measures such as the mean, variance, skewness, and kurtosis. Thereafter, diagnostic tests were conducted to ensure the fulfillment of OLS assumptions, including tests for stationarity, multicollinearity, and serial correlation. To capture both short-term dynamics and long-term equilibrium relationships, the study applied advanced econometric techniques, including Vector Error Correction Model (VECM), the Johansen Cointegration Test, and Granger Causality analysis. Furthermore, the Impulse Response Function (IRF) and Forecast Error Variance Decomposition (FEVD) were utilized to evaluate the dynamic temporal responses of the variables. The findings of the study yielded valuable insights for policymakers, investors, and financial analysts by elucidating the macroeconomic determinants of stock market performance in Kenya. The results also served to inform strategic financial decision-making, enhance risk management frameworks, and support the formulation of sound economic policies. Additionally, this study aimed to contribute to the broader academic discourse on financial market development within the context of emerging economies.Item Marketing strategies and performance in Nairobi’s central business district pastry shops(KCA University, 2026) Njeru, Joy N.This study examined the effect of marketing strategies on the operational performance of bakeries within Nairobi’s Central Business District. Using a mixed-methods approach, data were collected from a purposive sample of 48 bakeries, achieving a 91.7% participation rate after four bakeries (8.3%) declined due to restructuring, confidentiality concerns, or staffing shortages. The analysis focused on four key areas: digital marketing and social media usage, customer retention programs, promotional effectiveness, and operational performance measures. Results indicated that 64% of bakeries actively used digital marketing channels such as Instagram, Facebook, Google Ads, and SEO, while 36% had no visible online presence, potentially limiting their reach to digitally inclined consumers. Structured loyalty programs were adopted by 42% of bakeries, with the remainder relying on informal retention approaches. Seasonal promotions were utilized by 55% of respondents, yielding average sales increases between 10% and 30% depending on the campaign type. Operational performance tracking varied, with 48% employing measurable KPIs like daily sales, wastage rates, and delivery punctuality, while others relied on qualitative assessments such as freshness and customer satisfaction. The study identified significant operational challenges, including high rental costs (71%), ingredient price inflation (65%), competition from chains (49%), and seasonal workload spikes. The findings underscore the need for greater adoption of digital marketing, structured loyalty systems, standardized performance metrics, and innovative growth strategies such as subscription models and corporate catering partnerships. Inferential statistics show that customer acquisition strategies, product positioning, branding, and sales tactics all have a significant positive effect on the performance of pastry shops in Nairobi’s Central Business District. Shops that invest in creative customer acquisition methods such as social media marketing, loyalty programs, and promotions experience improved visibility and higher sales. Effective product positioning through quality, packaging, and differentiation enhances competitiveness and customer loyalty. Strong branding builds trust, recognition, and emotional connection with customers, driving repeat purchases. Lastly, structured sales tactics like upselling, discounts, and personalized selling boost profitability, customer satisfaction, and sustainable business growth. These insights offer practical guidance for enhancing competitiveness and sustainability within Nairobi’s urban bakery sector.Item Auditor characteristics and financial sustainability of county governments in Kenya(KCA University, 2025) Kiarie, Anthony N.Auditors play a central role in advancing financial sustainability within public sector institutions, particularly county governments. Their characteristics, including professional experience, independence, ethical orientation, and risk disposition, significantly shape the quality of financial reporting, accountability, and transparency, which are essential for sustainable fiscal management. This study investigated the effect of auditor characteristics on the financial sustainability of county governments in Kenya. Guided by legitimacy theory, stewardship theory, and inspired confidence theory, the research focused on four specific objectives: to assess the influence of auditors’ professional experience, independence, ethical orientation, and risk attitude on financial sustainability. A descriptive research design was employed, targeting all 47 counties in Kenya. A sample of 123 respondents was selected, and data were obtained through structured questionnaires utilizing a five-point Likert scale. Instrument reliability was verified through a pilot test, yielding a Cronbach’s alpha of 0.7. Data analysis was conducted using SPSS, applying both descriptive and inferential statistics, including multivariate regression and structural equation modeling. The findings established that auditors’ professional experience, independence, and ethical orientation exert a positive and statistically significant effect on financial sustainability, while auditors’ risk attitude demonstrated a negative but statistically insignificant effect. The study emphasizes the importance of strengthening auditors’ technical competencies, safeguarding their independence from political interference, and promoting high ethical standards as key strategies for enhancing accountability and fiscal discipline. It concludes that sustained investment in auditor capacity-building, coupled with institutional reforms to support professional autonomy and integrity, is vital for improving governance and ensuring long-term financial sustainability within devolved government units.Item Effect of Macroeconomic Variables on the Net Asset Values Of Equity: Empirical Evidence From Pension Funds in Kenya(KCA University, 2014) Kemboi, Leah J.Investors of pension funds just like any other investor seek to achieve high returns on investment while at the same time minimizing risks. For this reason, fund managers choose to invest pension in quoted equity with the sole objective of growing the fund by making capital gains through appreciation of stock prices and generating revenue in the form of dividends. The relationship between macroeconomic variables and the stock market index is a well documented subject in many literatures but the effect of the stock market index and macroeconomic variables on the net asset values of equity pension funds remains an uncharted course. Whereas it is acknowledged that macroeconomic variables influences the level of investments and returns - and by extension the net asset values of equity pension funds, the magnitude and the direction of the effects is an empirical issue. The purpose of this paper therefore was to investigate the effect of the Nairobi stock exchange index (NSEI) and selected macroeconomic variables – inflation (INFL), interest rate (WIR), and Money supply (M2) on the net assets of equity pension funds (EPF). To this end, published quarterly time series data from December 2001 up to and including December 2012 were obtained from the Central Bank, Kenya National Bureau Statistics, Pine Bridge and the Retirement Benefits Authority. Explanatory research was used to establish the relationship between the variables and as a preliminary, data was tested for stationarity using the ADF and KPSS test and the data was found to be I(1)- a necessity for cointegration. Johansen cointegration test was done, a multivariate vector error correction (VEC) model and the estimates obtained. Empirical results showed that the net asset values of equity pension funds formed a significant positive relationship with inflation, weighted interest rate and the Nairobi Stock exchange index and a negative significant relationship with money supply. The error correction model also indicated that the net asset value of equity pension funds adjusted by 44.3 % in one quarter and takes six months to eliminate the disequilibrium. Variance decomposition tests and impulse response functions indicate that approximately 81% of changes or variance in the net asset value of equity pension fund was explained by its own shocks and innovations. The implication of this study is that fund managers and scheme participants should know that the macroeconomic variables under consideration in this study and the stock exchange index indeed forms a long-term equilibrium relationship with the net asset value of equity pension funds and be concerned especially with changes in money supply.Item Relationship Between Alternative Financing And Growth Of Savings And Credit Co-operative Societies In Baringo County(KCA University, 2013) Jepkorir, Jane B.Savings and credit cooperative societies (SACCOS) have continued to play a significant role in creation of wealth across all sectors of the Kenyan economy. The SACCO model is perceived to be crucial for sustainable development and as the best vehicle for addressing poverty among majority of Kenyans. Despite its success it is faced with a number of challenges with the key being access to adequate capital to financing its operations and growth. Alternative sources of financing are currently seen to be the new frontier by many saccos as a cheaper and efficient way of meeting their capital requirements however its role in their growth is still unclear. The general objective of this study was to investigate the relationship between alternative financing and growth of saccos, in Baringo county. The specific objectives were to establish the relationship between fixed deposits, interest from short term investments, interests from government guaranteed loans & financial intermediation with the growth achieved by SACCOS in Baringo County. The study employed a descriptive research design targeting all SACCOS in Baringo County. A census approach was used where primary data was collected using semi-structured questionnaires. Descriptive statistics and inferential statistics inform of regression and correlation analysis was used to establish the relationship between the different forms of alternative financing and sacco growth. It was established that fixed deposits and interest from short term investments were the most widely used sources of alternative financing with both the interest and duration of the facility significantly correlating with SACCO growth. Interest from government guaranteed loans were significantly correlating with the growth of SACCOS. The study concluded that fixed deposits, interest from short term investments and from government guaranteed loans influenced the growth of SACCOS in Baringo County.Item Effect Of Total Factor Productivity On Economic Growth In Kenya: An Empirical Analysis 1970-2015(Kca University, 2017) Misorimaligayo, Beatrice W.In view of the challenges stated in the Economic Recovery Strategy Paper for Wealth and Employment Creation (ERSPWEC) 2003-2007, the empirical findings of Kalio, Mutenyo and Owuor (2012) and on the basis of the point of motivation by Parente and Prescott (1996), the purpose of this study was to build a model to explain the effect of Total Factor Productivity (TFP) on economic growth in Kenya using time series data for the period 1970-2015. The TFP components of Foreign Direct Investment (FDI), Foreign Aid (FA) and Financial Development (FD) are used to explain the effect on economic growth after accounting for labour and capital productivity. To achieve the objectives an ARDL bounds test of co- integration is employed and a preliminary unit root test, co-integration test, Error Correction Model (ECM) and diagnostic tests are carried out. The ECM findings reveal that the TFP Components of Foreign Aid and Financial Development have insignificant effect on economic growth in the long run and therefore the null hypotheses are accepted. However, Foreign Direct Investment has a significant effect on Economic Growth and the null hypothesis is rejected.Multidirectional causality is determined due to the Error Correction Terms (ECTs) having statistically significant coefficients for Economic Growth, Foreign Direct Investment and Foreign Aid, while Financial Development is insignificant and there is unidirectional causality. The model passed the diagnostic tests except for presence of omitted variable bias in Foreign Aid and Financial Development. A robustness check is then carried out to determine the consistency of the ARDL findings using the Johansen test of co- integration, vector error correction model (VECM) and post estimation tests. The findings reveal consistency in the ECTs with (-.91) for ARDL and (-.87) for VECM with economic growth as the dependent variable for co- integrating equation one. The post estimation tests show non-normality of data for Economic Growth and the Orthogonalized impulse response functions show that Economic Growth and Foreign Direct Investment have significant effect of transitory shocks on each other from period 0 to 3 beyond which at period 4 the shocks become permanent and insignificant. The other variables show effect of permanent shocks from period 0 to 13 on themselves and on each other. In conclusion, the permanent shocks for Foreign Aid are due to regulatory and structural impediments that hinder the growth of TFP in the economy. Financial Development is affected by fragmented goods and capital markets and weak financial systems which prevent the leveraging of cross border investment opportunities. Foreign Direct Investment is affected by high transaction costs and weak absorptive capacity in the business environment. To realise significant effect of the TFP components on Economic Growth, recommendations for policy action are to improve policies for the adoption of technology, implement structural and economic reforms, lower the transaction costs to businesses, improve governance and strengthen financial systems to world class levels in order to raise the levels of savings and investments in the economy.