Theses and Dissertations
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Item Selected macroeconomic indicators and stock market performance: an ARDL approach(KCA University, 2025) Abukutsa, Noel O.The market for securities significantly stimulates economic growth through financial intermediation, cost efficiency improvements, the market valuation process, and risk allocation. Stocks are among the most economically volatile assets, and any sudden change in stock prices can have a significant impact on an economy. The worldwide economic downturn has seen equity indices plunge, volatile currencies, and falling prices of essential commodities. Many African stock markets are facing challenges, primarily due to low external demand rather than weak internal fundamentals. The primary objective was to determine the short and long run relationships between selected macroeconomic indicators and stock market performance in Kenya using monthly time series data from January 2008 to December 2024. The ARDL model was employed, with inflation, lending interest rates, exchange rates, and foreign portfolio investment as independent variables. The money supply served as a control variable to account for its potential association with the NSE 20 Share Index, ensuring that underlying monetary conditions did not confound the observed relationships between the independent variables. The study found that lending interest and exchange rates have a significant short and long run relationship with the NSE 20 Share Index. Long-run ARDL results indicated a positive relationship with loan rates, with a coefficient of 317.18, suggesting that moderate adjustments in loan rates can enhance market performance. The short-run relations were negative with a coefficient of -53.99, indicating higher borrowing costs and decreased liquidity. Exchange rate depreciation had a consistently negative relationship with a long-run coefficient of -29.94 and a short-run coefficient of -17.19, degrading stock performance. The study recommends that CBK should carefully manage interest rates for stability and market growth, the government of Kenya should stabilize exchange rates, policymakers should uphold inflation targeting for price control, and CMA should create investor-friendly policies that attract and retain international investors.Item Relationship Between Financial Development Indicators And Stock Market Performance In Kenya(KCA University, 2019) Muriuki, Humphrey M.The study examined the relationship between financial development indicators and stock market performance in Kenya for the duration between 2004 and 2018. The purpose of the research was to determine whether there is a significant relationship between financial development indicators (depth, accessibility and openness) and stock market performance measured by market NSE 20 share index. Quarterly secondary data was used and sampled from the Central Bank of Kenya statistical reports and Kenya national bureau of statistics. Hypotheses were devised and examined using the Vector error correction mechanism modeling. The study concluded that financial development indicators have a significant impact on the stock market performance which is a key driver of economic growth in Kenya. Recommendations were made to promote and encourage stock market performance. The Central Bank of Kenya needs to adopt an expansionary monetary policy to increase money supply in the economy by reducing the level of real interest rates. There is need for the Capital Market Authority to encourage locals to venture in stock market. This can be done through educating investors and awareness campaigns. Local investors’ participation will foster stock liquidity and increase confidence to the stock market.