The Effect of Changes in Interest Rates on the Returns of Stocks of Listed Commercial Banks in Kenya
View/ Open
Date
2012Author
Mulama, Valentine B
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The study aimed at investigating the effect of changes in interest rates on the returns
of the stocks of commercial banks listed on the Nairobi Securities Exchange (NSE).
The population of the study comprised the six commercial banks listed on the NSE
during the entire study period of 2002 to 2011. These banks are Barclays Bank of
Kenya (BBK), Housing Finance Corporation of Kenya (HFCK), Standard Chartered
Bank of Kenya (SCBK), Kenya Commercial Bank (KCB), National Bank of Kenya
(NBK) and National Industrial Credit Bank (NIC). Monthly data on the average 91Day
Treasury bill rates and the returns on the stocks of the respective banks were used
in the study. Summary statistics, correlation and regression analysis were applied to
ascertain the relationship between the dependent and independent variables. The
findings of the study show that the returns on the stocks of BBK, HFCK and SCBK
are negatively related to changes in interest rates while the returns on the stocks of
KCB, NBK and NIC are positively related to changes in interest rates. The most
significant contribution of this study is the use of data from the developing Kenyan
economy in determining the effect of changes in interest rates on the returns of the
stocks of commercial banks especially as most studies in this area have concentrated
on the developed economies.
Citation
Masters in Business AdministrationSponsorhip
The University of NairobiPublisher
The University of Nairobi School of Business