| dc.description.abstract | The stock market provides an important alternative source of long-term finance for long-term productive investments. This helps in diffusing stresses on the banking system by matching longtenn investments with long-term capital. Stock markets in the world individually and collectively playa critical role in their economies. They provide an avenue for raising funds, for trading in securities including futures, options and other derivatives which provide opportunities for investors to generate returns. The performance of the stock market is influenced by a number of factors the main ones among them being the activities of governments and the general performance of the economy.
It provides equity capital and infrastructure development that has strong socio-economic benefits like roads, water and sewer systems, housing, energy, telecommunications, public transport, ideal for financing through capital markets via long dated bonds and asset backed securities. Stock markets are very important because they play a significant role in the economy by channeling investment where it is needed and put into the best use. In the world the stock markets have seen a massive growth since it is easier to take a company public because the market is so sophisticated that is it is east to obtain information and they are clear policies which govern the running of such capital markets therefore this helps the economy grow since it provides a boost to companies wishing to grow very large because investors are attracted to such markets.
t\lthough a flow of global investor interest in the 1980s and 1990s Africa has been left behind by he massive international capital flowing to developing economies, it has remained the only leveloping region in which development assistance flow exceeds private capital flows. This can be attributed to a lack of well developed financial market and lack of clear policies that govern such markets. International organizations, governments in developed countries and international financial institutions seem to pay more attention to the Asian and Latin American emerging capital markets in contrast to the African markets (particularly in Sub-Saharan Africa) as evidenced by few studies and literature on the development of capital markets in Sub-Saharan Africa.
This study therefore, focuses on capital market development in Africa, with the Nairobi Stock Exchange (NSE) as a case study. The NSE has continued to increase in importance in economic growth and capital market development in the country and indeed the whole of East Africa region. African countries, particularly those in Sub-Saharan Africa (SSA) remain the only developing region in which development assistance flows exceed private capital flows. Except a few countries (such as South Africa, Mauritius, Botswana), most of the economies in the SSA region do not yet have strong capital markets.
In Kenya the stock market has been grown particularly after liberalization of the economy by the government. This was as a result of the government making most of the government owned to public companies by floating shares in the stock market this gave most people opportunities to own them. The purpose of this study is to examine the role and impact that capital markets have on the economy, the benefits of the stock exchange on the economy, the challenges facing efforts to develop market of stock market development in Africa, and the lessons learnt as well as governments can use some of them to develop and ensure the growth | en_US |
