Investor compensation funding as a determinant of investor confidence in the Capital Markets in Kenya

Abstract

Efficient capital and fmancial markets systems play a crucial role in promoting economic development in any country. The level of efficiency and efficacy would largely determine the confidence of the investors in the system. If there is adequate protection of their investments, the market is bound to grow.

There are justifiable doubts as to the efficacy of the capital markets' Investor Compensation Fund's ability to enhance confidence in the capital markets. This has arisen due to the Fund's inability to substantially and in a timely manner compensate the investors who suffer as a result of the collapse of some market players.

There is need to undertake various measures to strengthen investor confidence. These include the raising of the maximum monetary compensation limit, seeking new ways of increase the financial capacity of the Investor Compensation Fund and to facilitate the management of the Fund by an independent Board envisaged under the law.