| dc.description.abstract | The aim of this descriptive and correlational study was to determine the relationship
between fiscal policy and performance of the Nairobi Securities Exchange. The
performance measure of the Nairobi Securities Exchange used was the NSE 20-Share
Index which was regressed against the fiscal policy instruments including government
revenue, government expenditure and government debt expressed as percentage of the
GDP. The period of the study was ten years from January 2004 to December 2013.
The study employed monthly secondary data which was obtained from the CBK,
Kenya National Bureau of Statistics and NSE. Data were analyzed using the Ordinary
Least Square method which assumes linearity between the dependent variable and the
independent variables and the analysis technique was multiple regression aided by
research software ‘eviews’ version 7. The study found out that performance of the
stock market is influenced by the Government’s fiscal policies. Government
expenditure and revenue had positive effect on stock market performance as both are
indicative of the economic performance and the former reflect micro and
macroeconomic consideration and direction of the Government. Government debt had
low positive effect on stock market performance with a negative cumulative effect as
its long-term use poses risk of inflation owing to interest rates on debt. These findings
confirm the researcher’s priori expectation that government fiscal policy actions
significantly affect stock performance. The rest of the paper is organized as follows:
chapter one covers introduction by addressing issues related to background of the
study, statement of the problem, study objective and the significance of the study;
chapter two focuses on literature review; chapter three is about the research
methodology; chapter four covers data analysis, results and discussion; and lastly
chapter five addresses summary, conclusion and recommendations. | en_US |
