The Relationship Between Macroeconomic Variables and Shares’ Performance at the Nairobi Securities Exchange

Abstract

The aim of this research was investigating the relationship between the MEV of exchange rate, 91 day T-bill rate, monetary stock (M2) and the lending rate on shares’ performance at the NSE. OLS regression technique was used to establish the relationship of the MEV on the FTSE NSE 15 index performance. The theoretical framework that was considered to inform the selection of the MEV was based on the Multi-Factor Model. Empirical results of the regression model revealed that the MEV of exchange rate and the lending rate were significant in explaining the variations in shares’ performance while the other selected MEV were found to be insignificant. This study reviewed the period from November 2011 to May 2016 by using published monthly time series observations of the variables.