Stock Market Performance and Economic Growth in Kenya
Abstract
Stock market is seen as an avenue where efficient distribution of capital resources takes
place and that through this market, borrower’ obtain funds which they utilize to finance
various long term projects, while savers use stock markets to invest their surplus funds.
Many empirical studies have been conducted to assess how stock market performance
relate with economic growth. However, the findings remain inconclusive on the
relationship especially in developing economies. The present study therefore seeks to
investigate whether stock exchange performance affects economic growth in Kenya.
The objective of the study was to investigate effects of stock market performance on
economic growth in Kenya. Causation design was used to assess the correlation
between performance of stock market and Kenya’s economic expansion over a period
from 2010-2020. The target population entails the entire 63 business firms trading with
the Nairobi Securities Exchange from 2010 to 2020. The study relied on secondary data
gathered annually for a period of ten years, from 2010 to 2020, obtained from different
economic investigations from Nairobi Securities Exchange (NSE), Kenya National
Bureau of statistics (KNBS), Capital Markets Authority (CMA) and World Bank
statistics. The study used descriptive statistics inform of percentages, frequencies and
mean and presented the results in tables and graphs. Inferential results were generated
by regression analytical approach. Results identified a bidirectional causality
relationship between economic growth and stock turnover ratio, stock market
capitalization and stock traded value. The government should formulate and execute
Stock Markets strategic policies to guarantee relative stability and steady growth and
development of the economy.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1411]
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