The relationship between foreign institutional investment and equity turnover at the Nairobi securities exchange
International capital inflow is a very important issue to an economy and has both positive as well as negative impact on the health of the recipient economy. On the positive side, these capital inflows raise the level of economic development by augmenting the domestic investment and widen financial intermediation. The objective of this study was to determine the relationship between foreign institutional investment and equity turnover at the Nairobi Securities Exchange. The study adopted a descriptive research design. The study used secondary data from the Nairobi Securities Exchange collected using data collection sheet which was edited, coded and cleaned. F-test, a non-parametric test of differences developed by Sir Williams Gosset was used in this study as a test of significance. In order to test the significance of the model in measuring the relationship between foreign institutional investment and equity turnover at the Nairobi Securities Exchange, the study conducted an Analysis of Variance (ANOVA). From the analysis, it can be noted that foreign institutional investors had varying degrees. However, in general, the foreign institutional investors had a high impact on equity turnover at the NSE. The effects of foreign institutional investors on the equity turnover at the NSE however remained high whereby in some instances it was almost 100%. This shows that foreign institutional investors greatly influence activities at the NSE. This study established that foreign institutional investors play a key role on the equity turnover at the NSE. This study therefore recommends that the Country handles its macroeconomic appropriates as the changes in the macroeconomics like exchange rates and inflation bring about devaluation of the currency and affect the performance of the Stock Exchange. This will ensure stability at the NSE which promotes fair trade. This study also established that sales were positively correlated with Equity turnover at the NSE while purchases were negatively correlated with Equity turnover. This study therefore recommends that foreign institutional investors balance off the purchase and sale of stocks.