Constraints to the growth of commercial paper as a source of short term finance for listed companies

Abstract

The purpose of this study was to investigate constraints to growth of commercial paper market in Kenya with reference to listed companies. Conceptual framework of the study looked at the independent variables which included issuance requirements by CMA, issuance costs and the effects of credit rating agencies while the dependent variable was growth of commercial paper market. Innovations in the commercial paper market that could popularize it as a source of short term finance was also looked at. The study population comprised of forty seven (47) listed companies in Kenya with a minimum authorized and fully paid up share capital of Kshs 50 million and net asset of Kshs 100 million as per the requirement of CMA. The study used a descriptive research design and studied the entire population. Primary data was collected using semi structured questionnaires that were self-administered to the respondents. Secondary data was obtained from past studies on the topic, CMA reports, CBK reports and published financial statements. Data analysis techniques included the use of percentages and tables for easy analysis and interpretation. A multiple regression equation was used to establish the relationship among the dependent variable and independent variables.