Central Bank Rate Changes Announcement Effect on Stock Returns of Firms Listed at the Nairobi Securities Exchange, Kenya

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dc.contributor.authorAmollo, Florence Adhiambo
dc.contributor.authorNdede, Fredrick W. S.
dc.date.accessioned2023-11-29T11:22:15Z
dc.date.available2023-11-29T11:22:15Z
dc.date.issued2023-11
dc.descriptionArticleen_US
dc.description.abstractThe study aimed to investigate the relationship between central bank announcements of changes in rates and stock market returns of selected firms listed at the Nairobi Securities Exchange. The specific objectives were to; establish the effect of upward announcement of the central bank rates and downward announcement of central bank rate on stock returns of firms listed at the NSE. The study was guided by various theories to explain the relationship between the changes in the central bank rate announcements and the stock market returns including the Interest rate theory and Liquidity preference theory. Stratified sampling technique was adopted for the selection of the respondents from a population of firms listed at Nairobi Securities Exchange. The collected data was analyzed using econometric views software (EVIEWS). The study findings established that upward revision Central Bank Rate has negative effect on stock market performance with a P-value of -0.002. The findings show that fixed central bank rate have zero significant impact on stock returns with a P-value of 0.000. Also, the findings show the down revision of the CBK rate positive impacted the stock return with a P-value of 0.001. The study concludes that upward revision of central bank rate negatively impacted the stock returns of firms listed at NSE. The fixed central bank rate has zero significant impact on stock returns. Fixed rates provide greater certainty for firms listed at NSE in Kenya. The study concludes that down revision of the CBK rate impacted the stock return. The study recommends that the Central Bank of Kenya and the Monetary Policy Committee should maintain the CBR at reasonable levels. Minimal volatility on the CBR should be maintained so as to reduce the volatility of the stock market performance. Nairobi Securities Exchange regulators should encourage market activities and policies which will improve the market’s efficiency, so that the changes in CBR may have minimal or no effect on stock returns of listed companies within the market.en_US
dc.identifier.citationAmollo, F. A., Ndede, F. W. S. (2023). Central bank rate changes announcement effect on stock returns of firms listed at the Nairobi Securities Exchange, Kenya. International Academic Journal of Economics and Finance, 4(1), 48-70en_US
dc.identifier.urihttps://iajournals.org/articles/iajef_v4_i1_48_70.pdf
dc.identifier.urihttps://ir-library.ku.ac.ke/handle/123456789/27221
dc.language.isoenen_US
dc.publisherIAJEFen_US
dc.subjectCentral Bank Rate Revision and Stock Market Returnsen_US
dc.titleCentral Bank Rate Changes Announcement Effect on Stock Returns of Firms Listed at the Nairobi Securities Exchange, Kenyaen_US
dc.typeArticleen_US
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