Stock Market Liberalization, Stock Market Performance and Economic Growth in Kenya
Loading...
Date
2014-03-07
Authors
Kinuthia, Isaac Kimunio
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The study empirically examined whether stock market liberalization, by improving the
functioning of domestic stock market accelerates economic growth in Kenya. The study also
evaluated the nature of the relationship between stock market performance and economic growth
in Kenya. The stock market liberalization and performance were measured using two variables
namely stock market size as measured by stock market capitalization and stock market turnover
respectively. The study used quarterly time series data collected through secondary sources and
covered a period .of 22 years from January, 1991 to December, 2012. The study utilized
econometric techniques of Vector Autoregressive (VAR) and Granger Causality Tests to explore
the relationships. The empirical results showed a uni-directional causal link that runs from stock
market development to economic growth and there is evidence of an indirect transmission
mechanism through the effect of stock market development on investment. The study found that
stock market liberalization has a significant positive impact on the economic growth in Kenya.
There is a strong case for policy recommendation to further develop the stock market as a driver
of economic performance in Kenya.
Description
Department of Applied Economics, 2013