Foreign Capital Flows and Stock Market Capitalization at the Nairobi Securities Exchange, Kenya

Simple item page
dc.contributor.authorOsoro, Cliff
dc.contributor.authorSimiyu, Eddie
dc.contributor.authorOmagwa, Job
dc.date.accessioned2020-11-05T09:27:03Z
dc.date.available2020-11-05T09:27:03Z
dc.date.issued2020
dc.descriptionA research article published in European Journal of Business and Managementen_US
dc.description.abstractSince the onset of financial markets liberalization in the early 1990s, the volume of capital inflows to emerging capital markets has grown to unprecedented levels. Despite growth in capital flows, emerging capital markets are characterized by small size and very low liquidity. In the period 2008-2018, the number of listed firms at the Nairobi Securities Exchange increased only by twelve firms from 55 listed firms in the January 2008 to 67 listed firms as at December 2018 giving an average annual increase of approximately one firm per year. This study therefore sought to establish the effect of foreign capital inflows on stock market capitalization at the Nairobi Securities Exchange, Kenya. The study adopted a causal research design and time series data for the period 2008- 2018 was analysed using correlation analysis, and the Autoregressive Distributed Lag Model. The findings from correlation analysis indicate that foreign direct investment had a negative and significant effect on stock market capitalization while foreign equity portfolio inflows had negative but insignificant effect on stock market capitalization at the Nairobi Securities Exchange, Kenya. The autoregressive distributed lag test results support the existence a significant short run positive effects of all foreign capital inflows on stock market capitalization as evidenced by the negative and significant coefficient of the Error Correction Term (ECT). However, in the long run foreign direct investment had a significant negative effect on stock market capitalization while the effect of foreign equity portfolio on stock market capitalization was equally negative but insignificant in the long run. In view of the foregoing findings, there is need for the Kenyan government to reconsider its foreign investment policy to target only productive foreign capital inflows. Moreover, the Capital Markets Authority needs to implement policy measures that will attract active participation of the local investors at the Nairobi Securities Exchange.en_US
dc.identifier.citationEuropean Journal of Business and Management. Vol.12, No.26, 2020en_US
dc.identifier.issn2222-1905 (Paper), 2222-2839 (Online)
dc.identifier.urihttps://www.iiste.org/Journals/index.php/EJBM/article/view/54214
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/20821
dc.language.isoenen_US
dc.publisherInternational Knowledge Sharing Platform.en_US
dc.subjectForeign Capital Inflowsen_US
dc.subjectStock Market capitalization and Nairobi Securities Exchange (NSE)en_US
dc.titleForeign Capital Flows and Stock Market Capitalization at the Nairobi Securities Exchange, Kenyaen_US
dc.typeArticleen_US
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
Foreign Capital Flows and Stock Market Capitalization at the.pdf
Size:
203.96 KB
Format:
Adobe Portable Document Format
Description:
Full text article
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Item-specific license agreed upon to submission
Description:
Download
Collections
RP-Accounting and Finance Department