MDF Theses and Dissertations

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Browsing MDF Theses and Dissertations by Author "Kilel, Viola Chelangat"

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    An Assessment of the relationship between capital markets development and economic growth in Kenya
    (Strathmore University, 2021) Kilel, Viola Chelangat
    This study investigated the relationship between capital markets development and economic growth in Kenya for the period 2000-2019 The study used Gross Domestic Product (GOP) as the dependent variable and market capitalization, equity market turnover, bone! Market turnover as the independent variables, 91-day T -Bill as the control variable and exchange rates as the moderating variable. The data was analysed using STATA version 14.0. Statistical analyses including Descriptive statistics, Optimal Lag length selection, ARDL Bound tests for cointegration, Stationarity Test, ARDL ECM model , ECM, goodness of fit test, diagnostic tests and stability tests were undertaken. From the results, it is evident that capital market development has a significant positive effect on economic growth in Kenya. The study findings revealed that market capitalization had a significantly negative effect on GDP in the short run and a significantly positive effect on GOP in the long run. Flll1her, equity market turnover had a significantly positive effect on economic growth short run and a significantly negative effect on economic growth in the long run. Bond market turnover results indicated the presence of a significantly positive effect at first difference in the short run and a significantly negative effect on economic growth in the long run. The study's bound test statistic validates the presence of long run effect of the model on GDP as f-value as well as above the critical values. The study recommends that CMA and Capital markets industry stakeholders should implement initiatives that will support market activity and securities subscriptions in a bid to increase Market Capitalization, Equity Turnover and Bond Turnover percentage contribution to GDP. flll1her, it recommends the National Treasury to review sustainability of economic development and the suitability of the operating and economic environment for the growth and development of the domestic capital markets. In conclusion, domestic capital market plays a fundamental role as an engine for economic growth as revealed by the study findings.