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- ItemAn Analysis on the long term performance of Initial Public Offerings in the Nairobi Stock Exchange(Strathmore University, 2018) Ladha, Jay KaushikThere have been a number of studies carried out that have tried to determine the long term performance of IPOs. The three key issues these studies try and dwell on is the long run under-performance, short term underpricing and the hot issue market phenomena. The effects of the financial crisis of 2007-2008 was felt strongly in America. However there were small ripple effects that spilled over in to countries like Kenya. The studies carried out with regard to the above three phenomena in relation to IPOs and post financial crisis period have been scanty and not entirely conclusive. This project will help the IPO literature, by providing proof on two of the three above mentioned anomalies. The study documented evidence supporting the undisputed underpricing of IPOs at the NSE as compared to the closing first day trading price of the IPOs. With respect to the first phenomena, which was the long run under performance, the results are mixed in the sense that the study concludes that there is no visible regularity when computed against the market benchmarks. The study also proves through the use of wealth relatives that the IPOs are performing similarly to the market on their 5th anniversary to the market.
- ItemAnalyzing the effectiveness of microfinance as a means of poverty alleviation in selected areas of Nairobi County; a case study of Kenya Women Micro-finance Bank(Strathmore University, 2018) Sembi, Singh KaranPoverty is a major concern for most developing nations. Economic development and poverty reduction have been elusive throughout sub-Saharan Africa since independence (Younger, 2004), with Kenya being no exception. Moreover, entrepreneurship and financial inclusion among women in Kenya is lower than among men (CBK, 2016). Gender equality is the fifth Sustainable Development Goal (SDG) and its pursuit is key to the economic development of Kenya. Micro finance is built around the concept of alleviating poverty, the creation of wealth for the poor and women empowerment. Empirical evidence, however, indicates that this may not always be the case and in some instances, micro-finance initiatives leave their intended beneficiaries worse off than they were before undertaking the micro-finance initiative.
- ItemApplication of technical analysis in the forex market: Comparison of technical trading rules in developed and emerging markets(Strathmore University, 2021) Lelei, Elaine CheropThis paper examines the application of technical analysis in the forex market. It particularly looks at the comparison of technical trading rules in developed and emerging markets. In order to assess the performance, three momentum-based indicators are chosen, namely Moving Average Convergence Divergence, Relative Strength Index and Moving Average Crossover, while one volume indicator is chosen, namely Money Flow Index. To gauge the performance of the indicators, the parameters of each of the indicators is subjected to seven currency pairs which were, EURIUSD, GBP/USD, USD/JPY and USD/CNY for developed markets and USD/ZAR, USD/MXN and USD/TR Y for emerging markets. The daily closing prices of each of the currency pairs are used, and based on the parameters of the individual indicator, a buy or sell signal is conveyed by the indicator, and the profit or loss, of each of the signals is measured and summed up so that comparison of performance is possible. Daily closing prices from 2005- 2020 are used. The findings suggest emerging markets are more profitable than the developed markets.
- ItemApplication of technical analysis in trading forex; comparison of trend indicators vs oscillators(Strathmore University, 2017) Amunga, Jeff Chibole;This paper tests the hypothesis that in the long term, the use of technical analysis can produce positive returns. It particularly looks at the use of two of the most commonly used types of technical analysis which are momentum based indicators and oscillators. In order to assess the performance of this types of technical analysis, two popular momentum based indicators are chosen, namely Moving Average and Bollinger bands, while two popular oscillators are chosen namely, Relative Strength Index and Moving Average Convergence common. To gauge the performance of the indicators, the parameters of each of the indictors is subjected to six most traded currency pairs which were USDJY, EURUSD, USDCAD, GBPUSD, USDCHF and AUDUSD. The daily closing prices of each of the currency pairs are used, and based on the parameters of the individual indicator, a buy or sell signal is conveyed by the indicator, and the profit or loss, of each of the signals is measured and summed up so that comparison of performance is possible. Daily closing prices from 2000-2015 are used. The findings suggest it is possible for technical analysis tools to make positive returns over the long term. It also suggests that momentum indicators are better than oscillators and that Bolliriger bands are the best of the four indicators measured in this paper:
- ItemBitcoin as an alternative asset in emerging markets: portfolio optimization via conditional value-at-risk(Strathmore University, 2018) Mukuria, Mary WanjiruIn a bid to diversify their portfolios, investors are venturing into various alternative assets. This study analyses the inclusion of bitcoin, as an alternative asset, in a well-diversified portfolio in South Africa. Recognizing that bitcoin is a relatively new asset, this study has provided detailed information on the features of bitcoin, both as a currency and as an investable asset. The study utilizes a well-diversified portfolio that consists of stocks, bonds, commodities, cash, real estate and international assets. The asset classes in the portfolio are picked from the South-African market as it is a very lucrative emerging market. The study utilizes time series data as the historical data of the asset returns is collected from July 28, 20 I 0 to December 29, 2017. The Mean-CVaR Portfolio Optimization approach is utilized so as to accommodate the highly non-normal return distribution of bitcoin instead of the Mean Variance Optimization approach which assumes that returns are normally distributed. Two different portfolio frameworks are utilized namely; The Minimum CVaR Concentration Portfolio and the Minimum CVaR portfolio under an upper 30% CVaR allocation constraint are used to assess the objectives of the study. Dynamic rebalancing is utilized so as to achieve robust results. The results show that the inclusion of bitcoin increases the risk-return ratios of the different portfolios. The results also show that bitcoin's weight allocation is relatively low, however, even with the low weighting in the portfolios, the risk contribution of bitcoin to the portfolio CVaR is relatively high. The study concludes that bitcoin appears to be an attractive investment that can substantially increase the return of an efficient portfolio as the portfolios with bitcoin outperform their non-bitcoin counterparts. The recommendations of this study are that sophisticated forecasting techniques such as Bayesian methods or Neural Network should be utilized for scenario generation instead of the use of historical data and that the impact of the inclusion of bitcoin to a well-diversified portfolio should be conducted when the asset is at its mature stage.
- ItemCommodity diversification: How Kenya can exploit commodities for diversification.(Strathmore University, 2015) Kuhunya, Lisa WangariInvestment in commodities dates back to the age of barter trade and has continually evolved to form an investmentwith substantial diversification benefits to investors · {Vrugt, Bauer, Steenkamp, & Molenaar, 2004). Commodity markets have become an attractive investment, as they offer returns not easily accessible through the traditional equity and bond investments {Schneeweis, Karavas, & Georgiev, Updated 2002). Defining characteristics of the return on commodity investment include relatively high performance and low volatility as opposed to those of equities and bonds. Inclusion of these commodities in an equity or fixed income portfolio would therefore be important to improve the risk adjusted return of the latter portfolios.
- ItemDeterminants of financial inclusion in sub-Saharan Africa(Strathmore University, 2021) Odhiambo, Trevor OokoFinancial exclusion is the lack of access by clients to appropriate low cost, fair and safe financial products and services. Leyshon and Thrift explained it as the processes that are in place to prevent individuals or a section of individuals from gaining access to the formal financial system. Individuals being excluded from banking services generate negative socioeconomic consequences for economies (Levine, 1993). Defining financial exclusion prompts the need to elaborate on financial inclusion as they go hand in hand. Financial inclusion is the ease of access, availability and consumption of the services offered by the financial system of an economy. This brings about the importance of financial inclusion in a country as it improves sustainability and an economy's stability. The definition of financial inclusion gives us a scope which includes accessibility, availability and consumption of the services offered by the financial system particularly the banking industry.
- ItemDeterminants of method of payment in mergers and acquisitions and their agency implications(Strathmore University, 2021) Maua, WarrenThis study is expected to be useful to industry regulators like competition authorities, tax collection agencies and capital market regulators as it will provide some insight for deeper scrutiny of proposed mergers and acquisitions to ensure both parties in the transaction obtain a fair value by mitigating effects of infonnation asymmetry. It could inform future regulation with respect to M&Apractices in Kenya and Africa.Investmentbankersand other transactional advisors could benefit from this study. They provide advisory serv.ices to acquirers and targets in Africa, and this study and others like it will enable them to understand and antic.ipate their clients' ideal M&A structure on a deeper level. Also, shareholders and managers of companies that anticipate M&As involving their companies will obtain a different perspective of the thought process of their prospective counterpoises as they determine the method of payment to use and the implications of the chosen method on theh companies' operations and marl<:et performance. Finally, I hope this study inspires future academic studies aboutM&As in Africa
- ItemDividend yield strategy in the Nairobi Securities Exchange(Strathmore University, 2015-11) Mwangi, Archibald MachariaThis study aims to test the viability of dividend yield investing as an alternative investment strategy to exploit observed overreactions in the• market. The study adopts the Dogs of the Dow investment strategy that entails a buy and hold strategy of the highest dividend yielding stocks in the market. A back-testing approach is adopted from the period 2006 to 2015. The findings from this analysis show that there appears to be limited effectiveness of the DDS portfolio in beating the market or generating abnormal returns. As such, the study concludes that the Dogs of the Dow is not viable as an alternative investment strategy. The study further posits that any observations to the contrary may be as a result of data mining as was proposed by Fischer Black (1993).
- ItemDo high school national examination final grades predict undergraduate performance?(Strathmore University, 2021) Githaiga, Brian GachungiThe university placement system in Kenya places great emphasis on Kenya Certificate of Secondary Education (KCSE) Examination. This is the final exam through which high school students are evaluated throughout the country. This study looks into the ability of these examination results to predict university performance using data from a private university in Kenya. Scarce research in the area suggests KCSE offers little value in - predicting university pe1formance. In this study, we test the predictive value of KCSE results on year-by-year university performance and cumulative 4-year performance. The data also allows comparison of KCSE with a basic aptitude test. Results suggests that KCSE results offer some value in predicting university performance. The results also suggest there is little difference in the predictive ability of KCSE on year-on-year pe1formance compared to the cumulative university performance
- ItemEducation advantages in health: Exploring the factors influencing better health for the educated in East Africa(Strathmore University, 2021) Kaburi, Arthur BoeraThe East African region (Kenya, Uganda, Tanzania, Burundi, and Rwanda) faces several country specific stumbling blocks that hamper socio-economic growth within the borders, common across the region is the advancements in health and education over the years. This study contributes to the literature interlinking education and health by applying new estimation techniques and panel causality testing using data from five Eastern African countries from 1989 to 2018. Employing a concentrated approach for East Africa, deviating from Westernized datasets. Using the variables Life Expectancy at Birth as representative of the dependent variables and Primary School Enrolment for the independent variable, there is considerable evidence of education insignificantly contributing to the Health of individuals in East Africa. Primary School Enrolment is not consequential to influence a panel granger-causality for the dependent variable. These results are of specific importance to proposed policy amendments to Education and Health policies across the five states.
- ItemEffect of capital structure on financial performance: the case of banks listed on the Nairobi securities exchange.(Strathmore University, 2016) Onyango, Allen AlexanderThis paper seeks to examine the relationship between capital structure and bank perfonnance in Kenya. This study has employed the use of panel data techniques to analyze the relationship between capital structure and bank performance. The performance variables used in the study were retum on asset (ROA), Retum on equity (ROE) and net interest margin (NIM). The results from Levin-Lin-Chu and Im-pesaran-shin unit root test show that all the variables were stationary in levels. The study hypothesized negative relationship between capital structure and bank performance, The results also indicate that capital structure does not detennine bank performance but rather it is performance that determines banks capital structure.
- ItemThe Effect of demographic transition on the equity risk premium in Kenya(Strathmore University, 2018) Nanua, Kendi GloriaWhile a multitude of research has focused on the effects of demographics on asset prices and returns in developed countries, the same lacks in frontier and emerging countries. The findings and conclusions of such results however cannot be replicated across developing countries since their demographic characteristics are different. In developed countries, the fertility rates are lower than in their counterparts leading therefore to a lower middle-old ratio. Such demographic characteristics affect asset prices and returns differently. Where researchers have considered demographics in developing countries, only output and the impact of macroeconomic variables is considered (see for instance Thuku, Gachanja, & Obere, 201 3). Additionally, over time the only demographic variable under consideration, on its effect on the economy, has been population growth. While population growth is a key variable in analyzing the effect of demographics, there are other variables pertaining to demographics that are occasionally overlooked. Such variables include life expectancy, age structure, dependency ratios and fertility rates. There therefore exists a gap in that, the investigation of the effect of demographics on financial markets in emerging and frontier markets is scarce. This study is an attempt to fill this gap by particularly looking at the effect of demographic variables on the equity risk premium in an emerging market.
- ItemThe effect of environmental performance on stock returns: a study of South African stock markets(Strathmore University, 2017) Birir, Laura JebettChanges in climate change have brought about new strategies in investing. This is further reiterated with the creation of sustainability indices which are able to capture the performance of stocks with a strong sustainable performance and are able to advance on the environmental problem. The question to ask is does the market value companies that have better environmental reputations than those that do not? This paper researches on the impact of firms’ environmental performance on their stock returns, with a focus on the South African market. Environmental performance in this case is captured by an event study following the FTSE and JSE partnership announcement and followed subsequently with the launch of the FTSE/JSE Responsible Index. OLS and M-estimation are used to analyse the coefficients. With the improved results of the M-estimator of coefficients, the findings are not sufficient to be representative of the JSE All Share Index. This is because only three of the ten sample of stocks listed on the responsibility index show significant changes in risk and only one stock in the responsibility index made an abnormal return with the partnership announcements. Of those not listed on the responsible index, only two companies reported negative abnormal returns at the partnership announcement, with another one company being punished at the launch of the responsible index after reporting negative abnormal returns. Therefore, it is the conclusion that environmental performance does not make a great impact for the stocks listed on the JSE All Share Index. Further areas of research include a focus on other developing countries with sustainable indices, changes in the model to allow for MM-estimation for regression analysis and the consideration of the impact of environmental performance on economic performance as well.
- ItemEffect of exchange rate volatility on foreign direct investment - the case of Kenya(Strathmore University, 2015-11) Waweru, WanumaThe purpose of this research study was to examine the effect of exchange rate volatility on foreign direct investment (FDI) in a developing nation with the focus being Kenya. Time series data ranging from 1993-2013 were used with ARCH and GARCH models being utilized to determine the •volatility of tl1e exchange rate. The study showed that the volatility of the exchange rate has a negative impact on FDI and that the liberalization of the economy has not really contributed to greater FDI inflows to the country. Also revealed in the study was that stock FDI and political stability are likely to draw in more funds from foreign investors and that contrary to commonly held thought, per capita GDP does not really feature as a determinant in a foreign investor's decision process when deciding whether or not to invest in the Kenyan market.
- ItemThe effect of non-performing loans on the financial performance of commercial banks in Kenya(Strathmore University, 2017) Mitai, Achieng AnnetteThis study was carried out with objective of finding out whether the commercial banks in Kenya have been impacted by the problem of non-performing loans and whether ownership has any influence on the impact of non-performing 10ans. A Profitability measured by return on asset is used as dependent variable and non-performing loans measured by non-performing loans ratio, capital adequacy, management efficiency and liquidity are used as independent variables. The independent variables used of CAMEL factors that also affect profitability of commercial banks. To improve the accuracy and reliability of the test Wank size is used as a control variable and ownership as a dummy variable. The ownership structure used in this study whether a commercial bank is government owned that is the government has a significant stake in the bank or whether it is publicly owned. The research covered the commercial banks in Kenya listed in the Nairobi securities exchange for the past five years 2009-2014. The study used secondary data to analyze and draw conclusions and recommendations. A fixed effects model was used. The study indicates that there is negative effect of non-performing loans ratio on return on assets, confirming that non-performing loans negatively affects profitability of commercial banks in Kenya. On top of that the ownership structure was found to influence the impact of non- performing loans.
- ItemEffects of interim dividend announcement on the value of a firm(Strathmore University, 2016) Kipkosgei, Purity JThis research focuses on the impact of interim dividend announcement on the value of a firm. The purpose of this research , is to empirically investigate whether the magnitude of stock market reactions to-interim dividend is greater than final dividend announcements for companies listed Under the Nairobi Securities Exchange 20-Share Index. Out-of the 20 companies in the Index, 7 companies 'paid interim dividends under the period of study. The event study methodology was employed to analyze effects of both dividend announcements. The findings of this research show that the reaction by market participants to final dividend announcements in the Kenyan stock .market is stronger than interim dividend announcements. This contradicts previous research . that indicate interim -dividend 'announcements lead to a stronger reaction. The limitation of this study is small sample size due to the limited number of companies that pay interim dividends. The findings of this research will be useful to investors with vested interest in publicly traded companies for proper decision making. The study's originality stems from the fact that it focuses on the effects of both interim and final dividend announcement on Kenyan stock.
- ItemEffects of interim dividend announcement on the value of a firm - a case of the Nairobi Securities Exchange(Strathmore University, 2015-11) Jepkoech, Kipkoskei PurityThis research focuses on the impact of interim dividend announcement on the value of a firm. The purpose of this research is to empirically investigate whether the magnitude of stock market reactions to interim dividend is greater than final dividend announcements for companies listed under the Nairobi Securities Exchange 20-Share Index. Out of the 20 companies in the Index, 7 companies paid interim dividends under the period of study. The event study methodology was employed to analyze effects of both dividend announcements. The findings of this research show that the reaction by market participants to final dividend announcements in the Kenyan stock market is stronger than interim dividend announcements. This contradicts previous research that indicate interim dividend announcements lead to a stronger market reaction. The limitation of this study is small simple size due to the limited number of companies that pay interim dividends. The findings of this research will be useful to dividend policy makers of publicly traded companies that pay interim dividends and investors with vested interest in publicly traded companies for proper decision making. The study's originality stems from the fact that it focuses on the effects of Both interim and final dividend announcement on Kenyan stocks.
- ItemThe Effects of technology adoption on millennial entrepreneurship(Strathmore University, 2018) Githinji, Magdaline WangariInformation Technology has made considerable inroads in organizations and enterprises. This diffusion of technology has been credited with significant cost reductions, gains in productivity, organizational effectiveness and in some cases a definite competitive advantage (Earl, 1989). This study sought to bring out the various aspects of technology adopted in an enterprise and their impact on the growth and profitability on the firm. The aspects considered were Managing accounts/bookkeeping, managing inventory, online banking, online sale of business products, The results of the study obtained that there exists a linear relationship between the adoption of technology and the returns of the company. This relationship exists positively for all variables used in this study. This finding offers a valuable insight to entrepreneurs and provides a strategic direction of adopting technology to optimize the performance of the firm
- ItemEmpirical analysis of the value and growth investment styles in an African frontier market.(Strathmore University, 2018) Mumbo, James DennisThe choice of a stock is a headache for all equity investors worldwide ranging from well developed markets to developing markets. This study embarks on testing the Growth and Value investment styles in an African frontier market namely the Nairobi securities exchange and discovers is that the Value investment style does overall outperform the Growth investment style on the basis of portfolio return and Sharpe however there are instances when the Growth investment style does outperform the Growth investment style in the case of this study the results of 2007 are evidence.