BBSE Research Projects (2021)

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Can consumer debt burden adequately explain slowdowns in Kenya’s economic growth?
(Strathmore University, 2021) Otieno, Rickyjesse Daudi Omino
This study set to examine the relationship between consumer debt burden and economic growth. The prior specification was that consumer debt burden causes a slowdown in economic growth. The analysis makes use of Kenyan time series data from 1970 to 2019. Analysis of the data was done by means of a Vector Error Correction Model (VECM) and tested how consumer debt burden explains economic growth through a third variable (consumption & agriculture) which are the main drivers of Kenya's economy and also included a control variable; net exports. The results indicate a negative causal relationship between consumer debt burden and economic growth which means that rises in consumer debt burden cause economic slowdowns.
Coronary Heart disease prediction in the USA and factors that favor its occurrence
(Strathmore University, 2021) Gachanja, Jeremy Kibiru
Coronary Heart Disease (CHD) is the leading cause of deaths in adults in Europe ~md North America (WHO, 2017) . Early detection and treatment of this disease is thus a matter of life and death (Gonsalves, Thabtah, Mohammad, & Singh, 2019). This project has compared the predictive power of five machine learning algorithms namely: Support Vector Machine, Naive Bayes, Logistic Regression, Decision Trees and Neural Networks, in predicting this disease. The objective of this study was to determine which of the five algorithms was best suited for CHD prediction and what level of the CHD risk factors favored the occmrence of CHD. This study had fourteen CHD risk factors that is gender, age, smoking habit, number of cigarettes smoked, use of blood pressure medication, prevalent stroke, prevalent hypetiension, diabetes, total cholesterol, diastolic and systolic blood pressure, BMI, heart rate, and education. However, this study found that only age, systolic and diastolic blood pressure, prevalent hypertension, blood pressure medication and diabetes had a significant correlation with CHD occurrence. This study used these seven CHD risk factors to model CHD occurrence in the five algorithms. This study found that the logistic regression was best suited for predicting CHD, followed by Naive Bayes then Decision Tree and lastly SVM and Neural Networks. This work found that CHD positive individuals had high cholesterol (235mm on average), high blood sugar (a maximum of 394mm), had a smoking habit (10.82 cigarettes per day on average), were obese (overweight BMI of 26.63 on average) and had high blood pressure (a maximwn of 295/140 Mm Hg and 143/86 Mm Hg on average
Dynamics of asset prices in monetary policy; A case study of Kenya.
(Strathmore University, 2021) Langat, Levin
This study examines the extent to which stock returns are linked to interest rate, money supply and exchange rate in Kenya from 2000 to 2018, using GARCH (1,1). Some unanticipated results were uncovered, ultimately contributing to the existing body of literature, and illustrating how different markets respond to different stimuli. The most substantial was the significant positive relationship between stock returns and interest rates. A relationship that can be explained by the Keynesian hypothesis based on a sticky price model. In line with theory results revealed a negative and significant relationship between exchange rates and stock market price returns. Also, the study revealed a significant relationship between stock returns volatility and interest rates
An econometric analysis of factors that influence the performance of green bonds in emerging markets
(Strathmore University, 2021) Atieno, Ogwayo Melissa
Developing nations are the most vulnerable to the effects of Climate change. This acts as a hindrance in the fight against poverty and improving the livelihoods of their citizens. Green bonds were created to finance projects that fight climate change. They are intended to help developing countries fight climate change while they grow their economies. The perfonnance of green bonds in developed markets has been analyzed in numerous studies but there exists a deficiency in the emerging market space. This study involves econometrically analyzing factors that influence the performance of green bonds in emerging markets. The countries used in this study are Brazil, Mexico, and South Africa as they have successfully issued these securities. These factors include macroeconomic and stock market conditions as the independent variables. The number of active green bonds acts as the dependent variable. The macroeconomic conditions include short term interest rates, exchange rates, industrial output, and inflation. The macroeconomic conditions are represented by Treasury bill rates, Real Broad Effective Exchange Rate, the Industrial Production Index, and Consumer Price Index of the selected countries. The stock market conditions are represented by the countries' stock indices. Panel data regressions are used. The model used to evaluate the factors that influence the performance of green bonds in the selected countries was found to not be jointly significant given the macroeconomic conditions specified in the regression. The Consumer Price Index is the only significant macroeconomic variable. The second model sought to identify the implications of stock market conditions on the performance of green bonds in the selected countries. It was found that stock market conditions have a positive but insignificant influence on the overall green bond market in the selected countries. Green bonds issued by corporates are found to be the most popular in developing countries, but higher amounts are issued by agencies, and Municipal bonds are seen to pay higher coupons.
Effect of corruption on social welfare issues in the Kenyan economy
(Strathmore University, 2021) Kinyanjui, Lucy Wanjiku
Corruption has become widespread especially in developing countries and has affected their economies and growth. Due to high corruption rates in Kenya, it has put off foreign investors as well as foreign aid. Corruption in Kenya has become an epidemic that is slowly killing the country's economy and its biggest consequence is the cost. This article tries to address an important question whether there is a relationship between corruption and social welfare issues. After running diagnostic checks like test for autocorrelation and test for heteroskedasticity then a regression analysis it was concluded that life expectancy, education, and income per capita have a negative relationship with corruption but education variable substantially affected by corruption and there is no significant effect of Corruption Perception Index (CPI) on Human Development Index
Effect of external debt on inflation: the case of Kenya, Tanzania and Uganda
(Strathmore University, 2021) Gathendu, Jane Joy Wairima
High inflation is considered to be a threat to growth of emerging countries. However, most of these countries need to borrow in order to cater for budget deficits and sustain economic growth. The aim of this study is to empirically investigate the effect of external debt on inflation in Kenya, Uganda and Tanzania for the period 1988-2018. Other independent variable is included, broad money growth rate, and analysed if it helps in explaining the relationship between external debt and inflation. The study uses a balanced annual panel data obtained from World Bank International Financial Statistics and Data Files. The variables are tested for stationarity to establish their order of integration and select a suitable model. Two tests are done for robustness, Engle and Granger, and Johansen's Cointegration to test for availability of co-integration relationship among the variables. A Vector Error Correction Model {VECM) is employed to estimate long run dynamics and Granger Causality to test if the co-integrated variables can help in predicting each other. The results show that external debt has a positive long-term effect on inflation and that money growth helped in explaining this relationship. Moreover, it was found that there is a unidirectional causality between external debt and inflation. This causality was found to be homogeneous. It is therefore necessary for governments to effectively manage external debt so as to avoid negative economic circumstances which may affects other countries in the region .
The effect of foreign direct investment on the level of carbon emissions in Kenya
(Strathmore University, 2021) Marcellus, Ehete Kenneth
Foreign direct investment (FDI) can be thought of as either a blessing or a curse to the economies of countries. The study was investigating the impact FDI has on the level of carbon emissions Through FDI, growth of the economy is witnessed. However, it also serves as an avenue for dumping with hazardous effects to the environment. This study examines the effect that foreign direct investment has on the level of carbon emissions in Kenya. The period of study is from 1960-2016. A long run relationship was realized between the explanatory variables and carbon emissions. Owing to this fact a Vector error correction model was most relevant for the study especially in estimating the short run effect. From the results obtained, it is evident that foreign direct investment has a decreasing effect on the level of carbon emissions in both the short and long run. Meaning that with an increase in FDI, a significant reduction in carbon emissions is noted in Kenya. A recommendation made is that the government and policy makers actively and effectively monitor and evaluate adherence to the laid out policies by both foreign investors and foreign related investments. One constraint while carrying out the project was the lack of an abundant dataset. For further research, being able to obtain the sectoral breakdown of how FDI is distributed and carrying out a research based on a sectoral view will be able to give more insight into the topic.
The effect of globalization on C02 emissions in the East African community member countries
(Strathmore University, 2021) Akhwale, June Anachoni
Given that the East African Community continuous to expand and grow economically, this has led to an increase in globalisation and urbanisation in the region hence it is foreseeable that these changes would have an effect on the environment in the region. This study sought to investigate the impact of globalisation on C02 emissions in East African Community member countries with globalisation, gross domestic product per capita and energy consumption as control variables and urbanisation as a moderating variable. Furthennore, the study sought to find the moderating effect of urbanisation on the relationship between globalisation and C02 emissions and to shed light on the Environmental Kuznets Curve hypothesis of the region. Using panel data, the study sought to explore these objectives for the period between 1990 to 2014 in Kenya, Uganda, Rwanda, Burundi and Tanzania. The pooled ordinary least squares regression model was utilized to estimate the parameters in the model and as a result, it was found globalisation and C02 emissions have a negative relationship and urbanisation has a positive moderating effect on the relationship between globalisation and C02 emissions. Moreover, the Environmental Kuznets Curve does not follow for the region. The study recommended that C02 reduction policies should be put in place and adopting of new teclmologies that help reduce pollution should be used to reduce the effect of C02 emissions in the region. Furthermore, the region needs to promote and facilitate economic-friendly globalisation and urbanisation to improve and sustain economic development without any ecological degradation.
Effect of macroeconomic shocks on REITs returns
(Strathmore University, 2021) Maina, George Kamau
While REITs are useful investment vehicle that offer a variety of benefits , little is known about how they inter<1ct with the macroeconomic conditions in developing REITs markets. The objective of this study was to establish the effect of macroeconomic shocks on the retums on REITs in Malaysia, Taiwan and Turkey as well as the direction of the relationship between the macroeconomic shocks and REITs retums investments. This paper addressed this issue by looking at the interaction between REITs which <1re securitised real estate property and changes in the macroeconomic factors namely inflation r<1te, interest rate, exch<1nge rate, money supply and gross domestic product for three developing REITs markets. This study used quarterly secondary data that covered the period between 2009(Q4)-20 19(03) for all the three countries. This study involved the use of the theoretical framework which is the Arbitrage Pricing Theorem and pooled OLS empirical framework that was deten11ined after canying out various diagnostic test on the data. This study found out that GDP and Foreign exchange rates were the only significant variables in explaining REITs returns. From the study, there was 1.035784% increase in REITs retums whenever the local currency depreciated to imply that there w<1s a heavy investment on REITs by parties outside the borders of the three countries. GDP growth and REITs retums had a negative relationship. Whenever the gross domestic product went up by a billion, then REITs returns would decrease by 25% .
Effect of teacher- student gender matching on narrowing test scores gender gap in Kenyan primary schools: A quantile regression approach
(Strathmore University, 2021) Koki, Edel
In Kenya, boys outperform girls in mathematics and science while girls outperform boys in english. The gender gap in academic performance may persist and affect performance in higher learning and career choices. Research has investigated various factors that affect gender gap in academic performance. These include the effect of resources and introduction of free primary education on gender gap in academic performance. However, the effect of teacher- student gender matching on academic performance has not been studied in Kenya. This study uses Uwezo data from Twaweza, a survey done across Kenya in 2015 to analyze the effect of teacher student gender matching on academic performance. The study analyzes this relationship using the quantile regressions approach. Findings show that teacher student gender matching has no significant effect on both average test scores andacross test score distribution in both mathematics and english.
The effect of technological innovation on economic growth: Empirical evidence from Kenya
(Strathmore University, 2021) Mohammed, Leila Haroon
Kenya's recent classification as a Lower- middle-income country (LMIC) is proof that the economy of Kenya is growing as per the Vis on 2030 Plan set in 2008. As technological innovation development is a known factor for increasing the growth of a nation's economy, Kenya's objective to transition into a knowledge-based economy requires a proper understanding of the relationship between technological innovation, that produces technological knowledge, and economic growth. This study puts technological innovation into perspective and aims to empirically examine its relationship to economic growth. It employs the use of Patent registered, Number of trademarks registered in Kenya, and Scientific and Teclmical Journal articles in Kenya as measures of technological innovation as well as Labour productivity Growth rate as a proxy for economic growth. It establishes whether there exists a long-run relationship between technological innovation and economic growth from 1981 to 2018 with data sourced from The World Bank database. This study also seeks to examine whether there exists bidirectional causality between technological innovation and economic growth. The Autoregressive distributed Lag model and pairwise Granger causality test technique are used for estimation. There is a short run relationship between total number of patent applications and Labour productivity growth rate although the impact is quite small. There is no presence of a significant long run relationship between technological innovation and economic growth. The study also concludes that, there exists no bidirectional granger causality between technological innovation and economic growth.
The Effect of urbanization, population growth and climate change on the WEF nexus using an input-output analysis and econometric modelling
(Strathmore University, 2021) Ariyatalika, Harine
The efficient allocation and consumption of resources has been of interest to the economics academic community for many years, and this is mainly attributable to the fact that, resources are a part of our everyday lives. This paper focuses on three main resources for human development: the water, energy and food resources, and their sustainability in today's economic systems. We utilize two modelling techniques in this paper, the panel data approach seeks to investigate the impact of urbanization, population growth and climate change on water demand, and the input-output modelling approach seeks to investigate the interlinkages that exist bet\veen the WEF sectors of China, Mexico, South Afi"ica, and Spain. Results fi·om the paper suggest that urbanization and population growth are the significant variables that contribute to water demand, whereas the WEF Nexus interlinkages of the four countries exhibit strong linkages between the water, energy, and food sectors. Results of this paper are relevant to policymakers that are interested in improving either the water, energy, or food sectors without destroying the other sectors.
Effectiveness of gender budgeting on gender equality : evidence from selected sub-saharan countries
(Strathmore University, 2021) Alusa, Grace Ongaya
This paper studied and analysed the effect, if any, of gender budgeting on gender equality. Studies have been done on the importance of gender equality to governments through growth and development, but there is still research needed on whether gender budgeting can lead to gender equality or at least lead to a reduction of gender inequality. Gender budgeting is a strategy to use public spending and collection to reduce the inequality between genders. Government budgets and fiscal measures such as gender budgeting can be key measures to enhance women's development and gender equality. The paper used GDI and Gil scores as proxies for gender equality and used an Ordinary Least Squares fixed effect econometric model to model the effect of gender budgeting on variables such GDP, labor force participation, education and health. These scores were then tested to find their effect on gender budgeting. The study found that: Gender budgeting reduces the Gil index but has an increasing effect on GDI Gender budgeting has no effect on GDP which shows that gender budgeting is more significant in increasing the gender equality indexes compared to economic growth. Public spending on education and health will lead to an increase in GDI and Gil
Estimating the effects hydro climatic variability and its extreme events have on economic growth of Kenya
(Strathmore University, 2021) Wainaina, Jessica
The cunent effect of climate change on economic growth needs to be understood. Climate change has affected the hydro climatic system and thus rising temperatures and unpredictable rainfall have led to hydroclimatic variability. Due to this, extreme weather events such as floods, droughts and heavy storms have increased in frequency and intensity. This study seeks to investigate the effects ofhydroclimatic variability on the economic growth ofKenya and detennine which hydroclimatic extreme event has a substantial effect on the economic growth of Kenya. A time series analysis covering the years 1965 to 2019 is canied out with the Mankiw-Weil-Romer growth model based on the Neoclassical growth theory. We see the effects climate variables: temperature and rainfall variability have on GDP growth rate while also including other variables that affect growth namely gross fixed capital, population and human capital. To capture the extreme events namely drought and floods in the model, a precipitation index called Weighted Anomaly Standardized Precipitation (WASP) index is applied. From analysis ofhydroclimatic variability, we establish that change in temperature has a positive effect on economic growth both in short run and long run. Severe droughts are the most occuning extreme event followed by the severe floods. Drought effects have a higher magnitude of effect on GDP growth rate compared to floods. Moderate drought has a slightly higher effect on GDP growth rate but the magnitude of severe drought is still very high. Severe drought still has a negative effect on the economy growth in the long run and is thus worth looking into solving this issue.
Firm investment, stock prices and information asymmetry in Kenya
(Strathmore University, 2021) Farah, Abdi
Financial markets play an important role in the production and aggregation of information. An undisputed view in economics is that asset prices incorporate information from various sources including tra~ing itself (Grossman and Stiglitz, 1980). This information, including private information, acts as a signal to market participants which significantly influences individual and corporate investment decisions (Roll, 1986 and Dow & Gorton,
Flood hazard mapping using GIS in Kenya- A HEC-RAS model applied to mapping the Enkare Narok River
(Strathmore University, 2021) Alvin, Igobwa Mugwe
The purpose of this project is to come up with a visual tool to aid in the visualization of flood prone areas, determine the causes of floods and estimate the total damage caused by floods in Narok town. The study uses Advanced Spaceborne Thermal Emission and Reflection Radiometer(ASTER) 30m resolution Digital Elevation Models (DEMs) for the extraction of the river properties and geometry and Hydrological Engineering Center -River Analysis System (HEC-RAS) for the hydrological routing of the Enkare Narok river so as to carry out the unsteady flow simulation that yields the production of the flood prone areas, and the cause of flooding. This flood hazard map will help in the forecasting of floods and further help in the creation of an early warning system.
The growth effect of external debt and FDI in sub-Saharan Africa: The role of institutional quality
(Strathmore University, 2021) Mark, Robert Kinuthia-
Much of the literature on the relationship between external debt, FDI and economic growth focus on the direct effect external debt and FDI has on economic growth. It is difficult to find research addressing the role of institutions in the relationship between the three variables. This study aims to investigate the effect institutional quality has on the relationship between external debt and FDI on economic growth. To achieve this objective, the fixed effects model is estimated with data from 6 Sub-Saharan African countries over the years 2000 to 2018. The empirical results find that both the interaction terms between external debt and corruption, and FDI and corruption to be positive and statistically significant. This confirms the institutional quality of an economy play a role in the effect external debt and FDI have on economic growth. It is determined that when countries have stronger institutions, the effect of external debt and FDI on economic growth is enhanced.
How financial self-efficacy and financial attitudes affect saving behavior among Sacco members: an empirical study in Kericho County
(Strathmore University, 2021) Chepngetich, Michelle
This paper seeks to examine the impact of financial attitudes and financial self-efficacy on saving behavior. It investigates how financial attitudes affect the saving behavior, the relationship between financial self-efficacy and saving behavior of Sacco members in Kericho county, and the moderating effect of financial self-efficacy on the relationship between financial attitudes and saving behavior according to Sacco members. The study was conducted in Kericho county in November and December 2020, with a focus on Imarisha Sacco and Ndege Chai Sacco. The data was collected by issuing questionnaires. Ordinal logistic regression was employed to derive the .I results. The findings from the study are as follows: financial attitudes and financial self-efficacy have a positive significant impact on saving behavior among Sacco members in Kericho county and financial self-efficacy has a positive significant moderating effect on the relationship between fmancial attitudes and saving behavior. The results showed that 7.64% of saving behavior is explained by fmancial attitudes and 12.90% is explained by financial self-efficacy. The findings justifY the relevance of financial attitude and financial self-efficacy in the explication of saving behavior as it opens further discussions on the intricacies of financial behavior which helps individuals check their financial management effectively and intellectually.
ICT development and economic growth: Are southeast African countries doing enough to leverage on ICT?
(Strathmore University, 2021) Amusudzu, Luvindi Mwingisi
ICT is fast growing across continents and has brought about aspects of economic growth within countries, particularly developed countries. Over the years, productivity has noticeably increased with businesses and governments having easy access to global markets, hence improved trade openness. In this study, we analyze the state of ICT in Southeast African countries to understand whether ICT has been underutilized or to whether they are leveraging the use of it. From literature, Solow (1956) and Swan (1956) have argued that absence of technology innovation leads to economic stagnation that leads to high unemployment. In this study, we analyze ICT and its impact on unemployment as well as human capital in Southeast Africa. Also, the study analyzes consumption expenditure, trade and inflation and their relationship with ICT while alluding that they could be potential growth enhancing factors ofiCT. The study proposes to use a two-step system generalized method of moments (GMM) estimation technique while drawing its theoretical underpinnings from the neo-classical growth model.
Impact of a cashless economy in Kenya
(Strathmore University, 2021) Otieno, Sylvester Odhiambo
This study aims to look at the suitability of adopting a cashless economy on Kenya's economy. The objectives of this study are to find the short-term relationship between cashless payments in Kenya and the country's GDP and their overall long run effects. The first objective oflooking at the short-term relationship is observed through a Vector Autoregressive model (V AR). The long run relationship of cashless payments and Kenya is observed through a Vector Error Correction Model (VECM) which also compliments the shmi-term relationships. The variables included in the VAR and VECM are card payments, mobile transactions and electronic fund transfers as independent variables and Real GDP as the dependent variable. Granger Causality was used to check on the causality between the different variables.

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