BBSE Research projects (2017)

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    Determining if Kenya’s foreign debt portfolio management is optimal
    (Strathmore University, 2017) Sigey, Mercy Chepkoech
    The study seeks to define Kenya's optimal external debt portfolio. The optimization scheme employed minimizes foreign liabilities in a foreign debt portfolio which includes a combination of foreign assets and liabilities of the country in question, which in this case is Kenya. It will involve comparing the optimal foreign debt portfolio with the currency exchange rates. The time series data that will be used consists of exchange rate data for the period from 1970 to 2016 and the percentage of external long-term public and publicly guaranteed debt share contracted in Japanese yen, Swiss Franc, U .K pound sterling for Kenya. The study will apply the cointegration methodology where it involves first carrying out unit root tests on the data to find out whether it is stationary. Thereafter, introduce the cointegration tests which will be used to form the results and discussions of this study. Ideally, a debt portfolio will be deemed optimal if movements in the exchange rates do not granger cause changes in the debt shares denominated in the corresponding currency.
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    The impact of on the capital structure of listed firms in Kenya
    (Strathmore University, 2017) Omondi, Veronica Sandra
    The Nairobi Securities Exchange is considered one of the most developed stock markets in Sub-Saharan Africa. This development is attributed to the significant reforms that were made between the years of 1990 and 1999. The reforms include shifting from being self-regulated to having a regulatory body (Capital Markets Authority), elimination of "call-over" trading and "open outcry" trading through introduction of a Central Depository and Settlement System, tax concessions, relaxation of exchange controls and reduction of listing costs. The above reforms resulted in a development of the Nairobi Securities Exchange evidenced by the increase of the value of shares traded, market capitalization ratio and turnover ratio (Nyasha & Odhiambo, 2014).
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    Stock market liquidity and asset returns: The case of the NSE 20 share index
    (Strathmore University, 2017) Silvia, Wairimu Kahihu
    This research aims to measure the liquidity levels on a sample of stocks from the Nairobi Securities exchange and also investigate the relationship between returns and liquidity on some of the stocks listed under the NSE 20-share index. The results show that there is a positive relationship between market illiquidity and returns which suggests that the excess returns contain a compensation for illiquidity. The measure of the illiquidity used in the study is the one proposed by Amihud in 2002 which is the average across stocks of the daily ratio of absolute stock return to dollar volume, which is easily obtained from daily stock data for long time series in most stock markets. The model that was used to test for this analysis is the random effects model after running the Hausman test.
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    Investigating the impact of complementary currencies on business growth in informal economies: Case of lindi-pesa in lindi, Kibera slum, Nairobi County
    (Strathmore University, 2017) Musyoka, George NdaIana
    This study sought to investigate the role of complementary currencies in promoting business growth in an informal area, the case of Lindi-Pesa in Lindi Location, Kibera Slum, Nairobi County. The methodology that was undertaken to address the objectives was a Census Survey study. Three research instruments, namely; questionnaire, interview schedule and observation were used. The number of people that participated in the study was: one hundred and twenty three traders and twelve informants. With respect to the role Lindi-Pesa plays in promoting access to finance, all the respondents indicated that the use and adoption of the program had provided the respondents with an avenue of savings. The traders were able to gain financial assistance through merry-go-rounds. The LBN also introduced some of their members to banks and microfinance institutions for funding. All the traders agreed that the program had been able to increase their sales and profitability, thereby boosting their business growth. All the participants viewed Lindi i-Pesa as a sustainable program, mostly due to the aspect of promoting community cohesiveness. A Pearson Con-elation Coefficient Matrix was carried out to identify the strength of relationships between the dependent and independent variables. It revealed that there exists a strong positive relationship between business growth and the dimensions that promote trade and business support services. The study concludes that promotion of trade and the enhancement of business support significantly increased business growth whereas the contribution of Lind i-Pesa to access to finance had no significant effect on business growth in the area. The study recommends further research to find the price formation/setting mechanisms that apply in community currency systems.
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    Impact of fiscal and monetary policy on stock market performance in Kenya
    (Strathmore University, 2017) Maara, Lynette Wanjiru
    Given the important role of the stock market to an economy, this study aims to explore the impact of fiscal and monetary policy on the stock market in Kenya. The study uses Structural Vector Error Correction model (VECM) while controlling for GDP and average lending rates (market interest rates). M2 is used as a proxy for monetary policy, government expenditure for fiscal policy and data on NSE-20 for stock prices in Kenya. Quarterly data spanning from 1998 to 2015 was used. Despite the results revealing that monetary policy, fiscal policy and the combined effect of the two are not significant in explaining stock price movements for the period under study, the impulse response function and error variance decomposition results suggest that the stock market variable does respond to a positive shock applied to the monetary and fiscal policy variables. However as the stock market in Kenya continues to develop, the fiscal and monetary policy variables may become significant and may have a sizeable influence on the movement of stock prices. Therefore there may be a need for coordination.