Impact of fiscal and monetary policy on stock market performance in Kenya

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dc.contributor.authorMaara, Lynette Wanjiru
dc.date.accessioned2017-09-11T11:51:18Z
dc.date.available2017-09-11T11:51:18Z
dc.date.issued2017
dc.descriptionA Research project submitted in partial fulfillment of the requirements for the Degree of Bachelor of Business Science in Financial Economics at Strathmore Universityen_US
dc.description.abstractGiven 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.en_US
dc.identifier.urihttp://hdl.handle.net/11071/5420
dc.language.isoenen_US
dc.publisherStrathmore Universityen_US
dc.subjectVector Error Correction model (VECM)en_US
dc.subjectMonetary policyen_US
dc.subjectStock marketen_US
dc.titleImpact of fiscal and monetary policy on stock market performance in Kenyaen_US
dc.typeProjectsen_US
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