Impact of macroeconomic variables on stock market volatility : a case study of the Nairobi Stock Exchange.

Abstract

Stock market plays a very important role in economic growth and development. It is a center of network transactions where buyers and sellers of securities meet at a specified price. Movement of stock markets is an important indicator of the growth of the economy. A well-organized stock market mobilizes the savings and activates the investment projects, which lead to the economic activities in a country hence growth of the industry and commerce of the country as a consequence of liberalized ad globalized policies adopted by most emerging and developed country. The key function of a stock market is to act as a mediator between savers and borrowers. It further mobilizes funds from a large pool of savers and directs it into worthy investments that are sure going to generate sufficient profits. It also provides liquidity from domestic expansion and credit growth. The stock market performance can be measured by changes in its index which is inclined by many factors macroeconomic, social and political factors. A stock market is also a subsidiary market which assigns policy for investors to easily buy and sell the stocks. Stock prices depict predictions of the upcoming representation of corporate firms whether they are performing poorly or the vice versa