MACRO-ECONOMIC FACTORS AFFECTING PERFORMANCE OF FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE
Abstract
The objective of this study was to examine the macro-economic factors affecting performance of firms listed in Nairobi Securities Exchange. The study targeted the firms listed in NSE. The study was anchored on flow oriented model, Mckinnon and shaw theory and Keynesian economic theory. Specifically the study looked at how money supply, inflation rate, exchange rate and interest rate affect performance of firms listed in NSE. The study adopted a descriptive survey research design. The population of this research consisted of the 20 companies listed and included in the Nairobi Securities Exchange 20 Share Index. A sample of 95 respondents was derived using formula proposed by Yamane. Data collection was done through the use of closed-ended questionnaires. The data was summarized and tabulated using descriptive measures. Data was analysed using descriptive statistics and inferential statistics where multiple regression analysis and correlation analysis was done on the data. SPSS version 23 was used to generate quantitative reports. From the research findings, the study established that supply of money in the market inversely affects performance of the firm. The study concluded that the government had put measures to curtail depreciation of Kenyan currency. The study concluded that exchange rate depreciation can cause decline in stock returns and that stable currency creates confidence in investors. Finally, the study concluded that interest rate causes efficient utilization of resources in the promotion of economic growth and development. The study recommended that the listed firms should lobby the government through Central Bank to plan in advance and influence supply of money in the market so as to ensure that there is enough money to conduct trade in the economy.
Key Words: money supply, inflation rate, exchange rate, interest rate, Firm Performance
CITATION: Mureithi, S., Mukhongo, A., & Datche, E. (2019). Macro-economic factors affecting performance of firms listed in Nairobi Securities Exchange. The Strategic Journal of Business & Change Management, 6 (3), 860 – 874.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i3.1363
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