FACTORS INFLUENCING GROWTH OF DERIVATIVES MARKET IN KENYA: A CASE STUDY OF NAIROBI SECURITIES EXCHANGE
Abstract
The research objectives and research questions set out and the scope of study limited to Nairobi securities exchange. Descriptive research design was used in the study. The population census was drawn from the Nairobi Securities Exchange of 18 firms’ financial participants and key staff from the Capital Markets Authority of Kenya as a result therefore stratified and purposive sampling technique was used to sample 114 employees in 18 firms. The sample size was 39 employees from 12 firms. Both primary and secondary data was used. Data collected was validated, edited, coded and then analyzed qualitatively from 33 respondents. The study revealed that 89.1% changes in growth of derivatives market in Kenya could be accounted for by changes in financial innovation, regional market integration, and risk management legal and regulatory frameworks. From the findings the study found out that there was a strong positive relationship between the study variables. The study further revealed that the regression model had a significance level of 0.1% which is an indication that the data was ideal for making a conclusion on the population parameters as the value of significance (p-value) was less than 5%. At 5% level of significance and 95% level of confidence; risk management showed a 0.0017 level of significance legal and regulatory showed 0.0027 level of significance, financial innovation showed 0.0028 level of significance; regional integration showed 0.0016 level of significance; hence the most significant factor was financial innovation. Overall financial innovation had greatest influence on growth of derivatives market in Kenya (p<0.05).
Key Words: Integration, Kenyan Financial Market, Legal and Regulatory Framework, Financial Innovations, Risk Management, Derivatives Market
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DOI: http://dx.doi.org/10.61426/sjbcm.v4i3.535
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