A survey of factors determining development of corporate bonds market in Kenya

Abstract

This study examines the factors determining corporate bonds market development in a Kenya. It considers the level of the corporate bonds market development, as well as the political, macroeconomic, supervisory and regulatory, effective market structures and diversified intermediaries factors driving bond market development in Kenya. The study results suggest that political, macroeconomic and regulatory factors account fully in determining corporate bond market development in Kenya. The study employed a descriptive research design to obtain answers to the questions that helped identify factors determining the corporate bond market development in Kenya. This was done through a structured a questionnaire on a sample of 60 which was all the firms listed in the Nairobi Securities Exchange at the time. Out of the 60 questionnaires issued 42 were received back which is 70% response rate. The study analyzed data using statistical package for social sciences (SPSS) where descriptive statistics including mean, standard deviations and maximum and minimum were generated. In addition the study employed spearman’s correlation analysis and multiple regressions to establish relationship between independent variables and usefulness of the regression equation in making predictions. Overall, the results show that a confluence of factors matters for the development of corporate bonds market in Kenya; these include political environment of the country, investor base, regulatory framework, size of the banking sector, the cumbersome nature of issuance process, and various macroeconomic factors.