| dc.description.abstract | This study examines the relationship between capital market development and economic growth
in Kenya. Capital markets in the world individually and collectively play a critical role in the
national economies. However, controversies do exist on the role of capital markets in an
economy. For instance, Singh (1997) argued that stock market might not be important in
attaining higher economic growth while Levine and Zervos (1998) find that stock market
development plays an important role in predicting future economic growth. This study has used
data from 1990 - 2012 and has employed a multiple regression model technique.
The objective was to establish the relationship between capital market development and
economic growth in Kenya. From the results, it was revealed that there was a negative
relationship between stock market development indicators and economic growth in Kenya. The
data collected for the study was analyzed using a multivariate regression model. Statistical
package for social sciences (SPSS) version 21 was used to aid in analysis of the data. The
independent variables of this study are market capitalization ratio, stock traded total value ratio,
turnover ratio and number of listed companies at the NSE. Where y was economic growth
indicated by GDP annual growth rate, xl was MCAR,x2 was TTVR, x3 was TOR and x4was
NC.
This study finds that turnover ratio and number of listed companies rarely affects the growth of
the economic sector. This study also revealed that market capitalization ratio and stock traded
total value ratio have a positive relationship with economic growth. The study recommends that
NSE needs to be developed further to enhance domestic resource mobilization. Policymakers
should encourage stock market development. | en_US |
