INFLATION RATES AND SECURITIES MARKET PERFORMANCE OF FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE
Hillary Kiprono Ngetich - Master In Business Administration (Finance), Kenyatta University, Kenya
Dr. Geoffrey Mbuva - Lecturer, Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
Currently, securities have become the most important investment instruments in the financial markets that has attracted both local and foreign investors. However, the Nairobi Securities Exchange (NSE) has experienced fluctuation of securities prices because of demand and supply of shares change. These fluctuations could be attributed to the changes in inflation rates that have led to significant effect on securities returns as well as the Corona virus outbreak. Therefore, the research project aspired to ascertain the influence of inflation rates on the securities market returns among NSE listed firms. This study evaluated this effect using four theories including Efficient Market Hypothesis theory and Monetary Inflation theory. A descriptive research design was employed to explain how inflation rates affected securities market performance. Secondary data involving all of the 64 listed companies in NSE was used. The data that were collected cover a period of ten years from 2012-2021 were based on monthly time series data obtained from the NSE, CBK and KNBS. The findings were analyzed by use of both descriptive and inferential analyses involving correlation and regression analyses. The findings depicted that inflation rate depicted an insignificant influence on securities market returns of NSE listed companies. The findings help in improvement of the existing theoretical and practical mastery of the effects of inflation rates on securities returns. The findings are also beneficial for future investments as this study served as foundation for gauging the prevailing economic conditions in Kenya that affect their investment choices.