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Issack Gure - Department of Accounting and Finance, Kenyatta University, Kenya

Dr. Vincent Shiundu Mutswenje - Department of Accounting and Finance, Kenyatta University, Kenya


The stock market is essential to a country's economic growth as it provides platforms that enable the companies to trade publicly and raise capital. This enables the transfer of capital and ownership to be regulated and secure environment for trade, thus promoting investment. This implies that strong performance positively affects business growth and expansion operations, which in turn generates jobs for the economy. Given the significance of stock market performance to the economy, any changes to that performance undoubtedly had an impact on the economy. Because of this, the researcher examined the effects that changes to macroeconomic conditions have on Kenya's stock market performance with specific focus on how inflation affect the stock market performance. The arbitrage pricing theory and Fisher theory were applicable. Explanatory research design was employed. Secondary data was gathered from the years 2017 through 2021 from the Nairobi Securities Exchange as well as the Kenya National Bureau of Statistic. Diagnostic tests were run to check for any violation of the regression analysis. Time series regression model was applicable for this study where both descriptive (mean and standard deviation) and inferential statistics were analyzed. The researcher kept ethics in mind throughout the investigation. The study findings were presented through graphical, pictorial representation, tables, and percentages. Inflation had a statistically significant impact on Kenya's stock market performance and was thus the hypothesis was rejected. In order to combat inflation, the study recommends employing a contractionary monetary policy, which is a method for doing so. A contractionary policy aims to lower the quantity of money available in an economy by lowering bond prices and boosting interest rates. Price decreases, slower inflation, and less consumption follow as a result.

Full Length Research (PDF Format)