FINANCIAL INNOVATIONS AND OPERATIONAL EFFICIENCY OF COMMERCIAL BANKS IN KENYA
FINANCIAL INNOVATIONS AND OPERATIONAL EFFICIENCY OF COMMERCIAL BANKS IN KENYA
Olianga Steven Biko - Msc Finance Student, School of Business and Entrepreneurship, Jomo Kenyatta University of Agriculture and Technology, Kenya
Roche Charles - Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Anomalies are recurring patterns on stock returns that deviate from the predictions of the EMH. These anomalies suggest that stock returns may exhibit predictable behavior at specific times of the trading calendar. In emerging and frontier markets such as Kenya, the persistence of anomalies raises important questions regarding market efficiency, investor behavior, and return predictability. The general objective of this study was to examine the effect January anomalies on stock market returns. The study adopted a quantitative, descriptive, and explanatory research design and employed a census approach covering all 62 firms listed at the NSE. Secondary daily stock price data for the period 2021–2025 were obtained from the NSE database and related regulatory reports. Panel data regression analysis was used to estimate the relationship between stock returns and January anomalies. Trend analysis indicated that the January anomaly persisted throughout the study period, although their magnitude varied across years. Correlation analysis established positive and significant relationships between stock market returns. The regression results revealed that January effect had a positive and significant effect on stock market returns (β = 0.2973, p < 0.001). The model explained approximately 45.05% of the variation in stock market returns (R² = 0.4505). The findings provide evidence of predictable return patterns and suggest that the Nairobi Securities Exchange exhibits characteristics of a partially efficient market. The study recommends that investors incorporate January trading patterns into investment decision-making, while regulators should strengthen market efficiency through enhanced investor education, transparency, and information disclosure. Future studies should incorporate firm-specific and macroeconomic factors to explain the variation in stock returns not accounted for by January anomalies.
