Determining the Factors that Affect Investor Participation in the Nairobi Securities Exchange [MBA Thesis a Ccompanied by a CD-ROM] PDF Download

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Languages : en
Pages : 74

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The main aim of this study was to analyze the factors that affect investor participation in the Nairobi Securities Exchange. It specifically sought to answer the questions: Does cognitive ability affect investor participation in the Nairobi Securities Exchange (NSE)? What information do investors seek to enable them to readily invest their money and how information availability affects their participation? The study was also intended to find out whether investor confidence was a major factor that could affect investor participation in the Nairobi Securities Exchange? The study used a descriptive research design and simple random sampling to study the 110 respondents of this study. The populations of this study were the 1.4 million investors in the NSE. Primary data was gathered using a questionnaire. The data that was collected was then edited, coded, transcribed and then cleaned. Data was analyzed using a computer application package known as Statistical Package for Social Scientists (SPSS). SPSS was used to find the frequencies of the variables and the correlations between them. On cognitive ability and investor participation, the study noted that the male population was more actively involved when compared to the female population of Kenya. A majority of the investors were neutral in their investment pursuits, avoiding any sort of major risk. It was also observed that a large proportion of the investors that were sampled had a first degree. Almost half of the investors lay in the age brackets 18-30 years and earned between Shillings 51,000-100,000. The portfolio performance of the investors improved with experience and the study provides evidence of this. This study also noted that the older population of investors tend to hold less concentrated portfolios. On information availability and investor participation, the study found that the NSE is an efficient market since a large proportion of the investors are easily able to attain information that helps them make investments decisions. The study observed a high tendency of an investor?s family member also investing in the securities exchange if one member was currently investing. The study keenly noted that the investors looked at financial information and trends prior to investing. v On investor confidence and investor participation, the study observed that a large majority of the investors were quite confident in the NSE and the investor?s investment decisions were highly affected by news concerning the cash-flows of listed companies. The study noted that eighty percent of the respondents were able to comfortably interpret financial information as provided in the listed company?s financial statement. Investor education lacks in Kenya and this was one of the reasons why there were so few individuals investing in the Nairobi securities Exchange (1.4 Million against a population of more than 40 million). Conclusions that were drawn from this study were that investors keenly looked for financial information prior to investing in shares. Investors were highly confident in the NSE and they preferred to invest as individuals. Furthermore, the study also concluded that investor education lacked in the Kenyan market. The study recommended motivating more individuals to take up stock investment, particularly the female population. Another recommendation was to hold more investor education forums to educate non investors, and for the Capital Markets Authority to open branches countrywide to ensure that individuals are educated throughout Kenya and not in the Capital-Nairobi alone.

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Languages : en
Pages : 49

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This study evaluates the effect of macro-economic factors on stock returns at the Nairobi stock exchange. According to the stock market efficiency (SME) hypothesis, all past information on fiscal and monetary policy actions is reflected in current stock returns and so changes in money supply or budget deficit should not have any significant impact on stock returns. The main aim of this study was therefore to test if stocks returns at the Nairobi Stock Exchange (NSE) follow the efficiency hypothesis. The objectives of the study was to determine the relationship between stock returns at the NSE on one hand and public deficit, interest rates and inflation on the other hand. The study uses regression analysis to establish the relationship between stock returns at the NSE and public deficits, interest rate, and inflation rate. Sixty data points are taken for the period beginning January 2008 to December 2012. The findings of the study indicate that budget deficits do not have any significant relationship with stock returns at the Nairobi stock exchange. This is true across all the five years that were analyzed. This finding is in line with stock market efficiency theory but it?s in contrast to some of the previous studies done on the subject. The study also found an inverse relationship between interest rates and stock returns in four out of the five years that were analyzed. A unit increase in interest rates led to a significant decrease in stock returns. Inflation was also found to have an inverse relationship with stock returns in four out of the five years that were analyzed. A unit increase in inflation led to a significant decrease in stock returns but the relationship was not as strong as that observed with interest rates. The major recommendation of this study is that more research is needed to establish whether indeed the lack of a significant relationship between stock returns and fiscal deficits in Kenya is because the Kenya stock market is efficient in terms of information on fiscal policy actions or there are other reasons why fiscal deficits do not seem to matter. Interest rates and Inflation on the other hand have been found to adversely impact stock returns at the Nairobi stock exchange. This indicates that high interest rates and inflation do harm to the economy and the major recommendation for improvement is that the government should pursue policies aimed at bringing interest rates down and containing inflation.

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Languages : en
Pages : 79

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Capital budgeting decisions are very important for financial managers since they determine the choice of investment projects that will affect company value. The adoption of the appropriate capital budgeting tools provides managers with both the processes and techniques required to make decisions that will enhance the organization?s resource base while improving its ability to serve its members and evaluate effectiveness of its investments. The general objective of this study was to assess the capital budgeting techniques adopted by companies listed at the Nairobi Securities Exchange. The study had four specific research objectives including: determining the structure of capital budgeting process adopted by companies listed at the Nairobi Securities Exchange; determining the capital budgeting techniques adopted by companies listed at the Nairobi Securities Exchange; analyzing the factors affecting choice of a capital budgeting technique by companies listed at the Nairobi Securities Exchange; and determining the risks in capital budgeting techniques adopted by companies listed at the Nairobi Securities Exchange. This study applied a descriptive study design. The target population comprised all the companies listed at the Nairobi Securities Exchange as at December 31st, 2013. A sample size of 42 firms was selected from a total population of 62. Primary data was collected using a questionnaire. Data analysis was done using SPSS and Microsoft Excel to generate quantitative reports. The collected data was analyzed and presented in the form of tabulations, percentages, mean and standard deviation. The study found out that the companies had a clearly defined process governing capital budgeting. The study further found out that the organizations collected relevant and detailed information on each investment opportunity presented to them, analyzed investment opportunities thoroughly to establish their worthiness to the organization and their alignment to the strategic plan and set budgets for each investment project to be undertaken. The companies also evaluated the fitness of the investment opportunities against the corporate strategic plan. On the capital budgeting technique, the study found out that all the proposed capital budgeting techniques were utilized in the organization. The most utilized capital budgeting method was internal rate of return followed by net present value technique. Profitability index technique was third while Present- Value technique was fourth. Other techniques utilized included discounted Payback technique, Accounting/Average Rate-of-Return technique and Modified Internal Rate of Return (MIRR) technique. For those least utilized, the respondents identified failure to take into account time value of money as they key reason for not applying some techniques followed by lack of familiarity with the technique and cumbersome computations involved. On the factors affecting the choice of capital budgeting technique among the organizations listed at the NSE, certainty of the cash flow affected the choice of capital budgeting technique, The size of the firm, the state of the economy, prevailing corporate taxes in the economy, limitation of the strategic plan of the organization, amount of capital available for investment, environmental impact of the project and profitability levels of the project. Government regulations on the sector, affected the capital budgeting technique to little extent. On the risks in capital budgeting techniques, high inflation affecting interest rates ranked the greatest risk, other risks such as cash flow not flowing in as anticipated. Collapse of the investee company, management investing the invested funds in risky projects, and fluctuating cost of capital used in computations, re encountered only to a little extent with an average were encountered by the firms. The study recommends that capital budgeting be a key process in an organization?s development plan which needs to be handled with strict care because of the impact it has on the future of the organization. It recommends that capital budgeting appraisers collect as much information as possible concerning the investment project, macro-economic changes that are likely to affect the operating environment so as to come up with appropriate inflation adjusted cost of capital used in appraising projects. The study further recommends that capital budgeting process incorporate risk management officers who would advice the team on ways of minimizing such risks.

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Languages : en
Pages : 78

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A rights issue is one of the ways through which organisations raise funds to finance their investment plans. The purpose of this study was to investigate the use of rights issues in raising capital. The study was guided by four research objectives namely: to determine the factors that lead organisations to choose rights issues; to determine the factors that influence the success of rights issues; to determine the challenges encountered during rights issues and the measures that can be taken to enhance the use of rights issues. The study employed a descriptive approach using primary data. The population for this study consisted of all the rights issues made in the Kenyan capital market. From this population a sample was selected, that comprised rights issues made during the period 2004 to 2012. A questionnaire was designed and used to collect primary data for the sample, targeting a total of 30 respondents. The respondents were key informants in the companies that made rights issues during the period of study, as well as financial consultants involved in rights issue transactions. Data collected was analysed using quantitative analysis techniques. It was entered into a statistical software (Statistical Package for Social Sciences (SPSS)) and analysed using frequency distribution,mean,standard deviation and coefficient of variation. A total of 18 rights issues were made during the period studied. With the exception of two issues; all the other issues were oversubscribed. The study identified the drivers to the use of rights issues as: the presence of a favourable regulatory environment; a high level of certainty and the need to take advantage of temporarily high stock prices. Low floatation costs and the need to preserve ownership and control were not rated as very significant in the decision to use rights issues. The factors that influence the success of rights issues were identified as: high shareholder take up the performance of the issuing firm; the purpose for which funds were raised and the trend of the stock market at the time of the issue. The challenges to financing through rights issues are: determining an appropriate timing; limited investor base; high future dividend payment; the high cost of contacting each shareholder and the negative effect on stock prices. The measures to address the challenges to rights issues were identified as: selection of an optimal subscription price; analysing the shareholder structure and the presence of underwriting. The study found that there had been a rise in the use of rights issues in the Kenyan market, and suggests that more organisations should use rights issues to raise funds. To achieve this, the study recommends that the Capital Markets Authority should encourage and facilitate the use of rights issues by creating a regulatory framework that is not complex for organisations to comply with. The study also recommends that future studies should investigate the long run effects of rights issues on stock prices and firm performance in order to determine whether there are any negative long run effects that organisations should be aware and therefore put preventive measures in place after making rights issues.

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Languages : en
Pages : 79

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The purpose of this study was to analyse the effect of remittances received from Kenyans residing abroad on macroeconomic factors in Kenya. This study was guided by the following research objectives: (i) To determine the effect of remittance flows on Kenya?s GDP; (ii) To determine the effect of remittance flows on investments in the Kenyan securities market; (iii) To determine the effect of remittance flows on bank interest rates in Kenya and (iv) To determine the effect of remittance flows on foreign exchange rates in Kenya. The research design was explanatory in nature focusing on remittances received from Kenyans residing in other countries and how they affect various macro-economic indicators such as gross domestic product (GDP), securities market data, interest rates and foreign exchange rates. The study primarily involved the examination of published data that was available from Central Bank of Kenya (CBK) and Kenya National Bureau of Statistics (KNBS), government ministries such as Ministry of Finance (MoF) and Ministry of East African Affairs, Commerce and Tourism (MEACT), as well as organisations such as the United Nations Conference on Trade and Development (UNCTAD), the World Bank and the International Monetary Fund (IMF). Descriptive and inferential statistics were used to analyse the data. In particular, means and standard deviations were calculated for all the variables in the study. Further statistical analysis was carried out by use of correlation and regression analysis where remittance flows were regressed against GDP, exchange rates for selected currencies, investments in the securities market and bank interest rates. Data was analysed using Statistical Package for Social Sciences (SPSS) and results presented in graphs and tables. The study findings indicated that that the amounts of diaspora remittances had increased consistently over the period of study. Further the findings indicated that the real exchange rate has consistently inclined over the period under study. Correlation results revealed that there was positive and significant relationship between remittance flows and GDP, bank interest rates, US Dollar exchange rate and Euro exchange rate. The study findings concluded that diaspora remittances had a positive and significant relationship with GDP, bank interest rates, the US Dollar exchange rate and Euro exchange rate. The study recommends that the country needs to consider adopting institutions that help in amplifying the growth effects of remittances into sustainable economic growth. The government in conjunction with financial institutions should come up with policies that make it cheap, easy and safe to receive remittances as well as establish efficient and effective formal channels for sending and receiving remittances. The study recommends that the various commercial banks should develop banking products that will encourage migrants to maintain bank accounts in the labour-exporting country. Such accounts should be denominated in applicable foreign currency of choice to the migrant and must be made operational in the migrant?s country of residence through the use of modern information and communication technology. The study also recommends that effective measures are needed to be taken by the central bank to control inflation by reducing money supply in the economy. The formulation of monetary policy by the central bank is an important factor for controlling inflation. It is recommended that the monetary authority should use policies aimed at strengthening the Kenya shilling as doing so would reduce the charges for sending remittances. Kenya should device a way of influencing remittance recipient households to save their income so that the proceeds can be distributed to critical sectors of the economy. For instance, policies advocating for the increased use of remittances in funding entrepreneurial activities in the economy can be formulated. This will also need an effective and efficient distribution system, that is, a vibrant financial system that can mobilise remittance funds and distribute them as investment capital to unfunded entrepreneurs.

Author: Heidi Raubenheimer
Publisher: CFA Institute Research Foundation
ISBN: 1944960880
Category : Business & Economics
Languages : en
Pages : 126

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Africa encompasses a wide range of market conditions, from rapidly emerging economies to countries with a long history with financial markets. Produced in partnership with the African Securities Exchanges Association, this collection of essays includes the perspectives of authors in local markets who provide their analysis of the history, current developments, and future outlook for South Africa, Nigeria, Mauritius, Ghana, Zimbabwe, Morocco, Egypt, Botswana, and East Africa. For prospective investors, the book provides valuable insights on how changing regulation, evolving financial technology, and expanding investor access are transforming local markets on the continent.

Author: Elizabeth J. Macfie
Publisher: IUCN
ISBN: 2831711568
Category : Nature
Languages : en
Pages : 87

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Executive summary: Tourism is often proposed 1) as a strategy to fund conservation efforts to protect great apes and their habitats, 2) as a way for local communities to participate in, and benefit from, conservation activities on behalf of great apes, or 3) as a business. A few very successful sites point to the considerable potential of conservation-based great ape tourism, but it will not be possible to replicate this success everywhere. The number of significant risks to great apes that can arise from tourism reqire a cautious approach. If great ape tourism is not based on sound conservation principles right from the start, the odds are that economic objectives will take precedence, the consequences of which in all likelihood would be damaging to the well-being and eventual survival of the apes, and detrimental to the continued preservation of their habitat. All great ape species and subspecies are classified as Endangered or Critically Endangered on the IUCN Red List of Threatened Species (IUCN 2010), therefore it is imperative that great ape tourism adhere to the best practice guidelines in this document. The guiding principles of best practice in great ape tourism are: Tourism is not a panacea for great ape conservation or revenue generation; Tourism can enhance long-term support for the conservation of great apes and their habitat; Conservation comes first--it must be the primary goal at any great ape site and tourism can be a tool to help fund it; Great ape tourism should only be developed if the anticipated conservation benefits, as identified in impact studies, significantly outweigh the risks; Enhanced conservation investment and action at great ape tourism sites must be sustained in perpetuity; Great ape tourism management must be based on sound and objective science; Benefits and profit for communities adjacent to great ape habitat should be maximised; Profit to private sector partners and others who earn income associated with tourism is also important, but should not be the driving force for great ape tourism development or expansion; Comprehensive understanding of potential impacts must guide tourism development. positive impacts from tourism must be maximised and negative impacts must be avoided or, if inevitable, better understood and mitigated. The ultimate success or failure of great ape tourism can lie in variables that may not be obvious to policymakers who base their decisions primarily on earning revenue for struggling conservation programmes. However, a number of biological, geographical, economic and global factors can affect a site so as to render ape tourism ill-advised or unsustainable. This can be due, for example, to the failure of the tourism market for a particular site to provide revenue sufficient to cover the development and operating costs, or it can result from failure to protect the target great apes from the large number of significant negative aspects inherent in tourism. Either of these failures will have serious consequences for the great ape population. Once apes are habituated to human observers, they are at increased risk from poaching and other forms of conflict with humans. They must be protected in perpetuity even if tourism fails or ceases for any reason. Great ape tourism should not be developed without conducting critical feasibility analyses to ensure there is sufficient potential for success. Strict attention must be paid to the design of the enterprise, its implementation and continual management capacity in a manner that avoids, or at least minimises, the negative impacts of tourism on local communities and on the apes themselves. Monitoring programmes to track costs and impacts, as well as benefits, [is] essential to inform management on how to optimise tourism for conservation benefits. These guidelines have been developed for both existing and potential great ape tourism sites that wish to improve the degree to which their programme constributes to the conservation rather than the exploitation of great apes.

Author: Iain Christie
Publisher: World Bank Publications
ISBN: 1464801975
Category : Business & Economics
Languages : en
Pages : 325

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This book presents how tourism initiates economic development and how constraints to the growth of tourism in Sub-Saharan Africa can be addressed. With 24 case studies that illustrate tourism development, it reveals that despite destination challenges, the basic elements needed to initialize or intensify success are applicable across the region.

Author: Joanna Ledgerwood
Publisher: World Bank Publications
ISBN: 0821366165
Category : Business & Economics
Languages : en
Pages : 570

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In response to a clear need by low-income people to gain access to the full range of financial services including savings, a growing number of microfinance NGOs are seeking guidelines to transform from credit-focused microfinance organizations to regulated deposit-taking financial intermediaries. In response to this trend, this book presents a practical 'how-to' manual for MFIs to develop the capacity to become licensed and regulated to mobilize deposits from the public. 'Transforming Microfinance Institutions' provides guidelines for regulators to license and regulate microfinance providers, and for transforming MFIs to meet the demands of two major new stakeholders regulators and shareholders. As such, it focuses on developing the capacity of NGO MFIs to mobilize and intermediate voluntary savings. Drawing from worldwide experience, it outlines how to manage the transformation process and address major strategic and operational issues inherent in transformation including competitive positioning, business planning, accessing capital and shareholders, and how to 'transform' the MFI's human resources, financial management, MIS, internal controls, and branch operations. Case studies then provide examples of developing a new regulatory tier for microfinance, and how a Ugandan NGO transformed to become a licensed financial intermediary. This book will be invaluable to regulators and microfinance NGOs contemplating institutional transformation and will be of tremendous use to donors and technical support agencies supporting MFIs in their transformation.

Author: R. Kindt
Publisher: World Agroforestry Centre Eastern and Central Africa Program
ISBN:
Category : Nature
Languages : en
Pages : 440

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