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Adigwe, P.K, Nwanna, I. O., and Amala A. (2015). Stock Market Development and Economic Growth in Nigeria: An Empirical Examination (1985-2014). Journal of Policy and Development Studies Vol. 9, No. 5.

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Article

The Nexus between Market Tightness and Economic Growth – A Case of Kenya

1Department of Agriculture and Recourse Economics, Jomo Kenyatta University of Agriculture & Technology, Nairobi, Kenya

2Department of Economics, Accounts and Finance, Jomo Kenyatta University of Agriculture & Technology, Nairobi, Kenya


Journal of Finance and Economics. 2017, Vol. 5 No. 6, 259-268
DOI: 10.12691/jfe-5-6-2
Copyright © 2017 Science and Education Publishing

Cite this paper:
Richard Wamalwa Wanzala, Willy Muturi, Tobias Olweny. The Nexus between Market Tightness and Economic Growth – A Case of Kenya. Journal of Finance and Economics. 2017; 5(6):259-268. doi: 10.12691/jfe-5-6-2.

Correspondence to: Richard  Wamalwa Wanzala, Department of Agriculture and Recourse Economics, Jomo Kenyatta University of Agriculture & Technology, Nairobi, Kenya. Email: rwwanzala@aa.jkuat.ac.ke

Abstract

This study investigates the nexus between the market tightness and economic growth in Kenya using data from 2006 – 2015 from Nairobi Security Exchange and Kenya National Bureau of Statistics. A parsimonious moderating regression analysis (MRA) has been presented to examine whether real interest rate and risk premium individually moderates the relationship between stock market tightness (proxied by various versions of spread) and the economic growth (proxied by Real Gross Domestic Product (GDP)) in Kenya. The study shows that both real interest rates and risk premium moderates the relationship between stock market tightness and the economic growth in Kenya.

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