IMPACT OF INVESTMENT BANKING ON ECONOMIC GROWTH IN KENYA

Investment banks are an essential part of the financial sectors of modern economies. Providing
alternative savings tools to savers and non-bank sources of financing for enterprises, the markets
promote economic growth through improved efficiency in savings mobilization (Hunter, 2003).
Nevertheless, in an economy of many private enterprises, many firms list in the market while
many that qualify to do so do not.
Capital market authorities may be unaware of plausible factors that induce firms to list in the
market. Worse, they may be unaware of persisting negative factors that may inhibit qualified
firms from listing in the stock exchange. The capital markets consist of the primary market and
the secondary market. The primary markets are where new stock and bonds issues are sold
(underwritten) to investors. The secondary markets are where existing securities are sold and
bought from one investor or speculator to another, usually on an exchange.
This study was a descriptive study. According to Schinler and Coopers (2004) descriptive studies
are more formalized and typically structured with clearly stated hypotheses or investigative
questions. It serves a variety of research objectives such as descriptions of phenomenon or
characteristics associated with a subject population, estimates of proportions of a population that
have these characteristics and discovery of associations among different variables.
This study was carried on investment banks in Kenya and the population of the study was all the
23 investment banks in Kenya (CBK, 2008). Census was used in carrying out the study. The
whole population was covered hence no sampling done. Secondary data was used in this study.This was obtained from NSE database and included Gross Domestic Product measured as the
real Gross Domestic Product generated within the year; average commission fee charged by the
investment banks in Kenya; the total number of investment banks in Kenya within the year; The
total value of stocks traded or transacted within the year; the trading cycle within the investment
market to measure the microstructure of investment markets.
The study revealed that efficient investment banking in the general economy strives to; improve
their capital bases, reduce operational costs, improve assets quality by reducing the rate of nonperforming
loans, employ revenue diversification strategies as opposed to focused strategies and
keep the right amount of liquid assets. Indeed the descriptive analysis of these factors by number
of investment banking showed that large investment banks perform better than the small and
medium investment banks hence superior in their contribution to economic growth.
This study therefore, sought to establish the impact of investment banking on economic growth
of Kenya.

Message from the Dean

Contact Us

P. O. Box P.O Box 30197
00100 GPO
Lower Kabete Campus

Lower Kabete Road
Tel:+254 020 2585841-6

+254 20 2059163

Mobile:0735704065

Mobile:0729396808

VOIP: +254 204918200
dean-business@uonbi.ac.ke

Twitter: @business_uon

 

Corruption Hotline:

0724-200311

0701-529130

Community Outreach

Media Center

Follow us on Facebook

 

AIBUMA on Facebook

 

UoN Website | UoN Repository | ICTC Website


Copyright © 2013.ICT WebTeam, University of Nairobi