Tag Archives: Nairobi Securities Exchange

Effect of Bond Issuance on Financial Performance of Firms listed on Nairobi Securities Exchange (Published)

The bonds market in Kenya has experienced tremendous growth in the recent past. Firms listed on Nairobi Securities Exchange (NSE) have gone ahead to undertake secondary bond issues as they pursue their growth strategies. Looking at the financial performance (Return on Equity) of these firms that have undertaken secondary bond issues, there are declines at particular periods after these issues. Understanding the effect of bond issues on financial performance is important for the survival of firms. Studies on the relationship between debt and financial performance of firms have shown that debt has an effect on financial performance. This study went further to find out the effect of debt in form of bond issuances on listed firm financial performance as measured by return on equity. The study collected dated from all the six firms that had issued bonds in tranches or additional bonds within the period 2008 to 2017. Data was analyzed via regression to assess whether bonds issuance has any effect on the financial performance of firms listed on NSE. Results indicate that about 75.4 percent of variance in financial performance could be explained by bond issuance as characterized by bond price, bonds coupon rate, bond proportion, and bond yield to maturity. Bond proportion and bond yield to maturity were found to have a statistically significant effect on financial performance. The study concluded that bond issues affected financial performance of listed firms in Kenya. It was recommended that the listed firms ought to take into consideration the various aspects of bond issues in order to enhance their financial performance.

Keywords: Financial Performance, Nairobi Securities Exchange, Return on Equity, bond issuance, bond price, bond proportion, yield to maturity

The Influence of Foreign Exchange Rate Fluctuations on the Financial Performance of Commercial Banks Listed At the Nairobi Securities Exchange (Published)

A foreign exchange rate is the price at which one currency may be converted into another. An exchange rate is an important aspect in a nation’s international trade, balance of payments and overall economic performance. This paper is based on a study that sought to understand the relationship and effects of foreign exchange liberalization on financial performance of commercial banks listed in Kenya’s Nairobi Securities Exchange. The study used a time series correlation research design with the target population being all commercial banks that are listed in the Nairobi Securities Exchange between 2006 and 2013. Data was sourced from the Central Bank of Kenya and published yearly accounts of listed banks. The study used multivariate Linear Regressions to establish the relationship between foreign exchange rate fluctuations, inflation rates, interest rates and bank performance indicators. Pearson product moment correlation (r) was applied to establish the relationship between the variables. The study found that there existed a strong positive relationship between foreign exchange rates and financial performance indicators. The positive relationship between exchange rate and financial performance may reflect how fluctuating and volatile exchange rate may have contributed to the growth of profitability of banks. The study recommends that the Government should put up more measures to increase the country’s exports.

Keywords: Commercial Banks, Financial Performance, Foreign Exchange Rate Fluctuations, Nairobi Securities Exchange