Foreign Direct Investment Outflow and Securities Market Volatility in Nairobi Securities Exchange, Kenya

Authors

  • Pasilisa Namikoye Catholic University of Eastern Africa, Kenya
  • Joseph Macheru Catholic University of Eastern Africa, Kenya
  • Mary Nyiva Catholic University of Eastern Africa, Kenya

DOI:

https://doi.org/10.53819/81018102t4192

Abstract

The study was undertaken to assess the effects of foreign direct investment on the securities market Volatility at NSE, Kenya. Although this topic has been the focus of financial studies, the relationship between foreign direct investment outflow and securities market volatility has not been completely analyzed. Global empirical research has produced conflicting results regarding how foreign direct investment affects the volatility of the securities market. The findings are contradictory, which calls for additional research to be done in the current study to determine how international capital outflow affects the volatility of securities traded at Kenya's NSE. The study utilized an explanatory research methodology and used secondary data to focus on the listed institution at the Nairobi Securities Exchange in Kenya. The impact of outflows of foreign direct investment on the volatility of the securities market over the research period was evaluated using the census technique. The analysis discovered a statistically significant positive link between foreign direct investment and GDP. According to the study's findings, the FDIO and SMV as represented by the NSE all share index had a favourable association. It means that adjustments to FDIO are probably going to have a noticeable impact on the volatility of the stock market. The study recommends that regulators should keep a close eye on the flow of FDIO leaving the Nairobi securities exchange market and to take precautions to prevent an excessive outflow from destabilizing the market and posing a risk to the stability of the capital market.

 Keywords: Foreign direct investment Cash flow, Nairobi Securities exchange security market volatility

Author Biographies

Joseph Macheru, Catholic University of Eastern Africa, Kenya

School of Business

Mary Nyiva, Catholic University of Eastern Africa, Kenya

School of Business

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Published

2023-09-14

How to Cite

Namikoye, P., Macheru, J., & Nyiva, M. (2023). Foreign Direct Investment Outflow and Securities Market Volatility in Nairobi Securities Exchange, Kenya. Journal of Finance and Accounting, 7(6), 21–33. https://doi.org/10.53819/81018102t4192

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