Effects of interest and exchange rates on bank stock returns. Evidence from Kenya

Epameinondas Katsikas, Sanjukta Brahma Brahma, Susan Maina Wangeci

Research output: Contribution to conferencePaper

Abstract

The current research attempts to investigate the effects of changes in interest rates (IR) and exchange rates (FX) on bank stock returns (BSR) in the context of Kenya. Further, it will investigate the effects of actual interest and exchange rates on bank stock returns. In addition, this study also explores the impact of 2007-2008 election violence in Kenya on these relationships. Both short and long term interest rates will be used by this study.

By applying Ordinary Least Square (OLS) regression method this study will test whether changes in interest rates and exchange rates are negatively or positively related to the BSR as well as the significance of their relationship to BSR. This will be tested together with the effect of the inclusion of inflation rates on them. In order to capture the effect of 2007-2008 election violence in Kenya the significance of IR and FX pre and post the election period will be evaluated with regard to their effect on BSR.
Original languageEnglish
Publication statusPublished - 13 Jun 2015

Keywords

  • interest rate
  • exchange rate
  • banks
  • stock returns
  • Kenya

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