Kenya Commercial Banks are Star Performers –Myth or Truth? Exploratory Empirical Evidence from Nairobi Securities Exchange (NSE)

Authors

  • Patrick Mumo Muinde Central University of Finance and Economics (CUFE) and Kenya School of Government (KSG)
  • James Mwangi Karanja University of Nairobi

Abstract

The profitability of commercial banks in Kenya has been a subject of intense policy debate over the past two decades. This paper explores and adduces evidence that the perceived abnormal profitability in the industry is reflected in stock returns. The study utilizes time series data obtained from the NSE and five macroeconomic variables for the period 1996: 2015. We regress portfolio monthly excess returns, predict and graph these returns to determine if the banking sector outperforms other sectors of the economy. The empirical evidence presented here suggests that the banking industry outperforms other sectors of the economy in Kenya.                                                                      

Keywords: Commercial Banks; Portfolio Returns

JEL Classifications: A23, C22, E44

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Author Biographies

Patrick Mumo Muinde, Central University of Finance and Economics (CUFE) and Kenya School of Government (KSG)

PhD Candidate (CUFE)AndSenior Lecturer -Finance (KSG)

James Mwangi Karanja, University of Nairobi

Department of Finance and Accounting, PhD Candidate & Lecturer

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Published

2017-01-13

How to Cite

Muinde, P. M., & Karanja, J. M. (2017). Kenya Commercial Banks are Star Performers –Myth or Truth? Exploratory Empirical Evidence from Nairobi Securities Exchange (NSE). International Journal of Economics and Financial Issues, 7(1), 340–350. Retrieved from https://econjournals.com/index.php/ijefi/article/view/3559

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