Domestic Savings in Unit Trusts and the Growth of Capital Market in Kenya

Abstract

Unit trust funds have contributed to the growth of capital market in Kenya and indeed globally. However there is need to determine the specific contribution of unit trust in the growth of capital market; more so, the particular attribute of unit trust that attract the investment. Theoretically it is expected that as unit trust funds grow, capital markets equally grows but empirically there is some substantial growth in capital market though not in equal measure in unit trusts. The study therefore sought to determine the contribution of domestic savings in unit trusts on the growth of capital market. This was undertaken using explanatory non-experimental research design and analysis were carried out using panel data. A census involving all twenty three (23) unit trust schemes for the period 2009 to 2017 was carried out utilizing secondary data. The variables were analyzed using panel data to determine the relationships of the variables by use of fixed effect model. The study revealed a positive effect of domestic savings to the growth of capital market in Kenya. The findings were presented using a linear type of regression model. The study therefore recommend that greater emphasis be placed on domestic saving in order to benefit from its contribution to the growth of capital market and consequently supporting the economic pillar in Kenya vision 2030. Keywords: capital market, domestic savings, growth and unit trusts. DOI : 10.7176/EJBM/11-16-04 Publication date :June 30 th 2019