Foreign Debt Repayment Outflow and Securities Market Volatility in Nairobi Securities Exchange, Kenya

Abstract

The study was undertaken to assess the effects of foreign debt repayment outflow on the securities market Volatility at NSE, Kenya. The connection between foreign loan repayment outflow and stocks market volatility has not been fully examined, despite being the subject of financial studies. Regarding how foreign debt repayment influences the volatility of the securities market, global empirical research has yielded inconsistent conclusions. 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 debt repayment on the volatility of the securities market over the research period was evaluated using the census technique. Nairobi All Share Index, a gauge of securities market volatility, was negatively and significantly impacted by the outflow of foreign debt repayments. It was determined that less foreign debt repayment causes the NSE equities market to be more volatile. The study recommends that Policy makers may need to consider whether to intervene in the foreign exchange market to prevent excessive currency appreciation, adjusting interest rates, implementing fiscal stimulus or introduce financial regulations to stabilize the securities market. Keywords: Foreign debt repayment outflow, Nairobi Securities exchange security market volatility.