Bond Characteristics and Financial Performance of Investment Firms Listed at Nairobi Securities Exchange, Kenya
DOI:
https://doi.org/10.47604/ijfa.3769Keywords:
Bond Characteristics, Bond Liquidity, Bond Price, Financial Performance, Investment Firms, Nairobi Securities Exchange, KenyaAbstract
Purpose: Investment schemes in Kenya have witnessed increased volatility in their earnings, resulting in irregular growth in the industry. This necessitated the need to understand the factors contributing to poor financial returns. Hence, this study aimed to assess the effect of bond characteristics on the financial performance of investment schemes listed at the NSE, Kenya. The specific objectives were to assess the effect of bond liquidity and bond price on the financial performance of investment schemes listed at the NSE in Kenya. The study was anchored on the liquidity preference theory and the expectations theory of the term structure.
Methodology: The target population was 5 investment schemes listed at the NSE and were operational in the period 2016 to 2025. The study adopted a causal research design, drawing on panel data from listed investment firms. Secondary data were sourced from audited financial reports, CMA, and NSE databases. The data were analyzed using panel regression models to establish the relationship between bond characteristics and firm financial performance.
Findings: The findings of the study revealed that bond liquidity has a positive and statistically significant effect (β = 0.1826, p = 0.0033), and bond price was found to have a positive and significant effect (β = 0.0062, p = 0.0007) of CISs listed at the NSE, Kenya. Based on these findings, the study concluded that the combined effect of these bond characteristics variables accounts for 50.89% of the variation in financial performance and thus plays a significant role in influencing the financial performance of CISs listed at the NSE.
Unique Contribution to Theory, Practice and Policy: The study recommends that investment schemes adopt strategies that enhance bond liquidity and bond price through improved transparency and active participation in secondary markets. Additionally, regulatory authorities should continue strengthening the bond market by enhancing market transparency, improving trading infrastructure, and encouraging wider participation in the bond market.
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