Feasibility study of asset-backed securities in Kenya (a case of Nairobi securities exchange)

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dc.contributor.author Wambui, Charles Mbugua
dc.date.accessioned 2015-05-05T06:35:37Z
dc.date.available 2015-05-05T06:35:37Z
dc.date.issued 2014-08-30
dc.identifier.uri http://erepo.usiu.ac.ke/11732/39
dc.description.abstract The purpose of this study was to investigate the feasibility of Asset-Backed Securities in Kenya. The study answered the following research questions: What are the benefits of Asset-Backed Securities in the financial market? What are the challenges facing Asset-Backed Securities market? What are the possible solutions to overcome the challenge facing Asset-Backed Securities market? To effectively respond to these questions, the researcher adopted an exploratory research design. The target population was the senior staff working with the registered member firms of the Nairobi Securities Exchange. A convenient sample of 40 respondents was adopted. The data collection tool used was a questionnaire that was distributed by way of email and collected in the same manner using telephone follow-up. The qualitative data was coded and analyzed using content analysis while the quantitative data was validated using validation checks, edited and coded then analyzed using both descriptive and inferential statistics. Both Microsoft Excel and Statistical Product and Services Solutions (SPSS) software were used for this analysis. This information was presented both in tabular and graphical formats. The study findings are that the market for Asset-Backed Securities in Kenya is feasible. The main benefits would be increasing liquidity in the market, lowering the cost of credit, risk dispersion, encouraging market growth and promoting FDI. Further benefits would include provide a better way to manage regulatory capital while at the same time creating revenue and managing profitability. Additionally, it would promote market and operational efficiency. There are challenges though in terms of infrastructure due to lack of optimal regulation, un-updated legal structure on company law, taxation and accounting laws as well as credit rating firms’ challenges. In addition there are issuance and pricing challenges as well as the problem of adverse selection and risk shifting. Lack of tested credit rating agencies in the Kenyan market is another challenge as well as the issues relating to separation of the originator and owner. These challenges may be overcome by implementing raft of laws and measures to address them including reviewing the laws and establishing an optimal regulatory framework. Credit enhancements would be part of the solution and also a close oversight on regulatory capital. Further it would be key to manage investors’ risk appetite. From this study the recommendations are for the Government and the regulating authority to take stock and consider marshalling the ship to securitization forward. This may be the solution to the agitation for lower credit costs and the liquidity trap that the country seems to be bottled in. Other recommendations are for further studies to be conducted on other securitized products with a view to comparing them and establishing the best starting point for Kenya. en_US
dc.publisher United States International University Africa en_US
dc.title Feasibility study of asset-backed securities in Kenya (a case of Nairobi securities exchange) en_US
dc.type Thesis en_US

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