Chapter 5

Effects of Interest Rates and Exchange Rates on Bank Stock Returns

E. Katsikas*
S. Brahma**
S.M. Wangeci†*    Kent Business School, University of Kent, United Kingdom**    Glasgow Caledonian University Business School, Glasgow, United Kingdom†    Adam Smith Business School, University of Glasgow, Glasgow, United Kingdom

Abstract

This research attempts to investigate the effects of changes in interest rates (IR) and foreign exchange rates (FX) on bank stock returns (BSR) in the context of Kenya. Further, it will investigate the effects of actual interest and exchange rates on bank stock returns. In addition, this study explores the impact of the 2007–08 election violence in Kenya on these relationships. Both short- and long-term interest ...

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