Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange

Stephen Mbaya Kimwele; Mary Bosire; Monica Muiru; Simon Kamau

doi:doi:10.11648/j.ijefm.20150303.24

| Peer-Reviewed

Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange

Stephen Mbaya Kimwele, Mary Bosire, Monica Muiru, Simon Kamau

Published in International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 3)

Received: 4 May 2015 Accepted: 13 May 2015 Published: 26 May 2015

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The aim of this study was to investigate the effect of automation of bond trading on the performance of bond market at Nairobi Securities Exchange (NSE). Specifically the study sought to determine the effect of automated bond trading on trading volumes and to determine the effect of automated bond trading on market size. The study adopted a comparative research design and the population of the study comprised of all firms trading on the bond market at the NSE from 2005 to 2012. The data for the study was collected four years before automation and four years after automation. Market capitalization ratio and the number of bonds traded were used to determine pre and post-automation bond market performance. Paired t-test was used to determine whether there was a statistically significant difference between the pre and post automation period. The results of the study indicated that bond trading automation has a positive and a significant effect on the performance of the bond market.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 3)
DOI	10.11648/j.ijefm.20150303.24
Page(s)	279-284
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Automation of Bond Trading, Bond Market Performance, Nairobi Securities Exchange

References

[1]	Alexander, G., Edwards, A., &Ferri, M. (2000). The determinants of trading volume of high-yield corporate bonds, Journal of Financial Markets, 3, 177-204
[2]	Alile, E., &Anao, F.(1986). Financial Theory and Corporate Policy, Addison. Wesley.
[3]	Al-Khouri, R.&Al-Ghazawi, N. (2008). The Effectof Electronic Trading onMarketVolatility and Liquidity inEmerging Markets: Evidence from Amman Stock Exchange. Journal of Derivatives & Hedge Funds,14, 222-246.
[4]	Anthon, M. (2002). Market Transparency: Who Wins and Who Loses? Review of Financial Studies, 12, 5-35.
[5]	Appiah-Kusi, J., &Menyah, K. (2003). Return Predictability in African Stock Markets. Review of Financial Economics, 12, 247–270.
[6]	Ashraf, M., &Joarder, H.(2008). The Effect of Information Technology on Stock Market Trade Volume and Volatility: A Case of Dhaka Stock Exchange. A.U Journal, 12, 265-270.
[7]	Brailsford, T., Faff, R., & Oliver, B.(2000). An Intracyclical Analysis of the Risk Sensitivity of Bank Stock Returns, Sydney, McGraw-Hill.
[8]	Brown, D., and Caylor, L. (2006). Corporate Governance and Firm Valuation. Journal of Accountingand Public Policy, 25, 409-434
[9]	Coelli,J., Prasada, R., O’Donnell, C.,&Battese, G. (2005). An Introduction to Efficiency and Productivity Analysis, New York, Springer.
[10]	Debysingh, N., & Watson, P.(2009). Automation and Efficiency in Two Emerging Equity Markets. Lewis Institute of Social and Economic Studies, 1-17.
[11]	Downing, C.,& Zhang, F.(2004). Trading activity and price volatility in the municipal bond market. Journal of Finance, 59, 899-931.
[12]	Edwards,K., Harris, L., &Piwowar, M.(2004). Corporate Bond Market Transparency and Transaction Costs. Fifteenth Annual Utah Winter Finance Conference.
[13]	Eng, L.,&Mak, Y.(2003). Corporate governance and voluntary disclosure. Journal of Accounting & Public Policy, 22, 325-345.
[14]	Fama, E.(1970). The Behavior of Stock Market Prices. Journal of Business38,34–105.
[15]	Frame, K., & White, T. (2004). Continuous-Time Finance. London: Basil Blackwell.
[16]	Franke, G.,& D. Hess.(2000). Information Diffusion in Electronic and Floor Trading, Journal of Empirical Finance, 7, 455-478.
[17]	Glosten, N. (2004). Trading Costs and the Relative Rates of Price Discovery in Stock, Futures, and Option Markets. Journal of Futures Markets, 16, 353-387.
[18]	Harris, L.(2003). Trading and Exchanges: Market Microstructure for Practitioners. Oxford, Oxford University Press.
[19]	Harris, M.(2003). Differences of Opinion make a Horse Race, Review of Financial Studies, 6, 473- 506
[20]	Horne, T. (1997). The Informational Efficiency of the Corporate Bond Market: An Intraday Analysis. Review of Financial Studies, 15, 1325-1354.
[21]	Iskandarani, M., & Haddad, F.(2012). The Effect of Electronic Trading on Market Liquidity and Stock Price Behaviour: An Empirical Study on Ammam Stock Exchange. Jordan Journal of Business administration, 9, 125-150.
[22]	Kalimipalli, M., &Warga, A.(2002). Bid/Ask Spread, Volatility and Volume in the Corporate Bond Market. The Journal of Fixed Income, 11, 31-42.
[23]	Kalimipalli, M.,&Warga, A. (2002). Bid/ask spread, volatility and volume in the corporate bond market. Journal of Fixed Income, 12, 1153-1165.
[24]	Kariuki, M. (2012).The impact of automated trading systems (ATS) on Share trading in the Nairobi Stock Exchange. Unpublished MBA Project, University of Nairobi.
[25]	Mailafia, H. (2011). The effect of automation of the trading system in the Nigerian Stock Exchange. Journal of Finance, 12, 467–482.
[26]	Marinde, C.(2006) African Stock Market Efficiency and Integration: A study of Eighteen Nations. Journal of Business Finance & Accounting, 24, 803-814.
[27]	Meek G., Roberts C., & Gray S. J. (1995). Factors Influencing Voluntary Annual Disclosures by U.S., U.K., and Continental European Multinational Corporations. Journal of International Business Studies, 26, 555-572.
[28]	Mensah, J., &Adom, P.(2012). Does Automation Improve Efficiency? Evidence from Amman Stock Exchange.Financial Review, 35, 79–104.
[29]	Nzotta, N. (2002). Developments in the Kenyan Domestic Bond Market. 89– 99
[30]	Okereke-Onyiuke, J. (2000). Portfolio Selection: Efficient Diversification of Investments. New York: John Wiley & Sons.
[31]	Oranika, P.(2010).Bond Market Trading. Baltimore, Publisha America.
[32]	Osaze, P. (2003). Corporate Bond Trading Costs: A Peek behind the Curtain, Journal of Finance, 56, 677-698.
[33]	Samuel. L.,& Wilkes, K.(1980). Security Markets, Information and Liquidity. Financial Markets and Portfolio Management, 3, 67-84.
[34]	Scott-Quinn, B., & Cano, D.(2009). Commercial and Investment Banking and the International Credit and Capital Markets. London, Palgrave Macmillan.
[35]	Sunday, J. K., Omah, I.&Oladimeji, M. (2012). Microstructure Change and the Effective Trading System: The Nigerian Experience. Global Journal of Management and Business Research.12, 10-14.
[36]	Weston, O.,& Copeland, A.(1988). Bond Price Data and Bond Market Liquidity, Journal of Financial and Quantitative Analysis, 24, 367-378.
[37]	Wriston, W.(1999). An Empirical Study of Corporate Bond Market Transactions. Financial Analysts Journal, 56, 32-46.

Cite This Article

Plain Text BibTeX RIS

APA Style

Stephen Mbaya Kimwele, Mary Bosire, Monica Muiru, Simon Kamau. (2015). Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange. International Journal of Economics, Finance and Management Sciences, 3(3), 279-284. https://doi.org/10.11648/j.ijefm.20150303.24

Copy | Download

ACS Style

Stephen Mbaya Kimwele; Mary Bosire; Monica Muiru; Simon Kamau. Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange. Int. J. Econ. Finance Manag. Sci. 2015, 3(3), 279-284. doi: 10.11648/j.ijefm.20150303.24

Copy | Download

AMA Style

Stephen Mbaya Kimwele, Mary Bosire, Monica Muiru, Simon Kamau. Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange. Int J Econ Finance Manag Sci. 2015;3(3):279-284. doi: 10.11648/j.ijefm.20150303.24

Copy | Download

@article{10.11648/j.ijefm.20150303.24,
  author = {Stephen Mbaya Kimwele and Mary Bosire and Monica Muiru and Simon Kamau},
  title = {Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {3},
  pages = {279-284},
  doi = {10.11648/j.ijefm.20150303.24},
  url = {https://doi.org/10.11648/j.ijefm.20150303.24},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150303.24},
  abstract = {The aim of this study was to investigate the effect of automation of bond trading on the performance of bond market at Nairobi Securities Exchange (NSE). Specifically the study sought to determine the effect of automated bond trading on trading volumes and to determine the effect of automated bond trading on market size. The study adopted a comparative research design and the population of the study comprised of all firms trading on the bond market at the NSE from 2005 to 2012. The data for the study was collected four years before automation and four years after automation. Market capitalization ratio and the number of bonds traded were used to determine pre and post-automation bond market performance. Paired t-test was used to determine whether there was a statistically significant difference between the pre and post automation period. The results of the study indicated that bond trading automation has a positive and a significant effect on the performance of the bond market.},
 year = {2015}
}

Copy | Download

TY  - JOUR
T1  - Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange
AU  - Stephen Mbaya Kimwele
AU  - Mary Bosire
AU  - Monica Muiru
AU  - Simon Kamau
Y1  - 2015/05/26
PY  - 2015
N1  - https://doi.org/10.11648/j.ijefm.20150303.24
DO  - 10.11648/j.ijefm.20150303.24
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 279
EP  - 284
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20150303.24
AB  - The aim of this study was to investigate the effect of automation of bond trading on the performance of bond market at Nairobi Securities Exchange (NSE). Specifically the study sought to determine the effect of automated bond trading on trading volumes and to determine the effect of automated bond trading on market size. The study adopted a comparative research design and the population of the study comprised of all firms trading on the bond market at the NSE from 2005 to 2012. The data for the study was collected four years before automation and four years after automation. Market capitalization ratio and the number of bonds traded were used to determine pre and post-automation bond market performance. Paired t-test was used to determine whether there was a statistically significant difference between the pre and post automation period. The results of the study indicated that bond trading automation has a positive and a significant effect on the performance of the bond market.
VL  - 3
IS  - 3
ER  -

Copy | Download

Author Information

Stephen Mbaya Kimwele

Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya
Mary Bosire

Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya
Monica Muiru

Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya
Simon Kamau

Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Stephen Mbaya Kimwele, Mary Bosire, Monica Muiru, Simon Kamau. (2015). Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange. International Journal of Economics, Finance and Management Sciences, 3(3), 279-284. https://doi.org/10.11648/j.ijefm.20150303.24

Copy | Download

ACS Style

Stephen Mbaya Kimwele; Mary Bosire; Monica Muiru; Simon Kamau. Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange. Int. J. Econ. Finance Manag. Sci. 2015, 3(3), 279-284. doi: 10.11648/j.ijefm.20150303.24

Copy | Download

AMA Style

Stephen Mbaya Kimwele, Mary Bosire, Monica Muiru, Simon Kamau. Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange. Int J Econ Finance Manag Sci. 2015;3(3):279-284. doi: 10.11648/j.ijefm.20150303.24

Copy | Download

@article{10.11648/j.ijefm.20150303.24,
  author = {Stephen Mbaya Kimwele and Mary Bosire and Monica Muiru and Simon Kamau},
  title = {Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {3},
  pages = {279-284},
  doi = {10.11648/j.ijefm.20150303.24},
  url = {https://doi.org/10.11648/j.ijefm.20150303.24},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150303.24},
  abstract = {The aim of this study was to investigate the effect of automation of bond trading on the performance of bond market at Nairobi Securities Exchange (NSE). Specifically the study sought to determine the effect of automated bond trading on trading volumes and to determine the effect of automated bond trading on market size. The study adopted a comparative research design and the population of the study comprised of all firms trading on the bond market at the NSE from 2005 to 2012. The data for the study was collected four years before automation and four years after automation. Market capitalization ratio and the number of bonds traded were used to determine pre and post-automation bond market performance. Paired t-test was used to determine whether there was a statistically significant difference between the pre and post automation period. The results of the study indicated that bond trading automation has a positive and a significant effect on the performance of the bond market.},
 year = {2015}
}

Copy | Download

TY  - JOUR
T1  - Effect of Automation of Bond Trading on Bond Market Performance: The Case of Nairobi Securities Exchange
AU  - Stephen Mbaya Kimwele
AU  - Mary Bosire
AU  - Monica Muiru
AU  - Simon Kamau
Y1  - 2015/05/26
PY  - 2015
N1  - https://doi.org/10.11648/j.ijefm.20150303.24
DO  - 10.11648/j.ijefm.20150303.24
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 279
EP  - 284
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20150303.24
AB  - The aim of this study was to investigate the effect of automation of bond trading on the performance of bond market at Nairobi Securities Exchange (NSE). Specifically the study sought to determine the effect of automated bond trading on trading volumes and to determine the effect of automated bond trading on market size. The study adopted a comparative research design and the population of the study comprised of all firms trading on the bond market at the NSE from 2005 to 2012. The data for the study was collected four years before automation and four years after automation. Market capitalization ratio and the number of bonds traded were used to determine pre and post-automation bond market performance. Paired t-test was used to determine whether there was a statistically significant difference between the pre and post automation period. The results of the study indicated that bond trading automation has a positive and a significant effect on the performance of the bond market.
VL  - 3
IS  - 3
ER  -

Copy | Download