Nflation And Stock Market Volatility In Kenya

ABSTRACT The effect of inflation on the stock market has attracted many studies. Fisher theory postulates that the real rate of returns on common stocks do not depend on inflation, indicating that stocks should be independent of inflation. The studies have attempted to investigate how inflation affects the stock market and the studies have mainly used the aggregate stock market index. However, the use of aggregate indices may mislead on the actual performance of sector-specific indices. The empirical studies using the aggregate index across countries reveal mixed results. The negative and pos…