Influence of Marketing Innovation by Capital Market Intermediaries on Retail Investor Participation in the Nairobi Securities Exchange
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Abstract
Despite significant product and service innovations introduced by capital market intermediaries, retail investor participation in the Nairobi Securities Exchange (NSE) has remained persistently low, with active monthly participation declining from 0.95% (11,283 investors) in 2019 to 0.46% (6,843 investors) in 2023. This study analyzed the effect of marketing innovation, measured through the number of new marketing initiatives adopted, changes in the delivery of services, and marketing budget allocation by capital market intermediaries on retail investor participation (trading volume) in the NSE. Anchored on the Theory of Financial Intermediation and the Schumpeterian Theory of Innovation, the study adopted a positivist philosophy and descriptive correlational research design. A census of all 112 licensed capital market intermediaries registered with the Capital Markets Authority of Kenya was used, targeting 336 senior management respondents (Chief Investment Officers, Heads of Marketing, and Heads of Innovation/Technology). Data were collected from May to June 2025 using structured questionnaires, achieving a response rate of 97.33% with 292 usable responses. Simple linear regression was employed to test the stated hypothesis. Results revealed that marketing innovation has a significant positive influence on retail investor participation (B = 0.496, β = 0.551, t = 11.239, p < 0.05), where B is the unstandardized and β the standardized regression coefficient, explaining 30.3% of the variance in retail investor participation (R² = 0.303). Mobile-based marketing initiatives (M = 4.19) and personalized marketing campaigns (M = 4.14) demonstrated the strongest associations with trading volume. The study concludes that marketing innovation is a significant positive driver of retail investor participation (R² = 0.303), underscoring the need for intermediaries to integrate marketing innovation with structural and operational improvements to maximize retail participation outcomes. Capital market intermediaries are recommended to allocate at least 30% of marketing budgets to digital channels, prioritize investor education programming, and develop culturally adapted content to maximize retail participation in the NSE.
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Copyright (c) 2026 Elizabeth Masakhwe Emongor, Elizabeth Kalunda, Bwire Albert (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
Elizabeth Masakhwe Emongor, United States International University-Africa.
Post Graduate Student
Elizabeth Kalunda, United States International University-Africa.
Lecturer
Bwire Albert, United States International University-Africa.
Lecturer
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