The impact of the AGOA legislations on the market returns in Kenya

The problem. The American Growth Opportunity Act (AGOA) legislations are American legislations that provide duty-free access of selected products from eligible African countries. Kenya is one of the first African countries that became AGOA-eligible in 2000. What was the impact of the AGOA on the Nairobi Stock Exchange (NSE) index? What was the impact of the AGOA legislations on the industry returns in the NSE? What were the behavioral effects of the AGOA on the Kenyan investors? What was the impact of the AGOA legislations on the trade patterns between the United States and Kenya? These are the fundamental questions that this research attempted to answer.;The methodology. A standard event methodology was used to analyze the impact of the AGOA legislations on the NSE index and different industries of the NSE. A behavioral model was used to analyze the behavioral effects of the AGOA on the Kenyan investors. A trade creation model was used to analyze the change of trade patterns between the United States and Kenya after the AGOA implementation.;The results. The results of the study showed that: (1) The AGOA legislations had a positive effect on the NSE index; (2) The AGOA legislations generated significant, positive, abnormal returns in the agricultural industry, financial industry, and industrial services industry; (3) The AGOA legislations generated positive, cumulative, abnormal returns during the 24 months that followed the announcement of AGOA I; (4) The AGOA legislations created significant positive trade between the United States and Kenya.