Abstract:
The global spread of the coronavirus across
countries had a devastating effect on
economies globally. Stock markets have
suffered the blunt of the pandemic with a
number of stock markets crashing even in
developed economies. In response to the crisis
using
Keynesian
model
governments
employed fiscal policies to address the
challenges. The main aim of the study was to
determine establish the effect of tax refunds
on stock market performance of listed
commercial banks in Kenya. This study was
supported by the following theories: The
Ability-To-Pay, Theory and efficient market
theory. The study adopted descriptive design.
The target population constituted 181 bank
employees from 12 listed commercial banks
in the Nairobi Securities Exchange. The
sample size of the study was 178 bank
employees comprising of managers and
accountants who were selected through
stratified-random sampling. The data was
obtained from NSE for the period starting
25th March 2020 to 31st December 2020. The
study applied closed-ended questionnaires to
collected primary while secondary data was collected using data collection sheet from
annual reports. Collected data was analyzed
through descriptive statistics (mean and
standard deviation) and inferential statistics
(correlational and simple and multiple
regression). Pilot test was conducted on non
listed commercia banks in Kenya. Cronbach
alpha was used to test reliability while face
validity was used to test validity. The study
found out that, tax refund had a strong
positive and highly significant correlation
with stock performance of listed commercial
banks in Kenya N=130, r=.365(**), P=.000<
0.05. The study concluded that, tax refund had
a strong, positive and highly significant
correlation with stock performance of listed
commercial banks in Kenya. The study
recommended that, the government should
consider giving firms incentives and other
items like reducing the cost of energy and
other necessary input materials instead of
reducing corporation tax alone.
