• Emmanuel Sikuku Wanjala Moi University
  • Naomi Koske Moi University
  • Ronald Bonuke Moi University


Objective: This paper analyses the impact of stock liquidity and growth opportunities on default risk of nonfinancial listed firms in Kenya.

Research Methodology: The study employs panel data analysis to study the 31 nonfinancial listed firms between 2011 and 2020. Default risk is estimated by Merton’s (1974) distance to default, stock liquidity is conceptualized as price impact and trading quantity, while growth opportunities is measured by the ratio of market to book value. The study employs the random effect to test the hypotheses based on the results of the Hausman test.

Results and findings: The results revealed that the stock liquidity had statistically significant effect on default risk, while growth opportunities had a moderating effect. Furthermore, tangibility, institutional ownership, firm size, firm profitability and leverage were also found as exerting a significant effect on default risk.

Recommendations: Managers may consider financing growth opportunities by leveraging on stock liquidity, which may lower the likelihood of default risk.

Keywords: Default risk, stock liquidity, growth opportunities, listed firms, Kenya

Author Biographies

Emmanuel Sikuku Wanjala, Moi University

School of Business & Economics

Naomi Koske , Moi University

School of Business & Economics

Ronald Bonuke, Moi University

School of Business & Economics


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How to Cite
Wanjala, E. S., Koske, N., & Bonuke, R. (2023). STOCK LIQUIDITY, GROWTH OPPORTUNITIES AND DEFAULT RISK AMONG NONFINANCIAL FIRMS LISTED IN KENYA. African Journal of Emerging Issues, 5(17), 164 - 180. Retrieved from