The effect of National payment system on economic growth in Kenya

Abstract

The study investigated the effect of national payment systems on economic growth in Kenya between the 1st quarter of 2009 to the 2nd quarter of 2017. Economic growth is defined as the ability of a country to produce goods and services in a given period of time as compared to the previous period. The dependent variable in the study was GDP while independent variables included four payment systems mainly real time gross settlement, electronic fund transfer and cheques, domestic foreign currency cheques and lastly mobile money payment system. The study used secondary data for a period of 34 quarters with the research study employed being case study research design. Microsoft excel 2016 and XLStat add in was used to analyze the research variables with the analysis done being descriptive analysis, correlation analysis and multiple regression analysis. The multiple regression analysis indicated that 94.2% of the variability in the study was explained by the four independent variables. This implied that 94.2% of the variations in gross domestic product were explained by the four predictor variables namely RTGS, EFT & Cheque, DFCC and mobile money with only 5.8% variations being explained by other variables not covered in the study. The study also indicated that only mobile money had a positive effect on economic growth while the three other predictors variables had a negative effect on economic growth.