The impacts of non-bank financial intermediaries on the demand for money in Kenya

Abstract

The subject of money of money demand is one of the most researched areas this is mainly because of the way money in which the quantity of money in circulation interacts with other factors to influence the behavior 'of interest rates. real Income, employment and the general price level. Commercial banks are the most important lending and deposit institutions. However. they are not the only financial outlets in the country. The study shows that NBFl's the rapid increase in these institutions most have effects on monetary policy in Kenya. The principle objective of the study is to investigate the effects ofNBFI's on the conduct of monetary policy in Kenya. The analysis ofNBFI,s liabilities indicates that they compete favorably with commercial banks in saving mobilization and also in provision of both medium-term and long-term credit. The estimated coefficients after adding NBFI's deposits suggest that NBFI's deposits are imperfect substitutes for commercial banks deposits