| dc.description.abstract | This study looks at the role of financial institutions in savings mobilisation in Kenya with particular reference to Kenya Post Office Savings bank (KPOSB). The hypothesis to be tested is that the KPOSB through its social objectives has increased the .level of savings. These social objectives ~re a wide geographical distribution, a low minimum deposit rec::.uirement and large number of OiI•1.ces.
Savings have been said to be a constraint in developing countries. Due to lack of data, theories on how to raise savings in developing countries have not been formed. Therefore, theories on savings for devaloped countries have been applied to less developec. countries (LDC) wjth
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little success. This is because there are certain
~onc;traints which reduce tne a~ili tyof LDCs to effectively mobilise savings as spelt out in these theories. It has been found that the household
sector contribute more to nation.al savings than
other sec"tors.
T'h e o n.Ly way to effectively tap
this savings i~ through financial in~2rm9dia"tion. Financial i.lstitutions are supposed to efficiently alJocata t.h e s e s2v"lngs to the most pro.iuccive sectors of the economy. Therefore theory on financial }~termediatio~ and savings will be used
in thi s study, to find o u t the role OI- KPOSB in savings mobi1.i.sat:ion.
"""",:",'This study is "theret'ore divided into 5 sections. Chapter is an introduction.
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Chapter 2 is a literature review on
savings mobilisation.
~his briefly covers
various theories on how certain var~~bles can
increase the level of savings.
These are
theories on income and savj~gs; taxation and savings, capital inflow and savings, export and savgins , interest rates and savings; and
financial institur,lons and savings.
The basis
of these theories, their weaknesses and strengths when applied to LDCs will be briefly
discussed.
Emphasic is laid on the theory cf
financial institutions.
Financial
institutions can mobilise savings throubh incentives it creates to savers; by getting resources from all groups by putting a low minimwn d e p o a i, t requirement; by having wide geographical distribut:::'on of branches which mobilise and allocate resources; offering diversified asset composition to satisfy asset acquisition desires of various ~eople; and through other factors like offerin~ attract~.ve
services t:J customers •
.\ model. _to sh'Jw the relationship o f' these variables to .savings mobilisation +s I~ormu.lated
and discussed.
All these other theories are
discus~:;d to show , ••. hy they are not lu;ed in this study as they are not relevan.t to LDCs.
Chapter J Jeals with financial
instit'..1tions in Kenya.
It briefly looks at the
histurical background and specialization OI~ these
instituticns.
Financial institutions in Kenya
are divided into three ca tegor';es namely, c omrn e r-, .;i::11. ba.flks, rro rr-. bank pri v a t e and non-bank public
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financial institutions. The first two types of institutions are profit maximisers, therefore do not adequately serve the most economic and social productive sectors of
the economy. They tend to seve mainly the mul tinational (MNC) and industirial sector who have promising security for the loans but whose capital output ratio and return to the LDvs economy is less than in agricul.ture.
Non-bank public financial institutions have social obJectivAs which make them fit well in LDCs where low income groups and rural po~ulation form the largest proportion of the LDCs total population. These are the socially productive sectors of the economy.
However most of these institutj~ns are
specialized in lendlne.
Only cooperative
societiGs, Housing Finance Company of Kenya, (HFCK)~ National Social Security Fund (NSSF) and KPOSB out of fourteen public ins~itutione
are involved in savings mobilisation.
NSSF is
a compulsory savings scheme; Housing Finance Company of' Kenya j. s J.imi ted to urban areas; and
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cooperative ~0cieties are limited to specified
sectors of the economy.
Cooperative Societies
are alctj' relatively HeW and much has been written about them. KPOSB is widespread in Kenya, savings clLannElied through it is voluntary and
~ixtle research has-been done on it. This is ~hy it is chosen aS~an area of study.
Details in chapter 2 and J are included so as to bring out clearly v •••. hy t h.i s area has
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been chosen for study.
Chap+er 4 deals with data ana.lysis,
it shl)ws how data,icollected and analysed. i"was However, due to data limitai;ion and constant nature of most of the d a t a , detailed E,r':ttistical analysis of the data was not possible. Therefore most of the analysis 2.'5> descr~.?tive. This chapter also looks at ~roblems facing financial institutions.
The last chapter deals with
conclusions and recommendations | en |
