The currency-deposit ratio in Kenya
Abstract
This study has provided an insight on the behaviour of the
currency ratio over time. It brings to light the fact that the
currency ratio is a decreasing function over time. The spread of
banking activities, the level of income, the government budget,
the Christmas holidays and a "June 1975 onwards" dummy are among
the factors that affect the currency ratio. Though statistically
insignificant, the rate of interest and the rate of inflation have
negative marginal impacts on the currency ratio.
A major finding of the study is the fact that the currency
ratio is only predictable over time within broad limits i.e. by
means of our function. However, the model makes a breakthrough in
that the effects of the above mentioned factors on the currency
ratio can be deduced. We conclude therefore, that it is not
difficult to influence the behaviour of the currency ratio
through manipulations on the level of income or the spread of
banking activities.
Citation
A Research Paper submitted to the Department of Economics, University of Nairobi, in partial fulfilment of the requirements for the Degree cf Master of Arts in Economics.Publisher
Arts-economics