The Relationship Between Monetary Policy and Growth of Real Estate in Kenya
Abstract
The study was conducted on the relationship between monetary policy and growth of real
estate in Kenya. The objective of this study was to establish the relationship between
central bank’s monetary policy and real estate growth in Kenya. The study used a
descriptive research design, by examining the relationship between CBR policy and
growth in real estate. The data points ranged between January 2004 to December 2013 by
taking the monthly data for the research which had 10 data points. Data was analyzed
using a multiple regression model was used to analyze the data. The regression results
revealed that the relationship between the variables was found to be direct apart from the
rate of inflation which showed that there was an in inverse relationship with real estate
growth. This is because its p-value=.069 which was more than 5% meaning that the
model was statistically insignificant. This study therefore recommends that central bank
to design and develop proper measures for to regulate monetary policies to ensure that
there exists a proper balance between interest rates and circulation of money in the
economy this will create a stable environment for investment in real estate and growth of
the economy. A comparative study can be carried out to establish whether investment in
real estate in other countries is able to impact the economic development. Thus enabling
comparison with the Kenyan experience and provide concrete facts upon which reliable
conclusions can be made. The present study can further be investigated over a larger time
period say twenty years this could have given the data more validity since it would have
been for a wider scope and also could have also generated different results. The sample
size should also be increased to get a more representative sample and make better
conclusions. The limitation of this study was that the secondary data was collected from
KNBS, CBK and World Bank’s World Development Indicators. The limitation of this
study was that Central Bank of Kenya works under very strict confidentiality in order to
secure any unauthorized access to information pertaining to the study variables. Due to
time limit and financial constraints, it was not possible to carry out comprehensive
research pertaining to the scope of the study. The study was therefore limited basically to
the central Bank of Kenya located in Nairobi Region and not the entire sub-Saharan
countries.
Publisher
University of Nairobi
Description
Masters