The impact of financial sector deepening on economic growth in Kenya
![Thumbnail](/bitstream/handle/11295/92338/Sindani_The%20impact%20of%20financial%20sector%20deepening%20on%20economic%20growth%20in%20Kenya.pdf.jpg?sequence=4&isAllowed=y)
View/ Open
Date
2013Author
Sindani, Moses
Buchichi, AN
Type
en_USLanguage
enMetadata
Show full item recordAbstract
The depth of the fi
nancial sector has generally been found to promote economic growth by
increasing economic efficiency, investment and growt
h.
Financial
sector deepening
enable the
financial intermediaries perform their functions of
mobilizing, pooling and channeling domest
ic
savings into productive capital
more effectively
thereby contributing to economic growth of a
country
. This study set to
establish the impact of financial sector deepening on economic
development in Kenya.
The study adopt
ed
a Quantitative comparative d
esign
.
The target
population for this study
was
: 44 banking institutions (43 commercial banks and 1 mortgage
finance company
-
MFC),
operating in Kenya as at 31
st
December 2011.
The study use
d
secondary data collected from the Central Bank of Ke
nya and Del
oite reports. Since the data
used was secondary data, the study conducted a census of the Banking sector where all the 44
commercial banks were included. The use of secondary data wa
s justified on the basis that some
of these sources have information that
was
very pivotal to this study and has been vetted and
accepted
.
This
study established that
the financial
sector was stable during the study period as
witnessed by the stable number of banking institutions
following stringent regulations by the
Central b
ank of Kenya which ha
d
reduced the frequency of commercial banks becoming
bankruptcy.
D
uring the period of the study
(2007
-
2011)
, financial sector deepening was high as
the commercial banks strived to leverage their operations through adoption of new techn
ologies
includ
ing
automation of bank process and adoption of Automated Teller Machines as opposed to
offering their services only through physical brick and mortar branches.
The economic growth
started at a high of 7.1 then fluctuated to a low of 1.5 in 20
08.
This study therefore recommends
that the Government of Kenya ensure efficiency in its regulation and supervision of all financial
institutions in allowing more private banks and non
-
bank financial institutions to broaden their
financial market to accel
erate financial development and improve the financial structure that
leads to increase economic growth of Kenya. The study further recommends that the
Government through its relevant offices promote the development of Microfinance institutions as
they play
a key role in deepening financial services in Kenya and in the alleviation of poverty
especially in the rural areas.
Citation
Buchichi , A. N. (201 3 ). The impact of financial sector deepening on economic growth in Kenya . International Journal of Social Sciences and Project Planning Management, 1 ( 1 ), 4 1 - 64 .Publisher
University of Nairobi