Financial Services Regulation In Kenya A Critical Analysis Of The Proposed Unified Financial Services Regulator.

Abstract

Regulation of the financial sector is crucial in the economic development of third world countries. This study focuses on Kenya‟s financial regulatory framework, which has continually grown. The financial sector is considered as the most instrumental to assist Kenya achieve its Vision 2030 objectives. The sector is today however, marred by a lot of regulatory inefficiencies as well as emerging trends, which are also witnessed globally. These challenges have resulted into appeal for reform of the regulatory framework, in order to enhance its supervision. This study looks at the rationale for regulation, the different models of regulation in the financial services and what they are aimed to achieve. The paper narrows on unified theory of financial service regulation, which has greatly been recommended to be adopted for the Kenyan financial regulatory framework. It further interrogates the efficacy of the existing regulatory framework, and conducts a comparative study of the regulatory models in the United Kingdom, Germany, South Africa and Zambia. In the circumstances, the study establishes that there is no optimal model of regulation and every jurisdiction must adopt a framework that best suits its intended objectives. The study thus postulates that the proposed unified Financial Services Council is the most viable model to be adopted for Kenya‟s regulatory framework. However the same must be structured taking into account the existing challenges and the intended objectives.