The process of monetization: a case study of Kenya. 1922 - 1972

Abstract

The study is about monetary influences on the development process. In terms of modern money, Kenya has one of the youngest monetary systems in the world. And over the last fifty years the system has been transformed from a currency board regime to a central banking stage. It, therefore, provides a good opportunity for the study of monetary influences on the pattern and pace of economic development. In the first chapter an analysis of the growth of the monetary system and the economic transformation is provided. Tue period is divided into sub-periods reflecting major changes that occurred in the system. Chapter two is a review of the theories of monetization, and the role of money in growth models. Although these models are theoretical, an attempt is made to relate some of their major conclusions to the Kenyan case. In Chapter three, a review of the various savings functions is done. Tue effect of monetization on saving is analyzed, and some measures of monetization for incorporation in savings functions are suggested. The chapter is concluded with a review of the ( savings performance and the composition of savings in Kenya. I conclude that both the spread of commercialization and the grov~h of intermediation have played a significant role in the promotion of saving in Kenya. Chapter four examines the theory of intermediation and resource allocation. The empirical section deals with the effect of the Kenyan financial system on resource allocation. It is concluded with the analysis of the effects of various financial controls on resource allocation and possible changes to effect a more efficient resource allocation.