Structural Issues in the Kenyan Financial System: Improving Competition and Access
Although by regional standards, Kenya's financial system is relatively well developed and diversified, major structural impediments prevent it from reaching its full potential. Crosscountry comparisons, however, show the importance of a well-d...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/07/4986852/structural-issues-kenyan-financial-system-improving-competition-access http://hdl.handle.net/10986/14185 |
| Summary: | Although by regional standards,
Kenya's financial system is relatively well developed
and diversified, major structural impediments prevent it
from reaching its full potential. Crosscountry comparisons,
however, show the importance of a well-developed financial
sector for long-term economic growth and poverty
alleviation. Experience from other developing economies has
shown the detrimental effect of government ownership and the
positive impact that foreign bank ownership can have on the
development of a market-based financial system. Analyzing
and decomposing the high interest rate spreads and margins
in Kenya helps identify structural impediments that drive
the high cost of and low access to financial services. The
limited information sharing on debtors, deficiencies in the
legal and judicial system, the limited number of strong and
reputable banks and non-transparency and uncertainty in the
banking market are major impediments to the development of
Kenya's financial system, to reducing spreads and to
widening access. |
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