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...

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Main Authors:	Beck, Thorsten, Fuchs, Michael
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	ACCOUNTABILITY ACCOUNTING ADVERSE CONSEQUENCES ADVERSE SELECTION AUTONOMY BANK PRIVATIZATION BANK SIZE BANK SUPERVISION BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK COMMERCIAL BANKS COMPETITIVENESS CONSOLIDATION CONSUMER PROTECTION CONTAGION CONTRACT ENFORCEMENT COUNTRY COMPARISON COUNTRY COMPARISONS CPI CREDIT RATIONING CREDIT RISK CROWDING OUT DEBT DEPOSITORS DEPOSITS DEVELOPED COUNTRIES EARNING ASSETS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EMPIRICAL EVIDENCE ENABLING ENVIRONMENT FINANCIAL CONTRACTS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEMS FOREIGN BANKS FRAUD GDP GDP PER CAPITA GOVERNMENT POLICIES GROWTH INCOME INFLATION INSTITUTIONAL ENVIRONMENT INSTITUTIONAL REFORM INSURANCE INTEREST MARGIN INTEREST RATE INTEREST RATES INTERNATIONAL BANKS INTERNATIONAL TRADE LEGAL FRAMEWORK LEGAL PROVISIONS LEGISLATION LENDING RATES LIQUIDITY LOAN LOSS PROVISIONS LOOTING MANDATES MARKET DISCIPLINE MICROFINANCE MORAL HAZARD MORTGAGES NET INTEREST MARGIN OVERHEAD COSTS OWNERSHIP STRUCTURE PARTIAL PRIVATIZATION POLICY POLICY ENVIRONMENT POLICY MAKERS POLITICAL INTERFERENCE PORTFOLIOS POVERTY ALLEVIATION PRIVATE BANKS PRIVATIZATION PRODUCTIVITY PROFIT MARGIN PROFIT MARGINS PROFITABILITY PUBLIC POLICY RECAPITALIZATION RESERVE REQUIREMENTS RESOURCE ALLOCATION RETURN ON ASSETS SAVINGS SHAREHOLDERS SMALL BANKS SUPERVISORY FRAMEWORK TERMS OF TRADE TRANSPARENCY VALUE OF MONEY VOLATILITY VULNERABILITY FINANCIAL SYSTEM FINANCIAL SECTOR DEVELOPMENT GOVERNANCE OWNERSHIP INCOME GROWTH GROSS DOMESTIC PRODUCT PER CAPITA
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

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recordtype	oai_dc
spelling	okr-10986-141852021-04-23T14:03:21Z Structural Issues in the Kenyan Financial System: Improving Competition and Access Beck, Thorsten Fuchs, Michael ACCOUNTABILITY ACCOUNTING ADVERSE CONSEQUENCES ADVERSE SELECTION AUTONOMY BANK PRIVATIZATION BANK SIZE BANK SUPERVISION BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK COMMERCIAL BANKS COMPETITIVENESS CONSOLIDATION CONSUMER PROTECTION CONTAGION CONTRACT ENFORCEMENT COUNTRY COMPARISON COUNTRY COMPARISONS CPI CREDIT RATIONING CREDIT RISK CROWDING OUT DEBT DEPOSITORS DEPOSITS DEVELOPED COUNTRIES EARNING ASSETS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EMPIRICAL EVIDENCE ENABLING ENVIRONMENT FINANCIAL CONTRACTS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEMS FOREIGN BANKS FRAUD GDP GDP PER CAPITA GOVERNMENT POLICIES GROWTH INCOME INFLATION INSTITUTIONAL ENVIRONMENT INSTITUTIONAL REFORM INSURANCE INTEREST MARGIN INTEREST RATE INTEREST RATES INTERNATIONAL BANKS INTERNATIONAL TRADE LEGAL FRAMEWORK LEGAL PROVISIONS LEGISLATION LENDING RATES LIQUIDITY LOAN LOSS PROVISIONS LOOTING MANDATES MARKET DISCIPLINE MICROFINANCE MORAL HAZARD MORTGAGES NET INTEREST MARGIN OVERHEAD COSTS OWNERSHIP STRUCTURE PARTIAL PRIVATIZATION POLICY POLICY ENVIRONMENT POLICY MAKERS POLITICAL INTERFERENCE PORTFOLIOS POVERTY ALLEVIATION PRIVATE BANKS PRIVATIZATION PRODUCTIVITY PROFIT MARGIN PROFIT MARGINS PROFITABILITY PUBLIC POLICY RECAPITALIZATION RESERVE REQUIREMENTS RESOURCE ALLOCATION RETURN ON ASSETS SAVINGS SHAREHOLDERS SMALL BANKS SUPERVISORY FRAMEWORK TERMS OF TRADE TRANSPARENCY VALUE OF MONEY VOLATILITY VULNERABILITY FINANCIAL SYSTEM FINANCIAL SECTOR DEVELOPMENT ECONOMIC GROWTH POVERTY ALLEVIATION GOVERNANCE OWNERSHIP INTEREST RATES CAPITAL MARKETS SHAREHOLDERS INCOME GROWTH GROSS DOMESTIC PRODUCT PER CAPITA PRIVATIZATION 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. 2013-06-25T19:17:21Z 2013-06-25T19:17:21Z 2004-07 http://documents.worldbank.org/curated/en/2004/07/4986852/structural-issues-kenyan-financial-system-improving-competition-access http://hdl.handle.net/10986/14185 English en_US Policy Research Working Paper;No.3363 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research Africa Kenya
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTABILITY ACCOUNTING ADVERSE CONSEQUENCES ADVERSE SELECTION AUTONOMY BANK PRIVATIZATION BANK SIZE BANK SUPERVISION BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK COMMERCIAL BANKS COMPETITIVENESS CONSOLIDATION CONSUMER PROTECTION CONTAGION CONTRACT ENFORCEMENT COUNTRY COMPARISON COUNTRY COMPARISONS CPI CREDIT RATIONING CREDIT RISK CROWDING OUT DEBT DEPOSITORS DEPOSITS DEVELOPED COUNTRIES EARNING ASSETS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EMPIRICAL EVIDENCE ENABLING ENVIRONMENT FINANCIAL CONTRACTS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEMS FOREIGN BANKS FRAUD GDP GDP PER CAPITA GOVERNMENT POLICIES GROWTH INCOME INFLATION INSTITUTIONAL ENVIRONMENT INSTITUTIONAL REFORM INSURANCE INTEREST MARGIN INTEREST RATE INTEREST RATES INTERNATIONAL BANKS INTERNATIONAL TRADE LEGAL FRAMEWORK LEGAL PROVISIONS LEGISLATION LENDING RATES LIQUIDITY LOAN LOSS PROVISIONS LOOTING MANDATES MARKET DISCIPLINE MICROFINANCE MORAL HAZARD MORTGAGES NET INTEREST MARGIN OVERHEAD COSTS OWNERSHIP STRUCTURE PARTIAL PRIVATIZATION POLICY POLICY ENVIRONMENT POLICY MAKERS POLITICAL INTERFERENCE PORTFOLIOS POVERTY ALLEVIATION PRIVATE BANKS PRIVATIZATION PRODUCTIVITY PROFIT MARGIN PROFIT MARGINS PROFITABILITY PUBLIC POLICY RECAPITALIZATION RESERVE REQUIREMENTS RESOURCE ALLOCATION RETURN ON ASSETS SAVINGS SHAREHOLDERS SMALL BANKS SUPERVISORY FRAMEWORK TERMS OF TRADE TRANSPARENCY VALUE OF MONEY VOLATILITY VULNERABILITY FINANCIAL SYSTEM FINANCIAL SECTOR DEVELOPMENT ECONOMIC GROWTH POVERTY ALLEVIATION GOVERNANCE OWNERSHIP INTEREST RATES CAPITAL MARKETS SHAREHOLDERS INCOME GROWTH GROSS DOMESTIC PRODUCT PER CAPITA PRIVATIZATION
spellingShingle	ACCOUNTABILITY ACCOUNTING ADVERSE CONSEQUENCES ADVERSE SELECTION AUTONOMY BANK PRIVATIZATION BANK SIZE BANK SUPERVISION BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK COMMERCIAL BANKS COMPETITIVENESS CONSOLIDATION CONSUMER PROTECTION CONTAGION CONTRACT ENFORCEMENT COUNTRY COMPARISON COUNTRY COMPARISONS CPI CREDIT RATIONING CREDIT RISK CROWDING OUT DEBT DEPOSITORS DEPOSITS DEVELOPED COUNTRIES EARNING ASSETS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EMPIRICAL EVIDENCE ENABLING ENVIRONMENT FINANCIAL CONTRACTS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEMS FOREIGN BANKS FRAUD GDP GDP PER CAPITA GOVERNMENT POLICIES GROWTH INCOME INFLATION INSTITUTIONAL ENVIRONMENT INSTITUTIONAL REFORM INSURANCE INTEREST MARGIN INTEREST RATE INTEREST RATES INTERNATIONAL BANKS INTERNATIONAL TRADE LEGAL FRAMEWORK LEGAL PROVISIONS LEGISLATION LENDING RATES LIQUIDITY LOAN LOSS PROVISIONS LOOTING MANDATES MARKET DISCIPLINE MICROFINANCE MORAL HAZARD MORTGAGES NET INTEREST MARGIN OVERHEAD COSTS OWNERSHIP STRUCTURE PARTIAL PRIVATIZATION POLICY POLICY ENVIRONMENT POLICY MAKERS POLITICAL INTERFERENCE PORTFOLIOS POVERTY ALLEVIATION PRIVATE BANKS PRIVATIZATION PRODUCTIVITY PROFIT MARGIN PROFIT MARGINS PROFITABILITY PUBLIC POLICY RECAPITALIZATION RESERVE REQUIREMENTS RESOURCE ALLOCATION RETURN ON ASSETS SAVINGS SHAREHOLDERS SMALL BANKS SUPERVISORY FRAMEWORK TERMS OF TRADE TRANSPARENCY VALUE OF MONEY VOLATILITY VULNERABILITY FINANCIAL SYSTEM FINANCIAL SECTOR DEVELOPMENT ECONOMIC GROWTH POVERTY ALLEVIATION GOVERNANCE OWNERSHIP INTEREST RATES CAPITAL MARKETS SHAREHOLDERS INCOME GROWTH GROSS DOMESTIC PRODUCT PER CAPITA PRIVATIZATION Beck, Thorsten Fuchs, Michael Structural Issues in the Kenyan Financial System: Improving Competition and Access
geographic_facet	Africa Kenya
relation	Policy Research Working Paper;No.3363
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Beck, Thorsten Fuchs, Michael
author_facet	Beck, Thorsten Fuchs, Michael
author_sort	Beck, Thorsten
title	Structural Issues in the Kenyan Financial System: Improving Competition and Access
title_short	Structural Issues in the Kenyan Financial System: Improving Competition and Access
title_full	Structural Issues in the Kenyan Financial System: Improving Competition and Access
title_fullStr	Structural Issues in the Kenyan Financial System: Improving Competition and Access
title_full_unstemmed	Structural Issues in the Kenyan Financial System: Improving Competition and Access
title_sort	structural issues in the kenyan financial system: improving competition and access
publisher	World Bank, Washington, D.C.
publishDate	2013
url	http://documents.worldbank.org/curated/en/2004/07/4986852/structural-issues-kenyan-financial-system-improving-competition-access http://hdl.handle.net/10986/14185
_version_	1764430495512264704

Structural Issues in the Kenyan Financial System: Improving Competition and Access

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