Determinants Of Banks Expansion In The East African Community An Empirical Analysis Of Kenyan Banks
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| Author | : Lucas Njoroge |
| Publisher | : |
| Total Pages | : |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
The study examines the determinants of banks expansion in the East African Community (EAC) using data for Kenyan banks. The study estimates both a probit model based on a binary choice of expanding to the region or not, and a pooled panel regression model based on a bank's actual flow of foreign direct investments in associates, subsidiaries and joint ventures in the region. The results show the importance of factors associated with the need to follow bank clients abroad, efficiency and size of the banks, and the potential market opportunities of the host countries. Larger, profitable and more efficient Kenyan banks have been at a competitive advantage to expand to the region. However, this does not imply that the smaller banks are not expanding to the region, rather, that the expansion of larger banks is more conspicuous. Consistent with other studies, Kenyan banks seem to prefer to expand to a country where inflation is relatively low and less likely to cause macroeconomic instability. The findings support the on-going deeper economic integration in terms of more trade and investment. This suggests that most Kenyan banks are expanding to the region in order to provide their home clients with the services on site and to take advantage of the large potential for business of the regional economies.
| Author | : Sarah Sanya |
| Publisher | : International Monetary Fund |
| Total Pages | : 25 |
| Release | : 2012-01-01 |
| Genre | : Business & Economics |
| ISBN | : 1463933177 |
This paper is an empirical analysis of competitiveness in the banking system of four out of the five East African Community (EAC) countries2. The results show that the degree of competition is low due to a combination of structural and socio-economic factors. By way of preview, the analysis ranks the countries in terms of banking sector competitiveness in the following order: Kenya, Tanzania, Uganda and Rwanda.
| Author | : Pantaleo J. Kessy |
| Publisher | : |
| Total Pages | : 147 |
| Release | : 2007 |
| Genre | : Banks and banking |
| ISBN | : 9780549049418 |
The empirical results of the study are consistent with the above hypothesis, as the bank efficiency variable is found to be positive and statistically significant for all specifications considered. To examine the two hypothesized channels of transmission, we test whether commercial banks efficiency variable has positive effects on the productivity of capital and level of savings on one hand, and on the other hand we test whether these intermediate variables have positive effects on GDP growth. The empirical results confirm that commercial banks' efficiency is positively associated with both capital productivity and level of savings. In addition, the results suggest that these intermediate variables are positively and statistically related to GDP growth.
| Author | : Maureen Were |
| Publisher | : |
| Total Pages | : |
| Release | : 2013 |
| Genre | : |
| ISBN | : |
Despite the liberalization of the financial sector, high interest rate spreads is still an issue of concern in a number of African countries, including Kenya. This paper investigates the determinants of interest rate spreads in Kenya's banking sector based on panel data analysis. The empirical results show that bank-specific factors play a significant role in the determination of interest rate spreads. These include bank size based on bank assets, credit risk as measured by non-performing loans to total loans ratio, liquidity risk, return on average assets and operating costs. The impact of macroeconomic factors such as real economic growth and inflation is not significant. Similarly, the impact of policy rate as an indicator of monetary policy is found to be positive but weak. On average, big banks have higher spreads compared to small banks. There is need for explore policy options meant to enhance competition in the industry and measures to break market dominance will be one such option. Further, the banking sector needs to explore internal as well as industry-driven strategies that counter some of the bank-specific factors associated with higher spreads. These could range from diversification of products to investment in cost-saving and efficient forms of technology.
| Author | : Ms.Catherine McAuliffe |
| Publisher | : International Monetary Fund |
| Total Pages | : 55 |
| Release | : 2012-11-14 |
| Genre | : Business & Economics |
| ISBN | : 1475586310 |
The East African Community (EAC) has been among the fastest growing regions in sub-Saharan Africa in the past decade or so. Nonetheless, the recent growth path will not be enough to achieve middle-income status and substantial poverty reduction by the end of the decade—the ambition of most countries in the region. This paper builds on methodologies established in the growth literature to identify a group of countries that achieved growth accelerations and sustained growth to use as benchmarks to evaluate the prospects, and potential constraints, for EAC countries to translate their recent growth upturn into sustained high growth. We find that EAC countries compare favorably to the group of sustained growth countries—macroeconomic and government stability, favorable business climate, and strong institutions—but important differences remain. EAC countries have a smaller share of exports, lower degree of financial deepening, lower levels of domestic savings, higher reliance on donor aid, and limited physical infrastructure and human capital. Policy choices to address some of these shortcomings could make a difference in whether the EAC follows the path of sustained growth or follows other countries where growth upturns later fizzled out.
| Author | : Mr.Hamid Reza Davoodi |
| Publisher | : International Monetary Fund |
| Total Pages | : 59 |
| Release | : 2013-02-06 |
| Genre | : Business & Economics |
| ISBN | : 1475553498 |
Do changes in monetary policy affect inflation and output in the East African Community (EAC)? We find that (i) Monetary Transmission Mechanism (MTM) tends to be generally weak when using standard statistical inferences, but somewhat strong when using non-standard inference methods; (ii) when MTM is present, the precise transmission channels and their importance differ across countries; and (iii) reserve money and the policy rate, two frequently used instruments of monetary policy, sometimes move in directions that exert offsetting expansionary and contractionary effects on inflation—posing challenges to harmonization of monetary policies across the EAC and transition to a future East African Monetary Union. The paper offers some suggestions for strengthening the MTM in the EAC.
| Author | : |
| Publisher | : |
| Total Pages | : 102 |
| Release | : 2015 |
| Genre | : Africa |
| ISBN | : 9781475547979 |
Pan-African banks are expanding rapidly across the continent, creating cross-border networks, and having a systemic presence in the banking sectors of many Sub-Saharan African countries. These banking groups are fostering financial development and economic integration, stimulating competition and efficiency, introducing product innovation and modern management and information systems, and bringing higher skills and expertise to host countries. At the same time, the rise of pan-African banks presents new challenges for regulators and supervisors. As networks expand, new channels for transmission of macro-financial risks and spillovers across home and host countries may emerge. To ensure that the gains from cross border banking are sustained and avoid raising financial stability risks, enhanced cross-border cooperation on regulatory and supervisory oversight is needed, in particular to support effective supervision on a consolidated basis. This paper takes stock of the development of pan-African banking groups; identifies regulatory, supervisory and resolution gaps; and suggests how the IMF can help the authorities address the related challenges.
| Author | : European Investment Bank |
| Publisher | : European Investment Bank |
| Total Pages | : 297 |
| Release | : 2018-11-21 |
| Genre | : Business & Economics |
| ISBN | : 9286138482 |
In its fourth edition, this report focuses on recent developments in Africa's banking sectors and the policy options for all stakeholders. The study of banking sectors across all African sub-regions includes the results of the EIB survey of banking groups operating in Africa. Three thematic chapters address challenges and opportunities for financing investment in Africa: Crowding out of private sector lending by public debt issuance The state of bank recovery and resolution laws in Africa Policy options on how to finance infrastructure development. The report finds that in many African banking markets, the last two years saw a pause in financial deepening. However, a rising share of banking groups report improving market conditions and plan a structural expansion of their operations in Africa and a continued push for new technologies.
| Author | : European Investment Bank |
| Publisher | : European Investment Bank |
| Total Pages | : 573 |
| Release | : 2018-11-20 |
| Genre | : Business & Economics |
| ISBN | : 9286140339 |
Africa is transforming itself. The continent stands ready to seize the opportunities arising from its young population, new technologies, new trade agreements and potential for productivity gains. However, the region needs a lot of help to fight deteriorating infrastructure, climate change, extreme weather events, social and political strife, persistent poverty, and the rising numbers of people leaving their homes to escape conflict or seek a better life. The European Investment Bank has been active in Africa for more than half a century, carrying out thousands of complex projects in all corners of the continent. We are concentrating even more on activities that create jobs and growth. We also are working hard on sustainable urbanisation, digital connectivity and gender equality.
| Author | : Luc Eyraud |
| Publisher | : International Monetary Fund |
| Total Pages | : 85 |
| Release | : 2021-06-08 |
| Genre | : Business & Economics |
| ISBN | : 1513576518 |
Sub-Saharan African countries are facing an unprecedented health and economic crisis that is likely to severely hurt credit quality and raise non-performing loans from already high levels. Banks have a critical role to play not only during the crisis by providing temporarily relief to businesses and households, but also during the recovery by supporting economic activity and facilitating the structural transformations engaged by the pandemic.
