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Financial Liberalisation, Political Stability, and Economic Determinants of Real Economic Growth in Kenya

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  • Zakaria Yakubu

    (Department of Economics, Kaduna State College of Education Gidan Waya, Kafanchan PMB 1024, Kaduna State, Nigeria
    Azman Hashim International Business School, Universiti Teknologi Malaysia, Kuala Lumpur 54100, Malaysia)

  • Nanthakumar Loganathan

    (Azman Hashim International Business School, Universiti Teknologi Malaysia, Johor Bahru 81300, Malaysia)

  • Tirta Nugraha Mursitama

    (International Relations Department, Bina Nusantara University, Jakarta Barat 11480, Indonesia)

  • Abbas Mardani

    (Informetrics Research Group, Ton Duc Thang University, Ho Chi Minh City 758307, Viet Nam
    Faculty of Business Administration, Ton Duc Thang University, Ho Chi Minh City 758307, Viet Nam)

  • Syed Abdul Rehman Khan

    (School of Economics and Management, Tsinghua University, Beijing 100080, China)

  • Asan Ali Golam Hassan

    (Azman Hashim International Business School, Universiti Teknologi Malaysia, Kuala Lumpur 54100, Malaysia)

Abstract

This study aimed to analyse financial liberalisation, political stability, and economic determinants of Kenya’s real economic growth using time series data over the period of 1970–2016. The authors specified quadratic and interactive models to be estimated by employing a quantile regression analysis. The traditional and quantile unit root test was used in testing the stationarity issue. The co-integration findings indicated that the capital account openness and financial development impede on real economic growth; and the political stability also had potential influence on the real economic growth of Kenya. Interestingly, there is a nonlinear U-shape link between financial development and real economic growth that undermined the real economic growth at its onset, but as it advanced, it enhanced the growth of the country in the long run. The policymakers should ensure that the capital account is more liberalised so that it will continue to stimulate the financial development. In the same way, the liberalisation of the domestic financial market should be taken in earnest to overcome the negative effects of financial repression in totality, while maintaining the stable political atmosphere.

Suggested Citation

  • Zakaria Yakubu & Nanthakumar Loganathan & Tirta Nugraha Mursitama & Abbas Mardani & Syed Abdul Rehman Khan & Asan Ali Golam Hassan, 2020. "Financial Liberalisation, Political Stability, and Economic Determinants of Real Economic Growth in Kenya," Energies, MDPI, vol. 13(13), pages 1-16, July.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:13:p:3426-:d:379730
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