Banking sector stability, efficiency, and outreach in Kenya
AbstractAlthough Kenya's financial system is by far the largest and most developed in East Africa and its stability has improved significantly over the past years, many challenges remain. This paper assesses the stability, efficiency, and outreach of Kenya's banking system, usingaggregate, bank-level, and survey data. Banks'asset quality and liquidity positions have improved, making the system more resistant to shocks, and interest rate spreads have declined, in part due to reduction in the overhead costs of foreign banks. Outreach remains limited, but has improved in recent years, driven by mobile payments services in the domestic remittance market. Fostering a level regulatory playing field for all deposit-taking institutions is a key remaining challenge. Specifically, an effective but not overly burdensome framework for regulation and supervision of microfinance institutions and cooperatives is a priority. Maintaining an openness to new, and non-bank, providers of financial services, which has enabled the success of mobile payments, could also further outreach.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5442.
Date of creation: 01 Oct 2010
Date of revision:
Banks&Banking Reform; Access to Finance; Debt Markets; Emerging Markets; Bankruptcy and Resolution of Financial Distress;
This paper has been announced in the following NEP Reports:
- NEP-AFR-2010-10-16 (Africa)
- NEP-ALL-2010-10-16 (All new papers)
- NEP-BAN-2010-10-16 (Banking)
- NEP-MFD-2010-10-16 (Microfinance)
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