Does Interest Rate Liberalisation Really Improve the Allocative Efficiency of Investment? Kenya's Experience
This study attempts to empirically investigate the impact of interest rate liberalisation on the efficiency of investment allocation in Kenya – using cointegration-based error-correction model. The study was motivated by the current debate on the efficacy of interest rate liberalisation on the one hand and the painful experience some countries have had with the liberalisation of interest rates on the other. Contrary to the results obtained from some previous studies, the results of this study find a distinct positive relationship between interest rate liberalisation and the efficiency of investment in Kenya. The study concludes that higher interest rates, which result from interest rate liberalisation, are likely to improve the average efficiency of investment in Kenya by transferring capital from projects with low returns to projects with high returns.
Volume (Year): 9 (2007)
Issue (Month): 1 ()
|Contact details of provider:|| Postal: PO Box 3628, Tygervalley, Bellville, 7536|
Web page: http://www.africagrowth.com/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:afj:journl:v:9:y:2007:i:1:p:53-69. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kirk De Doncker)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.