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Banks, stock market development and economic growth in Kenya: an empirical investigation

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  • Nyasha, Sheilla
  • Odhiambo, Nicholas M.

Abstract

In this paper, we have examined the impact of both bank- and market-based financial development oneconomic growth in Kenya during the period 1980 to 2012, using the autoregressive distributed lagbounds testing approach. To capture as far as possible the breadth and depth of the Kenyan bank- andmarket-based financial systems, the study employs the method of means-removed average to constructboth bank- and market-based financial development indices from an array of banking sector and stockmarket variables. The empirical results of this study show that market-based financial development has apositive impact on economic growth in Kenya. However, the results have also shown that bank-basedfinancial development has no impact on economic growth in the study country. These results applyirrespective of whether the regression analysis is conducted in the long run or in the short run.

Suggested Citation

  • Nyasha, Sheilla & Odhiambo, Nicholas M., 2015. "Banks, stock market development and economic growth in Kenya: an empirical investigation," Working Papers 19635, University of South Africa, Department of Economics.
  • Handle: RePEc:uza:wpaper:19635
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    References listed on IDEAS

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    Cited by:

    1. Simplice Asongu & Jules R. Minkoua N, 2017. "Dynamic Openness and Finance in Africa," Working Papers 17/040, African Governance and Development Institute..
    2. Andrew Phiri, 2017. "The Unemployment-Stock Market Relationship in South Africa: Evidence from Symmetric and Asymmetric Cointegration Models," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 15(3 (Fall)), pages 231-254.
    3. Andrew Phiri, 2017. "Has the South African Reserve Bank responded to equity returns since the sub-prime crisis? An asymmetric convergence appraoch," Working Papers 1709, Department of Economics, Nelson Mandela University, revised Aug 2017.
    4. repec:rej:journl:v:19:y:2016:i:61:p:211-226 is not listed on IDEAS

    More about this item

    Keywords

    Kenya; Bank-Based Financial Development; Market-Based Financial Development; Economic Growth;

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