IDEAS home Printed from https://ideas.repec.org/p/zbw/kbawps/316414.html
   My bibliography  Save this paper

Understanding bank demand for sovereign debt and its systemic risk implications: The Kenyan experience

Author

Listed:
  • Ochenge, Rogers

Abstract

This study investigates the demand for government securities by Kenyan banks using annual data from 2005 to 2022. Employing a fixed-effects panel regression model, the research examines the factors influencing banks' sovereign debt holdings and their implications for systemic risk. Key findings reveal that fiscal deficits, attractive bond yields, and capital adequacy requirements significantly drive banks' appetite for government securities. Over time, the similarity in sovereign holdings across banks has increased, raising concerns about systemic risk due to potential correlated exposure to sovereign debt shocks. The study also identifies a negative relationship between private sector lending and sovereign debt holdings, highlighting potential "crowding out" effects. These insights are critical for informing regulatory policies aimed at mitigating systemic risks in the Kenyan banking sector

Suggested Citation

  • Ochenge, Rogers, 2025. "Understanding bank demand for sovereign debt and its systemic risk implications: The Kenyan experience," KBA Centre for Research on Financial Markets and Policy Working Paper Series 88, Kenya Bankers Association (KBA).
  • Handle: RePEc:zbw:kbawps:316414
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/316414/1/1923637908.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Government paper; Bank; Systemic risk; Kenya;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:kbawps:316414. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://www.kba.co.ke/about_research_center.php .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.