Banks, stock market development and economic growth in Kenya: an empirical investigation
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Authors
Nyasha, Sheilla
Issue Date
2015
Type
Working Paper
Language
en
Keywords
Kenya, Bank-Based Financial Development, Market-Based Financial Development,Economic Growth
Alternative Title
Abstract
In this paper, we have examined the impact of both bank- and market-based financial development on
economic growth in Kenya during the period 1980 to 2012, using the autoregressive distributed lag
bounds testing approach. To capture as far as possible the breadth and depth of the Kenyan bank- and
market-based financial systems, the study employs the method of means-removed average to construct
both bank- and market-based financial development indices from an array of banking sector and stock
market variables. The empirical results of this study show that market-based financial development has a
positive impact on economic growth in Kenya. However, the results have also shown that bank-based
financial development has no impact on economic growth in the study country. These results apply
irrespective of whether the regression analysis is conducted in the long run or in the short run.
Description
BANKS, STOCK MARKET DEVELOPMENT AND ECONOMIC GROWTH IN
KENYA: AN EMPIRICAL INVESTIGATION