PurposeThe COVID-19 pandemic has had a catastrophic impact on the tourist activity in Kenya. Global lockdown has limited travel resulting to losses in the tourism sector. This paper discusses the specific role that fiscal policy plays to improve tourism competitiveness in Kenya. Specifically, the study examines how Kenyan government can revive the tourism economy to improve its competitiveness.Design/methodology/approachA tourism demand model to explore relationship between fiscal policies and inbound tourism in Kenya is developed. This study uses a Markov regime-switching (MS) regression model to establish the relationships that exist between COVID-19 pandemic, fiscal policies and tourism revenue in Kenya.FindingsThe estimation results of the Markov-switching dynamic regression showed that the coefficients of international tourists arrivals, domestic bed occupancy and international bed occupancy are positive and significant with p-values of 0.000 during the pandemic period. The findings show that the transitioning periods during the fiscal policy shifts had an effect on the international arrivals. Therefore, fiscal incentives were key in influencing tourism arrivals and bednights occupancies.Research limitations/implicationsThe theoretical implications show that to promote the state of high international and domestic tourist arrivals, the government should encourage more fiscal spending initiatives that encourage the increase in tourist arrivals and occupancies such as vaccinations against COVID-19 and promoting safe spaces for visitors within the destination is key towards reviving the sector. In order to curb the hysteresis effects of COVID-19 related depression and resultant impacts on GDP, there is a need to review the national fiscal policies and target fiscal policies on the cyclical effects of the COVID-19 impacts on international tourism market.Originality/valueThis research develops an economic model that builds accurate relationships between fiscal policies, pandemics and tourism destination competitiveness as a means of informing competitive tourism management strategies and governance.

The study empirically examined whether stock market liberalization improves the functioning of domestic stock market and accelerates economic growth in Kenya. The study also assessed the kind of relationship between liberalization, stock market performance and economic growth in Kenya. Liberalization was assessed by stock market capitalization while turnover was used to asses stock market performance. The study used quarterly time series data collected through secondary sources and covered a period of 22 years from January, 1991 to December, 2012. The study utilized econometric techniques of Vector autoregressive and Granger Causality Tests to investigate the relationships. The results displayed a one way causality that runs from stock market development to economic growth. The results also show that stock market liberalization indirectly impacts on economic growth through investment. The study found that stock market liberalization has a significant positive impact on the economic growth in Kenya.

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We examine the effect of foreign banks' presence on financial stability in Kenya. We consider a two-fold outcome, that is, whether or not foreign-owned banks enhance financial stability in Kenya. To ascertain this, we use binary regression approach involving a logit model. Our results suggest that foreign-owned banks have no important direct effect on financial stability in Kenya; rather, financial stability depends on the credit policies of the banks and their balance sheet structures, regardless of the ownership type. Foreign capital in the banking sector in Kenya is not a deciding factor in influencing the stability of the sector and measures to promote local banks and government banks should be encouraged. Generally, positive macroeconomic development drives Kenya's financial stability and increases foreign banks' penetration by encouraging them to expand through aggressive credit policies. Our findings suggest that it is the macroeconomic conditions and prudential regulations in Kenya that enhance financial stability and not necessarily the presence of foreign-owned banks.