Do interest rate controls work? Evidence from Kenya

Alper, Emre; Clements, Benedict; Hobdari, Niko; Porcel, Rafel Moyà

doi:10.1111/rode.12675

Cited by 15 publications

(17 citation statements)

References 14 publications

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“…The capping of interest rates, particularly for formal financial institutions, was introduced in Kenya in 2016 to help manage the borrowing cost and, in turn, influence debt financing positively. However, this has not been achieved (Alper, Clements, Hobdari, & Moya Porcel, 2020). Therefore, it was of interest to find out whether credit terms, including interest fees, are the main motivators of mobile debt financing among college students in Kenya.…”

Section: Credit Termsmentioning

confidence: 99%

Motivators of Mobile Phone Debt Financing among College Students in Kenya

Nyamita¹

2022

theijbm

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Mobile phone debt financing is above 90% among all phone users in Kenya, irrespective of the reason for borrowing, and at least three-quarters of the youth who own mobile phones in Kenya have accessed and utilized formally acquired debt financing, including mobile phone loans. In addition, mobile phone debt financing is essential for empowering the youths by enabling them to engage in small entrepreneurship ventures and even support their education programs. Hence, the study attempted to determine the motivators of this kind of debt financing among college students in Kenya. Using a purposive sampling technique, 377 students from four major colleges and universities in Kisumu City, Kenya, with a total population of 18,700 students, were applied to obtain data. Descriptive and inferential statistics were used, and the findings revealed that government regulations and credit terms are the most significant motivators of mobile phone debt financing among college students in Kenya. Sensitization and social influence were also found to moderately influence mobile debt financing.

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Section: Credit Termsmentioning

confidence: 99%

Motivators of Mobile Phone Debt Financing among College Students in Kenya

Nyamita¹

2022

theijbm

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“…However, fewer go beyond a mere discussion of the evolution of common financial soundness indicators and 6 There may be other risks worth assessing. For example, banks in some countries have had to cope with what could be called regulatory risk (for example, Kenya-interest rate controls that meanwhile have been lifted; Nigeria-requirement of a minimum loan-to-funding ratio introduced in mid-2019) considering that certain forms of financial repression can have a significant impact on both the banking sector and the real sector (see, for example, Alper andothers 2019 or Jafarov, Maino, andPani 2019).…”

Section: Banking Sector Vulnerabilitiesmentioning

confidence: 99%

Stress Testing in Sub-Saharan Africa

Leika¹,

Perez-Saiz²,

Stankova³

et al. 2020

Departmental Papers / Policy Papers

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The paper finds that supervisory stress tests are conducted in more than half of sub-Saharan African countries, particularly in western and southern Africa, and that the number of individual stress tests has grown exponentially since the early 2010s. By contrast, few central banks publish assessments of macro-financial linkages; the focus leans more toward discussing trends and weaknesses within the financial sector than on outside risks that may negatively affect its performance.

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“…For instance, in 2016, the Central Bank issued a circular setting its (policy) rate as the reference rate for private commercial banks. The net effect was severe funding hurdles for domestic enterprises, especially the risky ones (Alper et al 2020). Some of these firms opted for financing options outside the control of the Central Bank.…”

Section: Introductionmentioning

confidence: 99%

Financial Institution Type and Firm-Related Attributes as Determinants of Loan Amounts

Mallinguh¹,

Zéman²

2022

JRFM

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Access to formal credit remains critical for business operations, particularly for firms unable to generate sufficient funds internally. Using the World Bank’s Enterprise Survey dataset, 2018, we analyzed 230 Kenyan firms that applied for loans. These loans are sourced from banks (private, commercial, or state-owned) or non-banking financial institutions. Specifically, the paper explores the effect of financial institution type and firm-related characteristics on loan amounts advanced. The results show that the preferred credit provider matters, with the sensitivity level varying among the three institutional types. Additionally, the collateralization value, the owner’s equity proportion of fixed assets, and any existing credit facility correlate positively with the outcome variable. There is an inverse relationship between the largest shareholder’s ownership and the loan amount. The study uses the new product (service) launches to measure innovation. The findings suggest that firms in the innovation process access higher loan amounts than their non-innovative peers. Be that as it may, the difference in amount effect size between the two groups is small based on Cohen’s d rule. The paper highlights the theoretical and practical implications of these findings.

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Do interest rate controls work? Evidence from Kenya

Cited by 15 publications

References 14 publications

Motivators of Mobile Phone Debt Financing among College Students in Kenya

Motivators of Mobile Phone Debt Financing among College Students in Kenya

Stress Testing in Sub-Saharan Africa

Financial Institution Type and Firm-Related Attributes as Determinants of Loan Amounts

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