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Credit allocation schemes: Perspectives from credit providers and regulatory regimes in Kenya

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  • Tiriongo, Samuel

Abstract

This study analyses the credit channel of monetary policy transmission via major credit providers in Kenya before and during interest rate controls. Focusing on the period 2009M3- 2018m3 and employing a structural vector-autoregressive model, the study establishes whether controls on interest rates triggered a shift in credit allocation via a spectrum of providers; commercial banks, savings & credit cooperatives, and micro-finance banks. Findings show that the strength of policy signals in influencing credit allocation generally reduced, and the reductions varied from one provider to another. However, shares in total credit seem not to have changed substantially over time indicating no significant shifts in consumer preferences. A continued effort to review the interest rate capping rule is justified in improving overall credit allocation in the economy.

Suggested Citation

  • Tiriongo, Samuel, 2019. "Credit allocation schemes: Perspectives from credit providers and regulatory regimes in Kenya," KBA Centre for Research on Financial Markets and Policy Working Paper Series 36, Kenya Bankers Association (KBA).
    • Handle: RePEc:zbw:kbawps:36
    as

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    File URL: https://www.econstor.eu/bitstream/10419/249537/1/WPS-36.pdf
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    References listed on IDEAS

    as
    1. Lawrence J. Christiano & Cosmin Ilut & Roberto Motto & Massimo Rostagno, 2010. "Monetary policy and stock market booms," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 85-145.
    2. Been-Lon Chen & Yu-Shan Hsu & Chia-Hui Lu, 2010. "Endogenous Time Preference in Monetary Growth Model," IEAS Working Paper : academic research 10-A005, Institute of Economics, Academia Sinica, Taipei, Taiwan.
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    More about this item

    Keywords

    Credit channel; Monetary Policy Transmission; SVAR; Interest rate controls;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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