Research Proposal
CHAPTER 2
CHAPTER 1
1.0 INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Kenya falls among the countries regarded as third world countries whose economies are still under progress. Our worry is; when will Kenya attain full employment level as well as being free from macro-economic problems such as inflation, poverty, unemployment, unbalanced regional development, huge foreign debts, unpredictable foreign exchange rates, and alarming interest rates among other problems?
As per the CBK annual report (2009), banking sector comprised the Central Bank of Kenya, as the regulatory authority, Commercial Banks, Non-Bank Financial Institutions, Forex Bureaus and Deposit Taking Microfinance Institutions as the regulated entities. As at 31st December 2009, the banking sector was composed of 46 institutions, 44 of which were commercial banks and 2 mortgage finance companies. In addition, there was 1 licensed deposit taking microfinance institution and 130 foreign exchange bureaus. Commercial Banks and Mortgage Finance Companies are licensed and regulated under the Banking Act, Cap 488 and Prudential Guidelines issued thereunder. Deposit Taking Microfinance Institutions on the other hand are licensed and regulated under the Microfinance Act and Regulations issued thereunder. Foreign Exchange Bureaus are licensed and regulated under the Central Bank of Kenya Act, Cap 491 and Foreign Exchange Bureau Guidelines issued thereunder. Out of the 46 institutions, 33 were locally owned and 13 were foreign owned. The locally owned financial institutions comprised 3 banks with public shareholding, 28 privately owned commercial banks and 2 mortgage finance companies. The foreign owned financial institutions comprised 9 locally incorporated foreign banks and 4 branches of foreign incorporated banks. (See appendix I: structure of banking industry in Kenya)
The growth of banking industry in Kenya is contributed by the industry’s wide branch strategy both in Kenya and EAC. The banks have come
CHAPTER 1
1.0 INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Kenya falls among the countries regarded as third world countries whose economies are still under progress. Our worry is; when will Kenya attain full employment level as well as being free from macro-economic problems such as inflation, poverty, unemployment, unbalanced regional development, huge foreign debts, unpredictable foreign exchange rates, and alarming interest rates among other problems?
As per the CBK annual report (2009), banking sector comprised the Central Bank of Kenya, as the regulatory authority, Commercial Banks, Non-Bank Financial Institutions, Forex Bureaus and Deposit Taking Microfinance Institutions as the regulated entities. As at 31st December 2009, the banking sector was composed of 46 institutions, 44 of which were commercial banks and 2 mortgage finance companies. In addition, there was 1 licensed deposit taking microfinance institution and 130 foreign exchange bureaus. Commercial Banks and Mortgage Finance Companies are licensed and regulated under the Banking Act, Cap 488 and Prudential Guidelines issued thereunder. Deposit Taking Microfinance Institutions on the other hand are licensed and regulated under the Microfinance Act and Regulations issued thereunder. Foreign Exchange Bureaus are licensed and regulated under the Central Bank of Kenya Act, Cap 491 and Foreign Exchange Bureau Guidelines issued thereunder. Out of the 46 institutions, 33 were locally owned and 13 were foreign owned. The locally owned financial institutions comprised 3 banks with public shareholding, 28 privately owned commercial banks and 2 mortgage finance companies. The foreign owned financial institutions comprised 9 locally incorporated foreign banks and 4 branches of foreign incorporated banks. (See appendix I: structure of banking industry in Kenya)
The growth of banking industry in Kenya is contributed by the industry’s wide branch strategy both in Kenya and EAC. The banks have come