Fuchs, MichaelBeck, Thorsten2013-06-252013-06-252004-07https://hdl.handle.net/10986/14185Although by regional standards, Kenya's financial system is relatively well developed and diversified, major structural impediments prevent it from reaching its full potential. Crosscountry comparisons, however, show the importance of a well-developed financial sector for long-term economic growth and poverty alleviation. Experience from other developing economies has shown the detrimental effect of government ownership and the positive impact that foreign bank ownership can have on the development of a market-based financial system. Analyzing and decomposing the high interest rate spreads and margins in Kenya helps identify structural impediments that drive the high cost of and low access to financial services. The limited information sharing on debtors, deficiencies in the legal and judicial system, the limited number of strong and reputable banks and non-transparency and uncertainty in the banking market are major impediments to the development of Kenya's financial system, to reducing spreads and to widening access.en-USCC BY 3.0 IGOACCOUNTABILITYACCOUNTINGADVERSE CONSEQUENCESADVERSE SELECTIONAUTONOMYBANK PRIVATIZATIONBANK SIZEBANK SUPERVISIONBANKING CRISISBANKING INDUSTRYBANKING SECTORBANKING SYSTEMBANKING SYSTEMSBANKSCAPITAL ACCUMULATIONCAPITAL INFLOWSCAPITAL MARKETSCENTRAL BANKCOMMERCIAL BANKSCOMPETITIVENESSCONSOLIDATIONCONSUMER PROTECTIONCONTAGIONCONTRACT ENFORCEMENTCOUNTRY COMPARISONCOUNTRY COMPARISONSCPICREDIT RATIONINGCREDIT RISKCROWDING OUTDEBTDEPOSITORSDEPOSITSDEVELOPED COUNTRIESEARNING ASSETSECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMICSEMERGING MARKETSEMPIRICAL EVIDENCEENABLING ENVIRONMENTFINANCIAL CONTRACTSFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIARY DEVELOPMENTFINANCIAL INTERMEDIATIONFINANCIAL MARKETSFINANCIAL POLICIESFINANCIAL SECTORFINANCIAL SERVICESFINANCIAL STRUCTUREFINANCIAL SYSTEMSFOREIGN BANKSFRAUDGDPGDP PER CAPITAGOVERNMENT POLICIESGROWTHINCOMEINFLATIONINSTITUTIONAL ENVIRONMENTINSTITUTIONAL REFORMINSURANCEINTEREST MARGININTEREST RATEINTEREST RATESINTERNATIONAL BANKSINTERNATIONAL TRADELEGAL FRAMEWORKLEGAL PROVISIONSLEGISLATIONLENDING RATESLIQUIDITYLOAN LOSS PROVISIONSLOOTINGMANDATESMARKET DISCIPLINEMICROFINANCEMORAL HAZARDMORTGAGESNET INTEREST MARGINOVERHEAD COSTSOWNERSHIP STRUCTUREPARTIAL PRIVATIZATIONPOLICYPOLICY ENVIRONMENTPOLICY MAKERSPOLITICAL INTERFERENCEPORTFOLIOSPOVERTY ALLEVIATIONPRIVATE BANKSPRIVATIZATIONPRODUCTIVITYPROFIT MARGINPROFIT MARGINSPROFITABILITYPUBLIC POLICYRECAPITALIZATIONRESERVE REQUIREMENTSRESOURCE ALLOCATIONRETURN ON ASSETSSAVINGSSHAREHOLDERSSMALL BANKSSUPERVISORY FRAMEWORKTERMS OF TRADETRANSPARENCYVALUE OF MONEYVOLATILITYVULNERABILITY FINANCIAL SYSTEMFINANCIAL SECTOR DEVELOPMENTECONOMIC GROWTHPOVERTY ALLEVIATIONGOVERNANCEOWNERSHIPINTEREST RATESCAPITAL MARKETSSHAREHOLDERSINCOME GROWTHGROSS DOMESTIC PRODUCT PER CAPITAPRIVATIZATIONWorld Bank10.1596/1813-9450-3363