An investigation into the effectiveness of the Central Bank Rate as a key influencer for interest rates in Kenya
| dc.contributor.advisor | Mudida, Robert | |
| dc.contributor.author | Mwai, Paul Wachira | |
| dc.date.accessioned | 2016-05-30T11:32:58Z | |
| dc.date.available | 2016-05-30T11:32:58Z | |
| dc.date.issued | 2012-05 | |
| dc.description | A dissertation to Strathmore Business School , Strathmore University, in partial fulfillment of the requirements for Degree of Master in Business Administration | en_US |
| dc.description.abstract | This study is an investigation of the interest rates market in Kenya as regulated by the Central Bank of Kenya (CBK). The CBK introduced the Central Bank Rate as an instrument to be used in regulating the market interest rates thus cushion the public from excessive charges in interest rates by the banks. Since its introduction in 2006 different analysts have had different views with regard to its effectiveness to regulate the market rates (lending rates); the study explored the relationship of CBR with the lending rates. The general objective of the study was to investigate the effectiveness of the Central Bank Rate as a key factor influencer for interest rates in Kenya. The study was guided by three specific objectives which included: establishing the relationship between the average commercial bank's lending rate (market interest rates) and the CBR; establishing the relationship between the average commercial bank's lending rate and the other interest rates (repo, Treasury bill rate, inter-bank rate). The study was guided by the loanable funds theory. The study used secondary data retrieved from the archives of the Central bank of Kenya and the Kenyan Commercial Banks' records as they are the key lenders and determinants of existing market lending rates as the Central Bank Rate directly affects their borrowing and lending processes. The data collected was analyzed using inferential statistics. In addition, the researcher conducted a multiple regression analysis and ANOV A in order to investigate the effectiveness of the Central Bank Rate as a key factor influencer for interest rates in the Kenya. The findings indicated that REPO affected the lending rates more in Kenya followed by the 91-Day Treasury bill rate, interbank and then CBR as the least one. From the statistics values of REPO and 91 Day Treasury bills, the two factors are significant in explaining the relationship between them and the lending rates. However, for interbank and CBR rates, have little contribution to the lending rates in Kenya. The study recommended that the CBK should be keen in setting the REPO and the 91 day Treasury bill because they are the key determinants of lending rates in Kenya. | en_US |
| dc.identifier.uri | http://hdl.handle.net/11071/4536 | |
| dc.language.iso | en | en_US |
| dc.publisher | Strathmore University | en_US |
| dc.subject | Central Bank | en_US |
| dc.subject | Interest rate | en_US |
| dc.subject | Kenya | en_US |
| dc.subject | Data | en_US |
| dc.title | An investigation into the effectiveness of the Central Bank Rate as a key influencer for interest rates in Kenya | en_US |
| dc.type | Thesis | en_US |