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Banks, stock market development and economic growth in Kenya: an empirical investigation

Sheilla Nyasha and Nicholas Odhiambo ()

No 19635, Working Papers from University of South Africa, Department of Economics

Abstract: In this paper, we have examined the impact of both bank- and market-based financial development oneconomic growth in Kenya during the period 1980 to 2012, using the autoregressive distributed lagbounds testing approach. To capture as far as possible the breadth and depth of the Kenyan bank- andmarket-based financial systems, the study employs the method of means-removed average to constructboth bank- and market-based financial development indices from an array of banking sector and stockmarket variables. The empirical results of this study show that market-based financial development has apositive impact on economic growth in Kenya. However, the results have also shown that bank-basedfinancial development has no impact on economic growth in the study country. These results applyirrespective of whether the regression analysis is conducted in the long run or in the short run.

Keywords: Kenya; Bank-Based Financial Development; Market-Based Financial Development; Economic Growth (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-fdg
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Journal Article: Banks, Stock Market Development and Economic Growth in Kenya: An Empirical Investigation (2017) Downloads
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