Financial Deepening And Economic Competitiveness In Kenya: The Strides To Being An Economic Power House

Abstract

Economists have long held the view that financial deepening and economic development are closely intertwined. Kenya’s development blue print, Vision 2030, is anchored on this belief and aims to create a vibrant, globally competitive financial sector, envisioning Kenya as a leading financial centre in Eastern and Southern Africa. Using descriptive survey design, this study investigated the state of financial deepening in Kenya and how this enhances the country’s economic competitiveness. Data was collected from a key informant in the four largest banks by asset base that have subsidiaries/branches in other East African countries using a structured questionnaire. It focused on Mobile banking, Agency banking and credit referencing as indicators of financial deepening and established that Kenya has made remarkable strides in financial deepening, which has enhanced the country’s competitiveness through wider access of financial services, reduced operation and transaction costs, product diversification, superior customer experience and reduced loan default rates.