Korir, Julius Kipkemoi (1992) Money Supply Determination in Kenya: A Macro-econometric Analysis. Masters thesis, Kenyatta University.
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Abstract
Monetary policy plays an ever-increasing role as an economy develops. Understanding of money supply determination is important in formulating correct monetary policy measures. This study investigated the impact of high powered money and the basic ratios of money multiplier on money supply. Time series data used for estimation were obtained from published documents from the Central Bank of Kenya. The only artificial variable constructed is quarterly data for income. The results show that high powered money and the deposit and reserve ratios are all significant various in the determination of money supply in Kenya. On the basis of empirical results it is recommended that: (a) Greater stability be sought on the balance of payments to increase predictability of the high powered money as it was found to be the most important determinant of money supply. (b) The government budget gap be narrowed to reduce government domestic credit so as to enable the Central Bank to have some grip over high powered money. Budget deficit in Kenya have been shown to exert a powerful impact on trends in domestic credit and money , and this applies' to deficits financed by borrowing from the banking sector and of deficits financed externally. (c) Effective ways of controlling bank’s credit be designed and implemented in response the changes in their liquidity. This can involve use of bank's reserve base which requires raising of liquidity ratios until they affect credit creation by the banks.
| Item Type: | Thesis (Masters) |
|---|---|
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance |
| Divisions: | Africana |
| Depositing User: | Tim Khabala |
| Date Deposited: | 06 Oct 2017 08:31 |
| Last Modified: | 06 Oct 2017 08:31 |
| URI: | http://thesisbank.jhia.ac.ke/id/eprint/2472 |
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