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The Kenya financial system


Date Posted: 4/16/2012 2:06:06 AM

Posted By: sashoo  Membership Level: Silver  Total Points: 382

The Kenya financial market is classified into the following:

1. The Capital Market:
This is the market for long-term funds (shares and loans).

2. The Money market:
This is the market for short term funds (treasury bills, commercial paper, and certificates of deposit).

The financial market, which makes up the financial system in Kenya, is comprised of the following:

• Banks and non-bank financial institutions. These are licensed under the banking act.

• Insurance companies. They are licensed under the insurance company’s act.

• Building societies registered under the building societies act.

• Cooperative societies registered under the cooperative societies act.

• Hire purchase companies registered under the hire purchase act.

• Post office savings bank registered under the post office savings act.

• Agricultural finance co-operations registered under the Agricultural Credit act.

Commercial banks and non-bank financial institutions offer facilities for depositing and saving. In offering these facilities to savers, they consider savers’ needs like liquidity of savings - the financial security of savings. The institutions also lend or advance the monies deposited with them to borrowers in commerce, industry, agriculture and household sectors. Commercial banks, through branch banking systems, dominate the Kenya financial system - they account for the majority of all deposits from the public. However, non-bank financial systems attract an increasing volume of private savings.

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