March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.

This book investigates the impact of commercial banks in Kenya right through from their origins, to their role during the colonial period, the process of adaptation following independence, and up to their responses to new challenges and economic policies in the twenty-first century. The British colonisation of East Africa required the development of diverse political, social and economic institutions to advance and exercise control over the territories and their populations. Multinational commercial banks were among the first institutions, with the National Bank of India, Standard Bank of South Africa and Barclays Bank DCO all setting up business in Kenya, whilst continuing to maintain close relationships with the UK and other colonial actors. This book assesses the impact of commercial banks during the last years of colonial domination and the tools they used to adapt in the first decades of independence. The book concludes by considering how the colonial banking system has influenced the development of modern financial institutions in Kenya in the twenty-first century. This book argues that commercial banks are fundamental to understanding African colonies, and the foundations over which the financial system of contemporary Africa was constructed. It will be of interest to researchers of banking, economic history, the colonial period, and African studies.

"This book documents important milestones in the epic journey traversed by the Central Bank of Kenya over the last 50 years, putting into perspective the evolution of central banking globally and within the East African region, and contemplating future prospects and challenges. The book is timely, mainly because the global financial landscape has shifted. Central bankers have expanded their mandates, beyond the singular focus on inflation and consider economic growth as their other important objective. Financial crises have continued to disrupt the functioning of financial institutions and markets, the most devastating episodes being the global financial crisis, which broke out in 2008 and from which the global financial system has not fully recovered, and the unprecedented challenges posed by the global coronavirus pandemic. Bank regulation has moved from Basel I, to Basel II, and somehow migrated to Basel III, although some countries are still at the cross-roads. The book originated from the wide ranging discussions on central banking, from a symposium to celebrate the 50 year anniversary on 13 September 2016 in Nairobi. The participants at the symposium included current and former central bank governors from Kenya and the Eastern Africa region, high level officials from multilateral financial institutions, policy makers, bank executives, civil society actors, researchers and students. The book is an invaluable resource for policy makers, practitioners and researchers, on how monetary policy and financial practices in vogue today in Kenya have evolved through time and worked very well, but also about some pitfalls"--

This is the first volume in a new series Africa: Policies for Prosperity. For the first time in more than a generation, sustained economic growth has been achieved across the continent - despite the downturn in global economic fortunes since 2008 - and in many countries these gains have been realized through policy reforms driven by the decisive leadership of a new generation of economic policymakers. The process of reform is continuous, however, and the challenge currently facing this new generation is how to harness these favourable gains in macroeconomic stability and turn them into a coherent strategy for sustainable growth and poverty reduction over the coming decades. These challenges are substantial and encompass the broad remit of economic policy. Each volume in this series brings leading scholars into the policy arena to examine these challenges and to lay out, in a rigorous but accessible manner, key challenges and policy options facing policymakers on the continent. This first volume on Kenya explores the challenges facing an economy standing at a crossroads. Kenya has experienced a period of high and sustained growth since the mid 1990s, growth which involved economic transformation away from a heavy reliance on traditional economic activities towards an emerging manufacturing economy. But this process, and the economic and social stability that had come to characterize Kenya, have been severely tested by the post-election violence of 2008. Restoring equitable growth and sustaining the structural transformation of the economy is essential if Kenya is to leave this dark period behind. The chapters in this volume address the key issues that will face economic policy makers in the coming years. They cover the conventional but central question of finance and macroeconomic management, but also much deeper structural issues of trade, employment generation and education; of land policy, migration and urbanization; and the fiscal challenges facing an ageing but increasingly urbanized (and increasingly affluent) society.

In 2011 the World Bank—with funding from the Bill and Melinda Gates Foundation—launched the Global Findex database, the world's most comprehensive data set on how adults save, borrow, make payments, and manage risk. Drawing on survey data collected in collaboration with Gallup, Inc., the Global Findex database covers more than 140 economies around the world. The initial survey round was followed by a second one in 2014 and by a third in 2017. Compiled using nationally representative surveys of more than 150,000 adults age 15 and above in over 140 economies, The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution includes updated indicators on access to and use of formal and informal financial services. It has additional data on the use of financial technology (or fintech), including the use of mobile phones and the Internet to conduct financial transactions. The data reveal opportunities to expand access to financial services among people who do not have an account—the unbanked—as well as to promote greater use of digital financial services among those who do have an account. The Global Findex database has become a mainstay of global efforts to promote financial inclusion. In addition to being widely cited by scholars and development practitioners, Global Findex data are used to track progress toward the World Bank goal of Universal Financial Access by 2020 and the United Nations Sustainable Development Goals. The database, the full text of the report, and the underlying country-level data for all figures—along with the questionnaire, the survey methodology, and other relevant materials—are available at www.worldbank.org/globalfindex.