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Copyright of Acta Economica is the property of University of Banja Luka, Faculty of Economics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article investigates the disproportionate effect of government investment on economic growth in Kenya. This article employed a multivariate nonlinear autoregressive distributed lag model, covering the period 1980 to 2020. In contrast to similar past studies on the subject, this article tested a number of hypotheses to increase the reliability of the results. These tests comprise the Wald test for asymmetries, the Brock-Dechert-Scheinkman nonlinearity test, and the nonlinear autoregressive distributive lag bounds test for cointegration. The findings revealed evidence of an asymmetrical impact of government investment on economic growth in Kenya. A fall in government investment was followed by an economic downturn in the short run; however, the long-term impact was insignificant. The findings also indicate that, regardless of the timeframe considered, increases in government investment have no significant effect on economic growth. It was also established that gross domestic investment had a significant positive impact on economic growth, while inflation consistently had a negative impact. The goal of the current study is to add to our earlier research on Kenya's inflation and economic growth. Thus, this current article is meant to strengthen public sector accountability procedures and promote responsible government financial and investment decisions in Kenya, all of which are crucial for a functional governance system. In order to encourage economic growth and place Kenya on its optimal growth trajectory, the paper urges Kenyan authorities to expand public sector investment in crucial utilities and infrastructure, including power production, healthcare, education and transportation, at least in the long run. In light of the detrimental effects that inflation has on the country's development, lowering the amount of inflation can further boost economic growth. [ABSTRACT FROM AUTHOR]

Copyright of Acta Economica is the property of University of Banja Luka, Faculty of Economics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study has empirically investigated the impact of bank development on unemployment in Kenya, based on time-series data spanning from 1991 to 2019. Using the ardl bounds testing approach, the results of the study have revealed that in Kenya, the impact of bank development on unemployment, though time-invariant, depends largely on the proxy used to measure the level of bank development. Consistent with expectations, bank development - as proxied by liquid liabilities, bank deposits, deposit money bank assets and the banking development index - has been found to have a negative impact on unemployment in Kenya. However, when bank development is proxied by the domestic credit to private sector by banks, its impact on unemployment was found to be statistically insignificant. These results were found to apply consistently in the long run and in the short run. [ABSTRACT FROM AUTHOR]

In this paper, the casual relationship between foreign direct investment (FDI) and economic growth in Kenya during the period 1980–2018 is examined. In an attempt to address the omission-of-variable bias, which has been detected in some previous studies, two variables, namely money supply and trade, are used as intermittent variables, thereby leading to a system of multivariate Granger-causality equations. Using the ARDL bounds testing approach, the results show that there is a unidirectional causal flow from economic growth to FDI in Kenya. These results apply, irrespective of whether the causality is conducted in the short run or in the long run. Based on these results, it can be concluded that the current burgeoning FDI inflows that Kenya has attracted in recent years are largely driven by the strong economic growth and prudent macroeconomic policies that the country has been pursuing in recent decades. Policy implications are discussed. [ABSTRACT FROM AUTHOR]

Copyright of Acta Economica is the property of University of Banja Luka, Faculty of Economics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this study, the causal relationship between financial development and tourism in Kenya is investigated using annual time series data from 1995 to 2017. The study was motivated by the perceived role that the tourism sector has played in the various facets of the Kenyan economy over the past decades. Two proxies of financial development were used, namely broad money supply and stock market development (which is proxied by the total value of stocks traded as a percentage of GDP). Two intermittent variables were also used, namely real GDP and real effective exchange rate, thereby leading to a system of multivariate Granger-causality equations. Using the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and ECM-based Granger-causality model, the results show that both stock market development and broad money supply Granger-cause tourism in Kenya, but only in the short run. The results show that both proxies of financial development have the potential to spur tourism development in Kenya, at least in the short run. [ABSTRACT FROM AUTHOR]

Using the autoregressive distributed lag (ARDL) bounds testing approach; this paper examines the short-run and long-run impact of monetary policy on economic growth in Kenya for the period 1973 to 2013. The paper uses both the broad money supply and the 3-month Treasury bill rate as proxies of monetary policy. Both short-run and long-run empirical results support monetary policy neutrality, implying that monetary policy has no effect on economic growth - both in the short run and in the long run. This could be due to the fact that the increasing fiscal deficits funded domestically in Kenya could have weakened the transmission of monetary policy actions into the real economy. The study recommends that policies aimed at improving the institutional and regulatory environment for the financial sector and monetary policy conduct should be pursued in Kenya. There is also a need for improvement in policy coordination, particularly monetary and fiscal policies. [ABSTRACT FROM AUTHOR]

In this paper, we have examined the impact of both bank- and market-based financial development on economic growth in Kenya during the period 1980 to 2012, using the autoregressive distributed lag bounds testing approach. To capture as far as possible the breadth and depth of the Kenyan bank- and market-based financial systems, the study employs the method of means-removed average to construct both bank- and market-based financial development indices from an array of banking sector and stock market variables. The empirical results of this study show that market-based financial development has a positive impact on economic growth in Kenya. However, the results have also shown that bank-based financial development has no impact on economic growth in the study country. These results apply irrespective of whether the regression analysis is conducted in the long run or in the short run. The findings of this study, therefore, lend more support to pro-market-based financial development policies in Kenya. [ABSTRACT FROM PUBLISHER]

Purpose - The paper seeks to examine the inter-temporal causal relationship between financial development and poverty reduction in Kenya during the period 1968-2006. The study attempts to answer one critical question: is financial development in Kenya a spur to poverty reduction? Design/methodology/approach - The study uses a trivariate causality model based on cointegration and error-correction mechanism. Unlike the majority of the previous studies, the current study incorporates the savings rate as an intermittent variable in the bivariate causality setting between financial development and poverty reduction - thereby creating a simple trivariate causality model. Findings - The study finds a distinct causal flow from financial development to poverty reduction in Kenya. In addition, the study finds a uni-directional causality from financial development to savings and a bi-directional causality between savings and poverty reduction. The results apply irrespective of whether the causality test is conducted in the short run or in the long run. Practical implications - The empirical results of this study will help policy makers to determine whether the financial development in Kenya is pro-poor and pro-savings. Originality/value - Although several attempts have been made to investigate the relationship between financial development, savings, economic growth and other macroeconomic variables, very few studies have examined the impact of financial development on the ultimate policy goal, i.e. poverty reduction. Moreover, the majority of the previous studies are based mainly on Asia and Latin America - affording sub-Saharan African countries very little or no coverage at all. [ABSTRACT FROM AUTHOR]

This paper examines the impact of interest rate reforms on financial deepening and economic growth in Kenya, using two models: the financial deepening model and the dynamic Granger causality model. The study attempts to answer two critical questions: Does interest rate liberalization in Kenya have any positive influence on financial deepening? Does the financial depth which results from interest rate liberalization lead to economic growth? Using cointegration and error-correction models, the study finds strong support for the positive impact of interest rate liberalization on financial deepening in Kenya - although the strength and clarity of its efficacy is sensitive to the level of the dependency ratio. The study also finds financial depth to Granger cause economic growth in Kenya. The study, therefore, concludes that the interest rate liberalization in Kenya has succeeded in increasing economic growth through its influence on financial depth. This applies irrespective of whether the models are estimated in a static long-run formulation (cointegration model) or in the dynamic formulation (error-correction model). [ABSTRACT FROM AUTHOR]