Does a Bigger Commercial Banking Sector Benefit the Poor_ A Minor Field Study in Kenya
(2012) In Minor Field Study Series NEKM01 20121Department of Economics
- Abstract
- Recent evidence suggests that there are serious information asymmetries in the Kenyan
financial market. Between 2006 and 2009, the formal and semi-formal financial sectors in
Kenya increased a lot. In contrast to what classic economic theories would predict, the
informal financial sector experienced a minor increase. This thesis, through interviews in a
minor field study, suggests that the informal financial institutions in Kenya have some
important advantages compared to the formal ones. Informal lending seems to be operating
within informal institutions that serve as enforcement mechanisms of informal agreements.
Third party enforcement represented by the police or auctioneers is available to informal
lending, which, it may be... (More) - Recent evidence suggests that there are serious information asymmetries in the Kenyan
financial market. Between 2006 and 2009, the formal and semi-formal financial sectors in
Kenya increased a lot. In contrast to what classic economic theories would predict, the
informal financial sector experienced a minor increase. This thesis, through interviews in a
minor field study, suggests that the informal financial institutions in Kenya have some
important advantages compared to the formal ones. Informal lending seems to be operating
within informal institutions that serve as enforcement mechanisms of informal agreements.
Third party enforcement represented by the police or auctioneers is available to informal
lending, which, it may be argued, partly explains the seemingly high repayment ratios in the
informal financial sector. Many of the interviewed preferred the informal financial sector
because it offers more flexibility in the repayment period of a loan and because the costs of
financial services provided by banks were more unpredictable than the informal alternatives. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/2367769
- author
- Fromell, Hanna LU
- supervisor
-
- Andreas Bergh LU
- Therese Nilsson LU
- organization
- course
- NEKM01 20121
- year
- 2012
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- imperfect information, loans, institutions, informal, enforcement, Kenya
- publication/series
- Minor Field Study Series
- report number
- 216
- ISSN
- 0283-1589
- language
- English
- id
- 2367769
- date added to LUP
- 2012-03-02 09:17:54
- date last changed
- 2012-03-02 09:17:54
@misc{2367769, abstract = {{Recent evidence suggests that there are serious information asymmetries in the Kenyan financial market. Between 2006 and 2009, the formal and semi-formal financial sectors in Kenya increased a lot. In contrast to what classic economic theories would predict, the informal financial sector experienced a minor increase. This thesis, through interviews in a minor field study, suggests that the informal financial institutions in Kenya have some important advantages compared to the formal ones. Informal lending seems to be operating within informal institutions that serve as enforcement mechanisms of informal agreements. Third party enforcement represented by the police or auctioneers is available to informal lending, which, it may be argued, partly explains the seemingly high repayment ratios in the informal financial sector. Many of the interviewed preferred the informal financial sector because it offers more flexibility in the repayment period of a loan and because the costs of financial services provided by banks were more unpredictable than the informal alternatives.}}, author = {{Fromell, Hanna}}, issn = {{0283-1589}}, language = {{eng}}, note = {{Student Paper}}, series = {{Minor Field Study Series}}, title = {{Does a Bigger Commercial Banking Sector Benefit the Poor_ A Minor Field Study in Kenya}}, year = {{2012}}, }