The role of financial intermediation in savings mobilization in Kenya

Abstract

Savings mobilisation is quite a complex issue and the factors that enable this process to run is also incricace. These factors tend to differ from one economy to the other and depend too on the stage of economic development an economy finds itself in. In this study, the controversial role of financial intermediation on saving mobilisation is assessed other economic variables that affect savings are addressed in this study. An attempt was made to find out whether there exists a relationship between economic and financial development in Kenya. Various studies reviewed focused on the role financial intermediation play in savlngs process, factors deemed important in this mobilisation as well as literature on the type of relationship that is perceived to exist between economic and financial development The analyzed results showed that financial intermediation, per capita income and foreign capital inflows affect saving's significantly in Kenya. Using 'appropriate albeit simple proxies an explicit link was found to exist between economic and financial development. The influence of financial development on economic development was positive. Policy implications of the study were suggested that were aimed at encouraging and facilitating the economy's monetisation for the benefit of productive savings accumulatlon . Finally the study focuses on areas of further research having put in consideration some of the limitations of the study.