Knowledge based system for valuation of government securities

Abstract

The task addressed in this study is how to use a Knowledge Based System to determine the most appropriate rate of discounting government securities, a task undertaken by the Central Bank of Kenya on behalf of the Government of Kenya. The arm is to facilitate an easier decision-making process on the impact of any chosen rate on the economy without heavily relying on experts. The knowledae Based S stem is to acquire the desired knowledge from experts and infer when the need arises. The Treasury Valuation System is an integrated system that has an RDBMS to analyse the market response and a Knowledge Based System to give guided decision on the impact of government securities based on the rates obtained from the RDBMS in relation to other economic variables as desired. The knowledge base will bring in a new dimension, whereby expert knowledge, a domain of security experts wh ieh is still Iimitcd in our environment becomes a first line analytical tool for novice and sundry. The resu Its implied that playing around with interest rates, the management of the economy can be guided appropriately from available data till a desired trend is attained. Further KBS will revolutionise the grey areas of financial management with decision making being extended to non-experts of the domains.