An investigation into the factors hindering the development of commercial paper market in Kenya

Abstract

Commercial paper in Kenya is recent compared with major and developed economies like the USA and European countries. The principal advantage of commercial paper as a source of short-term financing is that it is generally cheaper than a short-term business loan from a commercial bank. Studies have concluded that firms that substituted short-term bank loan with a commercial paper experienced significant interest savings up to 5.85% on average. The study comprised of all firms that met the CMA requirements with a sample of 100 firms being selected. Approval time by CMA and NSE, lack of adequate information and cost of issuance were found to have impacted on the development of commercial papers in Kenya