The Relationship between National payment systems and the Economic growth in Kenya

Abstract

In Kenya today, there has been continuous increase in use of the national payment systems rather than the actual dispensation of cash. All payment systems instruments have resulted to transfer of huge sum of money from one area or person to the other. Efficient payments systems promotes and support regional flows by increasing speed, convenience, reducing cost, lowering payment risks and ensuring a high degree of finality and affects directly the efficiency of the circulation of goods and services and the pace of economic expansion. The study was therefore carried out to establish whether there is any relationship between the national payment system instruments and the economic growth. Specifically the study looked at six payment systems that is being measured by the central bank of Kenya based on their volume, value and some based on the transactions. In total a total of 15 independent variables were looked at. The study used secondary data from the central bank of Kenya and Kenya national bureau of statistic from September 2005 to March 2015. Statistical tools were used to analyze the data and was presented inform of mean, standard deviation, maximum, minimum, median, skewedness, kurtosis and the regression model. The result established that there was a positive relationship at 79% and that the independent variables explain 38% while the rest of the 62% is explained by other factors other than the independent variables