Financial Development and Economic Growth in Kenya: Evidence from the Asymmetric Autoregressive Distributive Lag

Journal Title: Journal of Economics, Finance and Management Studies - Year 2021, Vol 4, Issue 05

Abstract

Appropriate changes in financial development are largely known to cause growth. Inflation, gross capital formation and government expenditure, believably, succinctly controls the effects and causes long term growth. This paper analyzed this effects for Kenya paying exceptional attention on their asymmetric effects. The most reliable and important results supported that positive asymmetries of financial development increases long run growth unlike the negative with reducing and weak effects. However, in case of financial dynamics and instabilities, economic growth responds negatively with a steep slump to shocks by declining financial development as positive gross capital formation shocks seems to plausibly control such nonlinear dynamics and positively causing growth. Also, sustainable inflation and prudent state expenditure spurs long term growth. Since this growthfinance relationship supports the supply-leading hypothesis, there is need for specific financial development policies which would alongside support sustainable inflation and prudent expenditure if they are to spur real growth. Moreover, the financial risk managers are required to robustly prepare against the negative shocks by finance that have greater degenerating effects than by upturn from the positive shock.

Authors and Affiliations

Consolata Wairimu Nderitu , Duncan O. Hongo

Keywords

Related Articles

Analysis of Financial Literacy and Overconfidence on Investment Decision with Risk Tolerance Mediation and Gender as Moderator (Case Study of Generation Z Investors in Bandung City)

Financial literacy and overconfidence are important investment considerations due to market complexity. This study examines how Financial Literacy, Overconfidence, Risk Tolerance, and Gender affect investment decisions i...

Developing Bancassurance Distribution Channels in Vietnamese Life Insurance Companies

The article provides an overview of Bancassurance, Bancassurance business activities in Asia and Vietnam. Through the method of data collection, analysis, and synthesis, the research team has evaluated the status of Banc...

Knowledge Management: Perspective of Transformational Leadership on Employee Performance

This research is a development of the role of knowledge management, transformational leadership and Employee Engagement on the performance of private employees in the city of Makassar. The number of respondents who contr...

Development of Bancassurance Distribution Channel of Military Insurance Corporation In Commercial Banks In Vietnam

Bancassurance is one of the new distribution channels and is currently a particularly effective insurance distribution channel in the world and in Vietnam. From the general overview of bancassurance, benefits of bancassu...

Fiscal Policy for Inclusive Growth. A Case Study of Myanmar

Following decades of isolation under military rule, Myanmar initiated historic political reforms since 2011, but faces challenges translating liberalization into broad-based advancement. A dynamic stochastic general equi...

Download PDF file
  • EP ID EP695057
  • DOI https://doi.org/10.47191/jefms/v4-i5-18
  • Views 141
  • Downloads 0

How To Cite

Consolata Wairimu Nderitu, Duncan O. Hongo (2021). Financial Development and Economic Growth in Kenya: Evidence from the Asymmetric Autoregressive Distributive Lag. Journal of Economics, Finance and Management Studies, 4(05), -. https://europub.co.uk/articles/-A-695057