Question

In 2016, the government of Kenya introduced “Interest rate capping” in Kenya. Discuss this concept and...

In 2016, the government of Kenya introduced “Interest rate capping” in Kenya.

Discuss this concept and the implications it had on various sectors of the economy.

Homework Answers

Answer #1

The bank set a cap which charges 4% interest is equal to the base rate set by the Central Bank Of Kenya.It is intended to reduce the high interest rate for small enterprises and working people.This cap actually reduce the credit to the private sector.It reduce credit availability and increase cost for low income borrowers.This cap makes budgeting easier.

Interest rate capping rises the average loan size.So it reduce the loan accounts reflects lower access to small borrowers and larget loan to the established firms.This capping increases the share of commercial bank holding of government securities and decreases the share of credit to the private sector.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Discuss the concept of interest rate compounding. Why does it matter? 2. Consider an interest...
1. Discuss the concept of interest rate compounding. Why does it matter? 2. Consider an interest rate that is quoted at 8% - what is the equivalent rate if it is compounded a. Daily b. Monthly c. Semi-annually 3. What are the practical implications of the compounding period?
In Kenya the interest rate on a 1 – year loan is 15% and inflation is...
In Kenya the interest rate on a 1 – year loan is 15% and inflation is expected to be 7%.     The expected inflation rate in India is 9%. What should be the interest rate of a 1-year     loan in India.
QUESTION THREE a. The Kenya Government has issued a 20-year bond with a par value of...
QUESTION THREE a. The Kenya Government has issued a 20-year bond with a par value of Ksh 6000 with an annual coupon payment. The return on other bonds of similar risk is currently 12%. The Kenya Government decides to offer a 12% coupon interest rate. REQUIRED What would be a fair price for these bonds? Suppose interest rates rise immediately after treasury issued the bonds to 14%, but this time bond has semi-annual payments. REQUIRED Calculate the price of the...
In the face of the global financial crisis, Kevin Rudd introduced government guarantees on deposits. Discuss...
In the face of the global financial crisis, Kevin Rudd introduced government guarantees on deposits. Discuss covering at least the following two parts: An introduction/summary of the Government Guarantee. The general impact of this policy to the efficient frontier based on the Australian environment. (1 paragraph on each part) (2 + 2 = 4 marks)
Explain the concept of duration and describe how it is used in hedging interest rate futures....
Explain the concept of duration and describe how it is used in hedging interest rate futures.    Be sure to discuss the limitations of duration.
This question asks you to discuss a small open economy under a floating exchange rate regime....
This question asks you to discuss a small open economy under a floating exchange rate regime. What is the definition of a small open economy? What implications does this have for the interest rate? What is the difference between fixed exchange rates and floating exchange rates? In a small open economy with floatingexchange rates, what are the effects of fiscal expansion? What are the effects of monetary expansion? Explain why
This year the government of Bangladesh has introduced a fiscal stimulus package that significantly increases public...
This year the government of Bangladesh has introduced a fiscal stimulus package that significantly increases public expenditure. Because the government has problems borrowing in domestic and international credit markets these days, it asks the Central Bank of Bangladesh to print money and buy government bonds, so that the government will have sufficient money to spend. Assume that the exchange rate is flexible and that the interest parity condition holds. Also, assume that the price level is exogenously determined and the...
Medilab Pharmaceuticals had EBIT of $ 359 million in 2016. In​ addition, Medilab had interest expenses...
Medilab Pharmaceuticals had EBIT of $ 359 million in 2016. In​ addition, Medilab had interest expenses of $ 165 million and a corporate tax rate of 30 %. a. What is​ Medilab's 2016 net​ profit? b. What is the total of​ Medilab's 2016 net profit plus interest​ payments? c. If Medilab had no interest​ expenses, what would its 2016 net profit have​ been? How does it compare to your answer in part b​? d. What is the amount of​ Medilab's...
A government program that allows savers to exempt interest income from taxation until a date in...
A government program that allows savers to exempt interest income from taxation until a date in the future would probably increase private saving. Select one: True False In a closed economy, private saving is the amount of income that households have left after paying their taxes and paying for their consumption. Public saving is the amount of tax revenue that the government has left after paying for its spending. Select one: True False Crowding out occurs when increased government spending...
A) “The highest marginal tax rate for personal income taxpayers in South Africa is at relatively...
A) “The highest marginal tax rate for personal income taxpayers in South Africa is at relatively high levels “Analyse the possible efficiency and equity implications for South Africa of this tax. B) “A market economy and a democratic elected government is the ideal solution for South Africa’s socio-economic problems” Discuss this statement critically with the aid of the economic principles.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT