Despite the Existence of New Banking Developments Particularly on Technology - Accounting Assignment Help

Assignment Task:

Task:

ABSTRACT

Despite the existence of new banking developments particularly on technology stemming from Fintech, mobile banking and digital money, regulations are also a factor to consider in all these developments as they cannot exist in a vacuum. The objective of this study therefore is to establish whether indeed regulations have a part to play in all these developments in the Kenyan banking sector with great focus on their performance.
Various financial ratios will be used to measure financial performance with the population of the study being 40 commercial banks and the period of study being from the year 2010 to 2020. This period being the period where the prudential guidelines, 2013 came into force, when the Banking Act was amended to introduce the interest capping rate on loans and also this same period being the period when these laws were revised.
The research is therefore aimed at analyzing the performance of the banks before the introduction of these changes in the regulations and also after the changes came into being.
The research is also aimed at determining whether the CBK’s requirements on capital adequacy is in any way beneficial to the Kenyan banking system.
Multiple regression will be used to determine the relationship between the dependent and the independent variables.
The study is intended to be beneficial to the Kenyan economy in general and specifically to the regulators, policy makers, the commercial banks, and consumers of these financial services
 

CHAPTER 1
INTRODUCTION
BACKGROUND OF THE STUDY
 

Regulation is the process by which an institution is monitored by an authority established by the government. In the case of a financial entity, regulations are aimed at achieving microeconomic goals through monetary policies. Through Regulations, financial entities are subjected to certain rules and restrictions with an intention of maintaining a country’s financial growth and economic stability. (Eden, 2014).There exists a number of regulations governing the financial sector among them, macroeconomic regulations, allocation regulations, structure controls, prudential controls among many others.
Banks play an important role in a country’s economy (Osano & Gekara,2018). They are deemed to be the most integral component of the financial sector due to their ability to provide a wide range of services to its customers. Among the services include liquidity creation, safe keeping of savings, credit analysis, loans disbursement (Malgit and Kanang, 2019). They are however susceptible to failure, which failure can have a far-reaching consequence in a country’s economy (Kane, 2000) hence it is important for banks to be regulated to enable them avoid failure.
A strong co-relation between profitability and Regulation of Rwandan commercial banks was found to be in existence (Karemera,2013). Finance aims at driving economic activities whilst regulations is meant for stability and financial growth hence creating a potential balance between regulation and Performance of commercial banks (Mwega, 2014). Thus, in his research Mwega found out that regulation played a vital role in the profitability of banks.
Helm and Yarrow (1988) on the other hand argued that in as much as markets fail, this does not necessarily mean that regulation is the only prevention device for such failures. In reaching a well thought out judgement on alternative policy options, a balance between market failure and regulations ought to be established. Regulators on the other hand may fail to maximize on economic welfare due to an aspect of biasness towards a specific group of their preference (Stigler,1971) or the pressure of a certain interest group.
In spite of all the progress and developments made in the banking sector, a consumer’s greatest need is to operate in a system that is simple, reliable, convenient and fast, which objectives cannot be achieved by banks in an unsafe regulatory environment. (Omulele, 2021).
Banks’ regulators have had bank regulations and guidelines go through various revisions so as to respond effectively to the adverse changes in business environment, which if not properly dealt with, may result to financial challenges. (Richard, 2001). Regulations are also necessary to prevent market failure, regulate competitive markets, improve consumer welfare and enhancing market power by addressing the problems relating to information.
A balance between market failures against regulatory failure so as to reach a well thought out judgement regarding alternative policy options is necessary. There are evidences in both developing and well established markets on regulatory failure.
Apart from the various regulations is existence governing commercial banks, there also exists the Basel accord under the Basel committee. The committee oversees regulations and supervision of banks worldwide in order to achieve the financial stability of banks objective (Ndolo, 2014). Though Kenya is not a member of the committee, the Central Bank of Kenya borrows heavily from the committee in exercising its supervisory mandate in the Kenyan banks (Richard, Devinney, Yip, & Johnson, 2009).
Regulations
These are set of rules and policies set forth to govern an entity. In most jurisdictions including Kenya, banks are licensed and regulated by the Central Bank. The Financial Times (n.d.) describe financial regulations as a set of laws that govern a financial institution including its activities.
These regulations are aimed at ensuring orderly markets, licensing of financial services providers enforcement of applicable laws and prosecuting cases of market misconduct, protecting clients and investors and furthering the stability of the financial system. There are a number of regulations, but the main regulations include The Banking Act Chapter 488 Laws of Kenya, The Central Bank of Kenya Act, Chapter 491 Laws of Kenya and the Prudential Guidelines of 2013
The Central bank of Kenya is the Kenya’s banking sector sole regulator, and it is responsible for all the prudential supervision and consumer protection generally. T
Besides the CBK, there are international bodies which in conjunction with the CBK also play a supervisory role in the banking sector of the country. They include the International Monetary Fund, the World Bank, the Financial Stability Board, the Basel committee on Banking supervision, the international organization of securities Commission and the Financial Action Task Force Commission. The CBK tends to collaborate with these international entities to implement domestic regulatory regimes that are commensurate with international standards (Omulele,2021).
 

The above Accounting  Assignment has been solved by our  Accounting  Assignment  Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire considered worthy of the highest distinction.