Effects of Institutional Reforms on Financial Sector Development in Selected East Africa Community Member States
Keywords:
Institutional reforms, Financial sector, East Africa community member statesAbstract
Purpose: The purpose of the study was to investigate the effect of institutional reforms on financial sector development in selected East Africa community member states.
Methodology: Secondary panel data were collected from electronic secondary sources such as World Bank, International Monetary Fund, Central Banks, previous surveys, financial reports and regulatory authorities’ data bases in the respective countries for the periods spanning from 1987 to 2016. An exploratory study design involving econometric analytic techniques was used to analyze the data collected. In this study, panel data model was used to analyze panel data and estimate the effects of institutional reforms on financial development in Kenya, Uganda and Tanzania.
Results: The findings indicated that regulatory quality and access to information have a significant effect on financial sector development in Kenya, Uganda and Tanzania. In addition the study found out that corruption had a negative and significant effect on financial sector development in Kenya, Uganda and Tanzania. The study concluded that regulatory quality and access to information are important aspects in financial sector development. However corruption slows down the development of the financial sector. In addition, institutions play a key role in financial sector development.
Unique contribution to theory, practice and policy: In light of the research findings, the study recommends that suitable institutional changes ought to be started so as to enhance transparency and responsibility of open establishments, common administration, upholds strict controls and prudential guide for business exercises.
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