Regulation of Financial Institutions

Topics: Bank, Economics, Bank run, Regulation, Financial services / Pages: 48 (11784 words) / Published: Apr 1st, 2013
CHAPTER ONE
1.0 Introduction This chapter contains the background of the study, statement of the problem, purpose of the study, objective of the study, research questions, and significance of the study, limitations and the scope of the study. 1.1 Background Information The Ministry of Finance derives its mandate from the Constitution of Kenya, Cap VII Sections 99-103 which provides for proper budgetary and expenditure management of government financial resources. In addition, Parliament, over the years has enacted 49 Acts to which the Ministry of Finance is a custodian thereby adding more responsibilities to the Ministry.
The functions of the Ministry of Finance are strategic in several ways. As a main function, the Ministry is charged with the responsibility of formulating financial and economic policies. It is also responsible for developing and maintaining sound fiscal and monetary policies that facilitate socio-economic development. This responsibility makes the Ministry strategic and central to the country 's economic management, as all sectors of the economy look upon the Ministry to create an enabling environment in which they can operate effectively and efficiently. The Ministry regulates the financial sector which is central to the development of the country and on which all other sectors depend for investment resources.
Another strategic responsibility of the Ministry is the management of revenues, expenditures and borrowing by the government. The Ministry must ensure that it mobilizes adequate resources to support government programs and activities. Consequently, the Ministry has the task of developing sound fiscal policies that ensure sustainable budget deficits. In addition the Ministry must ensure that government expenditure is within the revenue collected to reduce domestic borrowing, which tends to cause negative ripples in economic management. The Ministry is also strategic as far as bilateral and multilateral development financing and



References: 1. Mugenda O and Mugenda, A., (2003) Research methods, “quantitative and qualitative approaches” Act Press, Nairobi, Kenya. 2 3. Howells, P. and Bain, k., (2007) Financial Markets and Institutions, 5th Ed, Prentice Hall, Pearson Education Limited 2007, London, Great Britain. 4. Bodie, Z., Merton, C.R., Cleeton, L.D., (2009) Financial Economics, 2nd Ed, Pearson Education International Inc, Upper Saddle River, New Jersey, US. 5. Mutuku, N., (2009) ‘Financial Sector Regulation: The Way Forward’, Presentation in Institute of Investment Professionals East Africa Seminar. 7. Musau, M., (November 2011) The Story of a Falling Shilling, Management, written by Kenya Institute of Management, Nairobi, Kenya. 8. Banking Survey Kenya (2008) 9 10. Stephen, G. and Ceahetti, (2008) Money, Banking and Financial markets, 2nd Ed, McGraw- Hill International Education, Brandeis University. 13. Hussein, M.W., ‘It’s Time For Tighter Regulation of Kenya’s Financial Industry’ (2011) Nairobi Law Monthly 14 P.O Box 112, 00614 Wangige, Kabete.

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