''The same would also apply to any attempt to impose controls on loan rates, in the erroneous belief that this might encourage more lending. A vast body of
economic literature suggests that when banks cannot price adequately for risk relative to their cost of funds, the impact is likely to be credit rationing rather than further credit extension.
Kenya is unlikely to prove the exception to this well-established economic rule.
The decision by the Bankers Association to extend the tenure of existing loans, rather than pass on the full impact of higher interest rates is a sound response to the reality of higher interest rates, which should blunt its overall impact on real economic activity. But any attempt to put in place curbs on interest rate spreads would risk undoing a lot of Kenya’s recent success with financial inclusion, perhaps permanently.'' - Razia Khan
GOD BLESS YOUR LIFE