MONEY REMITTANCE FACTORS AFFECTING THE GROWTH OF FINANCIAL SECTOR IN THE KENYAN ECONOMY
Gichuki Edwin Mugo - PhD Student, Kenya Methodist University, Kenya
Dr. Gillian Mwaniki (PhD) - Lecturer, Kenya Methodist University, Kenya
Dr. Douglas Ogolla (PhD) - Lecturer, Kenya Methodist University, Kenya
ABSTRACT
The general objective of this study was to determine the money remittance factors affecting the growth of financial sector in the Kenyan economy. The specific objectives of this study were: To establish the effect of CBK regulations of money remittance companies on the growth of financial sector in the Kenyan economy, determine the effect of the number of money remittance outlets on the growth of financial sector in the Kenyan economy, find out the effect of volume of transactions for licensed money remittance companies on the growth of financial sector in the Kenyan economy, determine the effect of money laundering on the growth of financial sector in the Kenyan economy and to determine the moderating effect of political stability on the relationship between money remittance factors and the growth of financial sector in the Kenyan economy. The pure Altruism, tempered altruism and the pure self-interest theory informed this study. This study adopted a descriptive research design. The population of this study consisted of all the 14 money remittance companies operating in Nairobi as at 31st June 2016. Both primary and secondary data was used; however, primary data sources was used as the main data collection repository. In order to obtain primary data, a set of semi structured questionnaires were administered to senior management of the money remittance companies. Secondary data were collected from the financial statements of remittance companies. Reliability testing and validity testing was undertaken to ascertain the soundness of the instruments. After tabulating and analyzing data collected, analytical model was estimated to constitute the general analytical model equation as well as the analytical equation for the moderating variable. Various diagnostic tests on the data were conducted, these tests entail: normality Test, multicollinearity test, autocorrelation and homoscedasticity. Also, substantive tests such as regression and correlation analysis were conducted. SPSS software version 21 was used for the process of data analysis and report processing. The coded, tabulated and classified data was subjected to quantitative analysis. Quantitative data was presented in through statistical techniques such as pie charts, tables and bar charts while descriptive data was be presented descriptively. The study found a positive relationship between the CBK regulations and the growth of licensed remittance companies in Kenya and that CBK regulations significantly affected the growth of licensed remittance companies in Kenya. The study also found a positive relationship between the number of money remittance outlets and growth of the licensed money remittance companies in Kenya. The study further established that volume of transactions for licensed money remittance companies didn’t affect the growth of licensed remittance companies in Kenya. The relationship between money laundering and growth of money remittance companies in Kenya was established to be negative. The research recommends that the Central bank of Kenya should maintain control over the standardized practices of these money remittance companies since is MRCs are likely to flourish best when the general legal framework in which it operates is sound, predictable, non-discriminatory and proportionate. Money remittance companies were also recommended to establish anti-money laundering (AML) measures since the risk of detection has become greater for those seeking to use the global banking system to launder criminal proceeds. Further research is suggested on the effect of number of money remittance outlets on the potential impact of emerging technologies on money remittances in Kenya.
