Caroline Mwaniki | Nyeri Technical Training Institute (original) (raw)
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Graduate Institute of International and Development Studies (IHEID), Geneva
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Papers by Caroline Mwaniki
The purpose of this study was to investigate the effects of de-risking on the financial activitie... more The purpose of this study was to investigate the effects of de-risking on the financial activities of Commercial Banks in Kenya. The research questions that guided the study were: What are the factors leading to de-risking in the banking sector in Kenya? What are the effects of de-risking in the banking sector in Kenya? What strategies and policies are directed towards managing de-risking in the banking sector in Kenya? This research was conducted in Nairobi, Kenya and focused on a sample of twenty-one Commercial Banks. The respondents of the research comprised of senior banking officials from each of the Commercial Banks. Descriptive and inferential research designs were utilized. Data was collected by use of a questionnaire and analyzed using Statistical Package for Social Sciences (SPSS). This was conducted by using descriptive analysis and correlation analysis. The related results were presented in tables and reports to facilitate interpretation of data and drawing of conclusions and recommendations. The study established that factors leading to de-risking were mainly anchored on regulatory requirements which dictate the regulations for complying with Anti Money Laundering (AML) and Combating Financing of Terrorist (CFT) activities policies and given standards. The associated compliance costs and hefty AML fines experienced by the correspondent banks globally were also seen to be a major contributing factor to derisking in the banking sector in Kenya. There was a positive relationship between derisking, cross-border payments and financial inclusion but the study concluded an insignificant correlation between de-risking and Trade Finance Services. Banks maintained closely knitted relationships with their correspondent banks to minimize the risk of losing their accounts and credit limits. The study also concluded that harmonizing regulatory requirements with the aim of combating financial crime amongst the various regulators both at a local and global level is instrumental in facilitating compliance and ultimately reducing the pressures of de-risking. The study additionally showed that training and boosting of compliance departments were key strategies adopted by banks to reduce the impact. The study recommends that Banks revamp their Risk departments and training policies to ensure continued regulatory compliance. Further the impact of leveraging on Fintech (Financial Technology) and Regtech (Regulatory Technology) innovations and its effect on de-risking should also be considered for further exploration.
The purpose of this study was to investigate the effects of de-risking on the financial activitie... more The purpose of this study was to investigate the effects of de-risking on the financial activities of Commercial Banks in Kenya. The research questions that guided the study were: What are the factors leading to de-risking in the banking sector in Kenya? What are the effects of de-risking in the banking sector in Kenya? What strategies and policies are directed towards managing de-risking in the banking sector in Kenya? This research was conducted in Nairobi, Kenya and focused on a sample of twenty-one Commercial Banks. The respondents of the research comprised of senior banking officials from each of the Commercial Banks. Descriptive and inferential research designs were utilized. Data was collected by use of a questionnaire and analyzed using Statistical Package for Social Sciences (SPSS). This was conducted by using descriptive analysis and correlation analysis. The related results were presented in tables and reports to facilitate interpretation of data and drawing of conclusions and recommendations. The study established that factors leading to de-risking were mainly anchored on regulatory requirements which dictate the regulations for complying with Anti Money Laundering (AML) and Combating Financing of Terrorist (CFT) activities policies and given standards. The associated compliance costs and hefty AML fines experienced by the correspondent banks globally were also seen to be a major contributing factor to derisking in the banking sector in Kenya. There was a positive relationship between derisking, cross-border payments and financial inclusion but the study concluded an insignificant correlation between de-risking and Trade Finance Services. Banks maintained closely knitted relationships with their correspondent banks to minimize the risk of losing their accounts and credit limits. The study also concluded that harmonizing regulatory requirements with the aim of combating financial crime amongst the various regulators both at a local and global level is instrumental in facilitating compliance and ultimately reducing the pressures of de-risking. The study additionally showed that training and boosting of compliance departments were key strategies adopted by banks to reduce the impact. The study recommends that Banks revamp their Risk departments and training policies to ensure continued regulatory compliance. Further the impact of leveraging on Fintech (Financial Technology) and Regtech (Regulatory Technology) innovations and its effect on de-risking should also be considered for further exploration.