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Macroeconomic determinants of carbon emissions in Kenya: an ARDL approach

Mon, 01 Jan 2018 00:00:00 GMT

Title: Macroeconomic determinants of carbon emissions in Kenya: an ARDL approach Authors: Kongo, Yabesh Ombwori Abstract: Environmentally sustainable economic growth portends numerous benefits to developing economies. However, development of energy sources whereas maintaining environmental quality presents diverse challenges. Nevertheless, stakeholders concur on the decisiveness and urgency on adoption of renewable resources and environmentally affable powering of the economy. The primary objective of this study was to examine the macroeconomic determinants of CO2 emissions in Kenya. Specific objectives included determining the effect of economic indicators such as; gross domestic product, population growth and trade openness on carbon emissions in Kenya. The study also analysed the effect of energy mix such as; Energy generated from renewable sources, fossil fuel sources, Alternative and Nuclear Energy sources and Imported Energy on carbon emissions in Kenya. The study spanned from 1970 to 2015, relying on data from Energy Information Administration database and World Bank’s World Development Indicators database. The study utilized the Autoregressive Distributed Lag (ARDL) model to analyse the dynamic interactions and to estimate the long-run and short-run relationships amongst the variables under study from the ECM. The Augmented Dickey Fuller and Philip Perron determined that gross domestic product was stationary at level with the rest of the variables stationary at first difference. The models did not exhibit multicollinearity and normality assumptions which were tested by VIF test and Lomnicki-Jarque-Bera test for normality respectively. The results established that in the long run, changes in population growth (p – value 0.001 < 0.05), gross domestic product (p – value 0.031 < 0.05) and trade openness (p – value 0.001 < 0.05) have significant effect on CO2 emissions. Further, results indicated that except renewable energy (p – value 0.326 > 0.05), fossil fuel (p – value 0.001 < 0.05), alternative and nuclear energy (p – value 0.042 < 0.05), imported energy (p – value 0.012 < 0.05) have significant effect on CO2 emissions in Kenya. In the short run carbon IV oxide, fossil fuels, imported energy, alternative and nuclear energy had coefficients of 0.3600, 0.9907, 0.6753, and 0.0899 all significant at 5% level of significance respectively. Gross domestic product, population growth and trade openness had coefficients of 0.034934, 12.8319 and -0.5133 significant at 5% level of significance. Except for trade openness with a negative coefficient all other variables had positive coefficient hence contribute to increase in carbon emissions. The adjustment coefficients were -0.62482 and -0.40046 significant at 5% level of significance indicating presence of short run adjustments and a long run equilibrium. The study proposes adoption of trade policies restricting high carbon emitting products and more tax incentives to products with less carbon emissions. Adoption of energy sources with low carbon IV emissions such as solar and wind will reduce the use of fossil fuels consequently reducing carbon emissions

Moderating role of institutional quality on public debt sustainability in Kenya

Sun, 01 Jan 2023 00:00:00 GMT

Title: Moderating role of institutional quality on public debt sustainability in Kenya Authors: Kongo, Yabesh Ombwori Abstract: The focus of institutional economics is on the crucial part that institutions play in a nation’s economic performance. With a focus on transaction costs as a crucial element of economic activity, it offers a framework for understanding the interaction of governmental structures, corporate structure, and individual decisions. A mechanism for advancing transparency, accountability, and responsibility in policy decision-making is thought to be better institutional quality. Kenya is one of the Sub-Saharan African nations struggling to meet enormous debt repayment obligations that the World Bank and other bilateral financial institutions have said are unsustainable. Kenya has recently heavily relied on bilateral financial arrangements with the Chinese government to finance important infrastructural projects because it has not been producing enough output to effectively finance its development projects. Kenya’s economic growth and debt management problems are partly related to budgetary components where there has been an unnecessary exaggeration of government consumption components, and government institutions are to blame for such disparities in the budgetary components, which have been empirically confirmed to be growth retarding. The analysis shows that Institutional Quality has a significant positive impact on public debt sustainability, while Current Account Balance does not appear to have a statistically significant effect on it. However, the interaction between Current Account Balance and Institutional Quality has a statistically significant negative effect on public debt sustainability. Based on the findings, policymakers should prioritize improving institutional quality as it plays a vital role in enhancing public debt sustainability. This may involve measures to strengthen governance, transparency, and the rule of law, which could lead to better fiscal management and debt control. Enhancing institutional quality promotes economic growth, reduces government overreliance on foreign debts and thereby acts a moderator in making public debt to be sustainable.

Influence of credit risk on interest rate margins in the midst of capping among commercial banks in Kenya

Fri, 01 Jan 2021 00:00:00 GMT

Title: Influence of credit risk on interest rate margins in the midst of capping among commercial banks in Kenya Authors: Nganga, Maingi James; Agak, Thomas; Siele, Richard Abstract: Interest rate margin is one of the critical component in the lending decision process of commercial banks. Commercial banks are independent business entities that set their own interest rate margin based on the central bank base rates. The aim of this study was to analyze bank specific determinants influencing bank margins interest rates in the midst of capping among commercial banks in Kenya using secondary data for the period 2013 to 2018, a period characterized by unrestricted and restricted interest rate cap. The specific objectives was to analyze the influence of: credit risk, on interest rate margins. The study adopted exploratory research design. Panel data was employed using annual data over the period before interest rate, covering 2013-2015, and after capping of interest rate, covering 2016 to 2018. Thirty-eight commercial banks in Kenya which were in normal operation as at 31st December 2018 were used giving 228 firm observations. Interest rate margins was informed by Dealership Model and its extensions while analyzing the influence of bank specific determinants, that is, credit risk, capital adequacy, operation efficiency and liquidity risk on interest rate margins. Applying STATA 13.0 employing Dynamic Stochastic General Equilibrium modeling, Generalized Method of Moments approach was used in the analysis. Descriptive statistics in form of pie charts, graphs, and summary statistics were presented. Inferential statistics was analyzed using regression analysis to establish the influence of bank specific economic determinants on the interest rate margin. The findings would be useful to policy makers, shareholders, customers in the respective commercial banks in Kenya. The government could also utilize the findings in making policies affecting commercial banks in Kenya which could have an impact on interest rate margin.

Factors influencing technical efficiencies among selected wheat farmers in Uasin Gishu District, Kenya

Fri, 01 Jan 2010 00:00:00 GMT

Title: Factors influencing technical efficiencies among selected wheat farmers in Uasin Gishu District, Kenya Authors: Njeru, James Abstract: This study examined the factors influencing technical efficiency in wheat farming in Kenya using a stochastic frontier production function in which technical inefficiency effects were assumed to be functions of both socioeconomic characteristics of the farmer and farm-specific characteristics. The paper used random sampling to interview 160 farmers comprising 97 large-scale farmers and 63 small-scale farmers. The results revealed existence of significant levels of technical inefficiencies in wheat production, especially among the large-scale farmers. The study found that the magnitude of technical efficiency varied from one farmer to another and ranged from 48.9% to 95.1%, with a mean of 87.2%. This implied that farmers lost close to 13% of the potential output to technical inefficiencies. There was variation depending on the size of farm with small-scale farmers attaining higher technical efficiency than the large-scale farmers. The main factors that influenced the degree of inefficiency were education levels, access to credit, and ownership of the capital equipment. Higher levels of education (12 years and above or secondary and above) significantly reduced inefficiency as did access to credit facilities and owning the farm equipment. The study recommended that farmers be educated on the use of better techniques such as use of certified seeds and application of recommended levels of fertilizer.