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Markets, not regulator should set loan prices for a thriving banking

The banking sector and CBK's market-based compromise represents the right path forward. If policymakers want to support or subsidise vulnerable borrowers, they should implement other well-designed interventions.

Photo credit: Shutterstock

By  Macharia Kihuro

Development Finance Expert

In recent weeks, a noteworthy debate has emerged in Kenya regarding the most suitable loan pricing model for credit facilities.

In the red corner stands the Central Bank of Kenya (CBK), advocating for a standardised, transparent model anchored on the Central Bank Rate (CBR).

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