This process allows economic agents to evaluate the risks and prices in the market and align their investment portfolio and investment gestation. The Kenyan case is both interesting as well as a policy strategy. It reflects a case of segmented markets. But the cost of credit and interest rates spread remains high.
The spread is a major challenge in the banking sector because it acts as an impediment to expansion of credit and development of financial intermediation and signals inefficiency in the sector. The challenge for a policymaker is to develop a financial sector that answers to the challenges of the economy.