Asset Portfolios and Credit Rationing: Evidence from Kenya

In: Economica, Band 66, Heft 261, S. 97-117

Abstract

This paper presents a model of the private sector's demand for financial and real assets in Kenya for the period 1973–90. The private sector is assumed to hold its wealth in terms of five assets but is quantity‐rationed in the credit market. The model is estimated as a co‐integrated demand system, based on the almost‐ideal demand system of Deaton and Muellbauer (1980). The model highlights the role of real asset accumulation in offering a hedge against inflation and the role of credit rationing in the composition of wealth.