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FACTORS AFFECTING PRICING OF LOANABLE FUNDS BY COMMERCIAL BANKS IN KENYA JOHN KENNEDY MATTE (B.Com.) D53/7847/2003 A Thesis submitted to the School of Business in partial fulfillment for the Degree

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Factors affecting loanable funds include:

1. Interest Rates: Changes in interest rates can affect the willingness of individuals and businesses to borrow money. When interest rates are high, borrowing becomes more expensive, reducing the demand for loans and decreasing the supply of loanable funds. On the other hand, lower interest rates can make borrowing more attractive, leading to an increase in loan demand and the availability of loanable funds.
2. Inflation: Inflation refers to the general rise in prices of goods and services over time. When inflation is high, lenders may be reluctant to lend money due to the decreasing purchasing power of the money they will eventually receive back. This can lead to a decrease in the supply of loanable funds. Conversely, low inflation can encourage borrowing and increase the supply of loanable funds.
3. Economic Conditions: The overall state of the economy can greatly affect the supply and demand for loanable funds. During times of economic growth, businesses may require funds for investments in expansion, leading to an increased demand for loans and an expansion of the supply of loanable funds. In contrast, during economic downturns or recessions, businesses may cut back on borrowing, resulting in a decrease in both loan demand and the availability of loanable funds.
4. Government Policies: Government policies such as monetary policy and fiscal policy can have a significant impact on loanable funds. Monetary policy, implemented by central banks, influences interest rates and the money supply, which in turn affect the availability and cost of borrowing. Fiscal policy, which involves government spending and taxation, can also influence loanable funds by affecting economic conditions and the overall demand for loans.

Who needs factors affecting loanable funds?

1. Banks and Financial Institutions: They need to understand the factors affecting loanable funds in order to make informed decisions about lending money. This knowledge helps them assess credit risk, set interest rates, and manage their loan portfolios effectively.
2. Individuals and Businesses: They need to be aware of the factors affecting loanable funds to evaluate borrowing opportunities. By understanding these factors, they can make informed decisions about when it is beneficial to take out a loan, considering factors such as interest rates, inflation, and the state of the economy.
3. Policy Makers and Economists: They need to consider the factors affecting loanable funds to formulate appropriate policies for economic growth and stability. By understanding the relationships between interest rates, inflation, and economic conditions, they can implement policies that promote borrowing and investment or adjust policies when necessary to maintain a healthy supply of loanable funds in the economy.

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What is factors affecting loanable funds?

Factors affecting loanable funds include interest rates, inflation, government regulations, economic conditions, and the availability of savings and investments.

Who is required to file factors affecting loanable funds?

Factors affecting loanable funds are not typically filed, but they are considered by financial institutions, policymakers, and economists when analyzing and determining lending rates and conditions.

How to fill out factors affecting loanable funds?

Factors affecting loanable funds are not filled out in a form or document, but they are studied and analyzed using economic data, financial indicators, and research.

What is the purpose of factors affecting loanable funds?

The purpose of studying factors affecting loanable funds is to understand the drivers of lending and borrowing in an economy, and how these factors impact interest rates, investment levels, and economic growth.

What information must be reported on factors affecting loanable funds?

Factors affecting loanable funds do not require specific reporting, but relevant economic data, market trends, interest rate changes, and policy decisions are considered when assessing these factors.