The banking industry is a major driver of economic development for world economies. By offering different types of services, such as facilitating money transfers between countries and ensuring that savers and borrowers are brought together in well-organised structures, the industry determines countries economic development and long-term sustainability. Although critical to world economic stability, the last few decades have seen the industry experience severe financial challenges which have negatively affected economic performance of most countries like Kenya.

Required

a) Give a detailed account of factors that led to the financial crises in this sector. (10 marks)

b) The Kenyan banking industry is considered the most mature, fastest-growing and largest in East Africa, thereby making it the regional financial leader. Discuss factors that can be attributed to this success. (10 marks)