The Role of COVID-19 Period Repurchase Agreements in Shaping Liquidity Dynamics in Kenyan Tier 1 Banks
DOI:
https://doi.org/10.53819/81018102t4293Abstract
The outbreak of the COVID-19 pandemic in 2020 had far-reaching repercussions on financial markets worldwide, impacting the liquidity dynamics of commercial banks. In Kenya, this occasioned the Central Bank of Kenya (CBK) to implement measures to cushion its impact on bank liquidity. Among these was an adjustment in the repos's maximum tenor, which was raised from 28 to 91 days. This study sought to establish how Kenyan commercial banks' liquidity was affected by the adjustment in the repos's during the COVID-19 period. The study focused on tier 1 commercial banks. The findings show that COVID period repos tenor significantly influenced the liquidity of commercial banks. These results offer practical insights for regulators and policymakers when confronted with unparalleled uncertainties, such as the COVID-19 pandemic.
Keywords: Repurchase Agreements (Repos), Liquidity Dynamics, COVID-19 Pandemic, Tier 1 Commercial Banks, Central Bank of Kenya (CBK)
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