Why interest rate caps impair the social contract of banking

NAIROBI, KENYA: Global banking, both as a profession and as an ecosystem, changed materially post-2008 financial crisis leading up to the global economic travesty of 2009 and 2010. However, given the transmission channels of the crisis to emerging markets, particularly sub-Saharan Africa ("SSA") were largely muted, SSA charted a path unfettered by the events of Wall Street on that fateful day of September 15, 2008 when Lehman filed for bankruptcy. Despite this insulation, SSA, and particularly Kenya banking has navigated unchartered territories, more globally speaking, in the recent months

I left my office cubicle at the former Lehman building September of last year, into the global financial services conference in New York, taking a break from the typical 90hour work week. This was meant to be another afternoon meeting with fellow bankers from across the street for an afternoon downtime, before getting back to office. The content of this conference oscillated around the post-financial crisis pivot, from 10 years back, where the overarching debate was whether banks had learned their lessons, given an observed rally on risk in 2016. This conference was about technical stuff, but I came out it with a simple, almost trite, revelation that has since changed my philosophy of banking and financial markets: That without taking risks banks have no real purpose to the society.