The fallacy in proposal to cap interest rates in Kenya's banking industry

Kenya's banking sector is ill. Of that there can be no doubt: not when two respected banks have fallen into administration in the last year or so; not when interest rates have touched 25 per cent; not when there turned out to be more non-performing loans than we had expected; and certainly not when bank directors seem immune to term limits.

The National Assembly has stepped in, with a Bill to cap interest rates. It remains only to ask whether the medicine proposed actually cures the illness.