that their recovery will be slower. this is why when the downturn of the economic cycle combines with a financial crisis, its costs are magnified. this can be understood and even quantified by using consumption theories, but that we will save for a future opportunity. thank you very much. references blanchard, o. ( 2009 ), “ ( nearly ) nothing to fear but fear itself, ” the economist, january 29th. bloom, n. ( 2009 ), “ the impact of uncertainty shocks, ” econometrica, vol. 77, no. 3, pp. 623 - 685. cooper, r. ( 1999 ), coordination games : complementarities and macroeconomics, cambridge university press. cooper, r. and a. john ( 1988 ), “ coordinating coordination failures in keynesian models, ” quarterly journal of economics, vol. 103, no. 3, pp. 441 - 463. de gregorio, j. ( 2007 ), macroeconomia. teoria y politicas, prentice hall - pearson educacion. if the crisis was caused only by a rise in uncertainty, a rapid recovery could be expected ( bloom, 2009 ), but the argument here is that imbalances exist that may hold back this recovery slowing it down. de gregorio, j. ( 2009 ), “ chile frente a la recesion mundial, ” estudios publicos, vol. 113, summer 2009, pp. 5 - 26. dixit, a. and r. pindyck ( 1994 ), investment under uncertainty, princeton university press. figure 1 countries posting drops in real gdp in the fourth quarter of 2008 ( * ) ( percentage of whole sample ) ( * ) using the annualized quarterly gdp for a sample of 29 developed an emerging economies. source : central bank of chile. figure 2 equilibrium d a y, ey figure 3 multiple equilibria d a b c y, ey figure 4 volatility of s & p 500 ( * ) ( percent ) subprime crisis erupts bear stearns goes bankrupt lehmann, aig, etc. jan. 06 jul. 06 jan. 07 jul. 07 jan. 08 jul. 08 jan. 09 ( * ) corresponds to volatility index vix. source : bloomberg. figure 5 projected world growth ( annual change, percent ) subprime crisis erupts 4. 0 3. 5 2

are segmented, requiring different and more specialized actors in some segments. dtms can be community based or nationwide with different core capital requirements of ksh. 30 million and ksh. 60 million, respectively. ii. agency banking effective 2nd january 2012, dtms were allowed to appoint third parties ( agents ) to offer specified dtm services on their behalf. this followed the successful rollout of agent banking by banks effective may 2010. so far eleven ( 11 ) banks have been granted approval to roll out their agency networks. eight ( 8 ) of these banks have appointed 11, 176 agents, which bis central bankers ’ speeches had executed over 18. 6 million transactions valued at over ksh. 93. 1 billion over the two year period to may 2012. iii. mobile phone financial services there has been tremendous growth in mobile phone financial services in the country. consequently, a number of institutions have initiated various innovations and new products to conveniently serve their customers and reduce the long queues that were previously experienced in banking halls. mobile phone money transfer services have been a phenomenal success and have put the country at the global centre stage of financial inclusion and innovation. in a country like ours with remote corners not served by financial institutions, mobile financial services has provided the answer. more importantly, our banks have easily integrated into their financial services with these technological platforms. the up - scaled level is now to use mobile phones to send money to savings accounts and credit provision through the same channels. this is already taking place with m - kesho type of products in the market. iv. credit information sharing the credit information sharing ( cis ) mechanism for banking institutions has successfully taken root with mandatory sharing of negative information on a monthly basis. all the 43 licensed commercial banks in kenya and institutions under the deposit protection fund board have been submitting negative credit information to the licensed credit reference bureaus ( crbs ) within the required timeframes. the banking act and the central bank of kenya act have now been amended to allow institutions licensed under both the banking act and the microfinance act to share both positive and negative credit information of their customers. this will go a long way in enriching the crbs database for the benefit of the entire banking sector and create objectivity in reporting. credit information sharing allows the market to build information capital for the financial sector in kenya. this will help build credit histories of borrowers and support a change of collateral technology in use currently. development of information capital will remove information as