scholarly journals Impact of Monetary Policy (Interest Rate) Regimes on the Performance of the Banking Sector in Nigeria

2017 ◽  
Vol 08 (04) ◽  
pp. 16-32
Author(s):  
Ndubuaku Victor C ◽  
Ifeanyi Ozioma. ◽  
Nze Chiaka, ◽  
Onyemere Samuel
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Banking Sector ◽  
Policy Interest

scholarly journals The Impacts of Government Spending and Monetary Policy Rate in Indonesia

2021 ◽  
Vol 6 (6) ◽  
pp. 183-187
Author(s):  
Yuniarto Hadiwibowo ◽  
Akhmad Priharjanto
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Money Demand ◽  
Government Spending ◽  
Banking Sector ◽  
Correction Model ◽  
Money Balance ◽  
Vector Error Correction ◽  
Vector Error ◽  
Policy Interest

This study reviews the impacts of government policies on the economy. The period of analysis starts from early banking sector reform until the current Covid-19 pandemic crisis. We apply Vector Error Correction Model based on the theory of money demand and inflation to analyze the relationships among income, inflation, money balance, government spending, and policy interest rate. The impacts of money balance and policy interest rate on income are as predicted by money demand. Financial sector growth and different expectation on inflation affect the efficacy of monetary policy. On the other hand, government spending might not be fully growth-enhancing. The need emerges to classify and distinguish the classes of government spending which increase growth.

Central bank transparency, inflation targeting and monetary policy: a panel data approach

2018 ◽  
Vol 45 (6) ◽  
pp. 1159-1174 ◽  
Author(s):  
Gabriel Caldas Montes ◽  
Cristiane Gea
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Panel Data ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Content Type ◽  
Central Bank Transparency ◽  
Policy Interest

Purpose The evidence concerning the effects of the inflation targeting (IT) regime as well as greater central bank transparency on monetary policy interest rates is not conclusive, and the following questions remain open. What is the effect of adopting IT on both the level and volatility of monetary policy interest rate? Does central bank transparency affect the level of the monetary policy interest rate and its volatility? Are these effects greater in developing countries? The purpose of this paper is to contribute to the literature by answering these questions. Hence, the paper analyzes the effects of IT and central bank transparency on monetary policy. Design/methodology/approach The analysis uses a sample of 48 countries (31 developing) comprising the period between 1998 and 2014. Based on panel data methodology, estimates are made for the full sample, and then for the sample of developing countries. Findings Countries that adopt the IT regime tend to have lower levels of monetary policy interest rates, as well as lower interest rate volatility. The effect of adopting IT on both the level and volatility of the basic interest rate is smaller in developing countries. Besides, countries with more transparent central banks have lower levels of monetary policy interest rates, as well as lower interest rate volatility. In turn, the effect of central bank transparency on both the level and volatility of the basic interest rate is greater in developing countries. Practical implications The study brings important practical implications regarding the influence of both the IT regime and central bank transparency on monetary policy. Originality/value Studies have sought to analyze whether IT and central bank transparency are effective to control inflation. However, few studies analyze the influence of IT and central bank transparency on interest rates. This study differs from the few existing studies since: the analysis is done not only for the effect of transparency on the level of the monetary policy interest rate, but also on its volatility; the central bank transparency index that is used has never been utilized in this sort of analysis; and the study uses panel data methodology, and compares the results between different samples.

scholarly journals Banking Disintermediation and Its Implication for Monetary Policy: The Case of Indonesia

2005 ◽  
Vol 7 (4) ◽  
Author(s):  
Halim Alamsyah ◽  
Doddy Zulverdi ◽  
Iman Gunadi ◽  
Rendra Z. Idris ◽  
Bambang Pramono
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Asymmetric Information ◽  
Banking Sector ◽  
Rating Agencies

Paper ini berupaya menganalisa implikasi perilaku bank dalam menentukan portofolio terhadap tingkat efektivitas kebijakan moneter. Dengan kerangka analisa comparative static, paper ini mengetengahkan model industri perbankan yang bersifat monopolis dimana pemilik bank memaksimalkan profit dengan kendala tertentu baik yang berasal dari kesanggupan modal maupun kendala akibat regulasi.Kalibrasi model pada kondisi optimal, mengindikasikan bahwa penurunan fungsi disintermediasi bank yang didominasi oleh faktor asymmetric information, akan berakibat pada menurunnya efektifitas kebijakan moneter.Kesimpulan ini berimplikasi pada (i) perlunya Biro Kredit dan rating agencies untuk menyempurnakan informasi, (ii) perlunya investasi yang lebih besar oleh perbankan atas kapasitas riset dan sistem monitoring, (iii) perlunya mempertimbangkan skema garansi kredit, (iv) perlunya koordinasi yang lebih baik antara kebijakan mikro dan makro demi kestabilan makro yang akan meningkatkan keyakinan publik dan terakhir, (v) perlunya mempromosikan perkembangan lembaga keuangan non-bank, untuk mengurangi ketergantungan pembiayaan atas lembaga perbankan.JEL: E52, E58, G21Keyword: Disintermediation, monetary policy, banking sector, interest rate.

Negative interest rates as a monetary policy tool

2020 ◽  
Vol 26 (8) ◽  
pp. 1731-1746
Author(s):  
D.A. Artemenko ◽  
I.I. Bychkova
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Banking Sector ◽  
Developed Countries ◽  
Fund Raising ◽  
Situational Analysis ◽  
Policy Tool ◽  
Negative Interest Rates

Subject. We consider the application of negative interest rates by central banks of various countries, as a monetary policy tool. Objectives. We focus on reviewing the historical retrospect, potential risks, as well as positive and negative aspects of using negative interest rate instruments by developed countries. Methods. The study rests on the logical, systems, functional, and situational analysis, methods of grouping, and the monographic survey. Results. The use of negative interest rates as a monetary policy tool by financial regulators in various countries is a least-evil solution, which is aimed at improving the economy after the global economic crisis of 2008–2010. At present, positive and negative factors of the tools' impact on the financial sphere have been identified. In particular, the advantage is a balance between inflation and deflation, as the latter leads to a reduction in aggregate demand, an increase in unemployment, a fall in asset prices, and a slowdown in economic growth. The banking sector bears the risks of negative margin from operations involving fund-raising. The use of negative interest rates is possible, if other measures aimed at boosting economic growth are applied simultaneously. Conclusions. The findings can be used to investigate the negative interest rate instrument and evaluate its effectiveness. They can be helpful for financial market specialists.

Fisher Effect in Pakistan

1999 ◽  
Vol 38 (2) ◽  
pp. 153-166 ◽  
Author(s):  
Hamid Hasan
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Inflation Rate ◽  
Banking Sector ◽  
Rational Expectation ◽  
Nominal Interest Rate ◽  
Complete Replacement ◽  
Long Run ◽  
Fisher Hypothesis ◽  
Savings Rate

This paper attempts to test the validity of the Fisher Hypothesis (FH) in Pakistan by investigating the long-run relationship between interest rate and inflation rate applying cointegration analysis. The FH has serious implications for debtors and creditors in an inflation prone economy since inflationary expectations influence nominal interest rate. Moreover, the effectiveness of monetary policy and efficiency in banking sector has direct bearing on the long-run relationship between nominal interest rate and expected inflation rate. Inflationary expectation has been modeled using adaptive and rational expectation approaches and sensitivity of the result to expectation formation has been compared. The paper finds the long-run relationship between nominal interest rate and inflation rate and accepts the partial Fisher Hypothesis. This result suggests that interest rate does not fully cover or accurately anticipate inflation, which implies that bank deposits deteriorate over time. The result further implies that monetary policy may not be effective in such a situation and households’ savings rate may suffer a decline. The acceptance of partial Fisher Hypothesis in case of rational expectation suggests that the rate of interest does not reflect all relevant information and real interest rate does not exhibit random walk behaviour, which is indicative of inefficiency in banking sector. The analysis clearly shows the failure of interest rate as a hedge against inflation and as a predictor of inflation. Therefore, the paper recommends innovation and financial engineering for better alternative especially in banking. The paper also recommends the growth and encouragement of equity market vis-à-vis prevalent debt-biased market. Finally, the paper advocates the complete replacement of traditional credit-based banking by more efficient trade-based banking in Pakistan.

scholarly journals Transmission of Monetary Policy through Credit Interest Rates in Turkey: A Microeconomic Perspective

2021 ◽  
Vol 11 (4) ◽  
pp. 122
Author(s):  
Ilyas Siklar
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Short Term ◽  
Dynamic Panel Model ◽  
Panel Model ◽  
Loan Interest Rates ◽  
High Degree ◽  
Transmission Of Monetary Policy ◽  
Policy Interest

This study aims to examine the monetary policy transmission through the credit channel from a microeconomic perspective by using the fixed effect dynamic panel model. It is estimated to what extent policy interest rate changes are transferred to the short-term interest rate depending on the type of loan. Results confirm that there is a high degree of inertia in both the commercial and consumer loan interest rates. In terms of the transmission of monetary policy, changes in policy interest rates are transferred to commercial loan interest rates by 11% and consumer loan interest rates by 15% in the short term. These values reveal that policy interest rate changes are gradually transmitted to market interest rates. Variables representing bank size, leverage, and market power in terms of distinctive characteristics have a limited impact on both commercial and consumer loan interest rates in the analyzing period. However, the market share of a bank has a significant impact on both commercial and consumer loan rates.

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