How Interest Rates Changed Under Financial Liberalization

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How Interest Rates Changed Under Financial Liberalization - a Cross-Country Review

Author : Glenn W. Harrison
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis How Interest Rates Changed Under Financial Liberalization - a Cross-Country Review by : Glenn W. Harrison

Download or read book How Interest Rates Changed Under Financial Liberalization - a Cross-Country Review written by Glenn W. Harrison and published by . This book was released on 2017 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial liberalization was expected to make interest rates, and asset prices more volatile, with distributional consequences, such as reduced, or relocated rents, and increased competition in financial services. The author examines available data on money market, and bank interest rates for evidence of whether these things happened. He shows that as more and more countries liberalized, the level and dynamic behavior of developing-country interest rates converged to industrial-country norms. In the short term, volatility increased in both real, and nominal money market interest rates. Treasury bill rates, and bank spreads, evidently the most repressed, showed the greatest increase as liberalization progressed - shifting substantial rents from the public sector, and from favored borrowers. Whereas quoted bank spreads in industrial countries contracted somewhat in the late 1990s, spreads in developing countries remained much higher, presumably reflecting both market power, and the higher risks of lending in the developing world. There was no clear-cut change in mean rates of inflation, monetary depth, or GDP growth. If anything, there was a small average improvement in inflation, but a decline in monetary depth, and economic growth, relative to trends in industrial countries.

How Interest Rates Changed Under Financial Liberalization

Author : Patrick Honohan
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis How Interest Rates Changed Under Financial Liberalization by : Patrick Honohan

Download or read book How Interest Rates Changed Under Financial Liberalization written by Patrick Honohan and published by . This book was released on 2000 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: As financial liberalization progressed, the general level of real interest rates increased more in developing countries than it did in industrial countries. Volatility in wholesale interest rates also jumped, often markedly, in most liberalizing countries. Treasury bill rates and bank spreads showed the greatest increase in developing countries, shifting substantial rents from the public sector and from favored borrowers.

Interest Rate Liberalization

Author : Mr.Bart Turtelboom
Publisher : International Monetary Fund
ISBN 13 : 1451939183
Total Pages : 46 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis Interest Rate Liberalization by : Mr.Bart Turtelboom

Download or read book Interest Rate Liberalization written by Mr.Bart Turtelboom and published by International Monetary Fund. This book was released on 1991-12-01 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper undertakes a survey of theoretical considerations and an analysis of the experience of five African countries with interest rate liberalization. Despite substantial progress in monetary policy reforms, liberalization has only partially affected the level and variability of interest rates. Several factors—macroeconomic instability, oligopolistic financial markets, the absence of developed capital markets, as well as the sequencing of the liberalization programs and the asymmetric availability of information—explain the increase in the spread between lending and deposit rates as well as the rather inflexible pattern of interest rates during the transition to a market-based financial system.

China’s Monetary Policy and Interest Rate Liberalization

Author : Wei Liao
Publisher : International Monetary Fund
ISBN 13 : 1484366298
Total Pages : 24 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis China’s Monetary Policy and Interest Rate Liberalization by : Wei Liao

Download or read book China’s Monetary Policy and Interest Rate Liberalization written by Wei Liao and published by International Monetary Fund. This book was released on 2014-05-01 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: China has been moving to a more market oriented financial system, which has implications for the monetary policy environment. The paper investigates the stability of the money demand function (MDF) in light of progress in financial sector reforms that, for example, have resulted in significant financial innovation (so-called shadow banking) and more liberalized interest rates. The analysis of international experience suggests that rapid development of the financial system often leads to structural shifts in the MDF. For example, financial innovation and liberalization alter the sensitivity of money balances to income and the interest rate. For China, we find that the stable long-run relationship between money demand, output, and interest rates that existed between 2002 and 2008 disappears after 2008. This coincides with the period of rapid financial innovation, especially the growth in off-balance sheet and nonbank financial intermediation. The results suggest that usefulness of M2 as an intermediate monetary target has declined with financial innovation and reform. A result that underscores the importance of moving toward increased reliance on more price-based targets such as interest rates.

Issues in Interest Rate Management and Liberalization

Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 1451925336
Total Pages : 22 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis Issues in Interest Rate Management and Liberalization by : International Monetary Fund

Download or read book Issues in Interest Rate Management and Liberalization written by International Monetary Fund and published by International Monetary Fund. This book was released on 1990-01-01 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the transition strategy from administratively set interest rates to market rates. Despite worldwide trends toward financial liberalization, few monetary authorities are prepared to accept as reasonable any interest rate level that is market-determined. The paper suggests some helpful indicators to assess the adequacy of interest rates. It discusses factors which contribute to a smooth liberalization process. The main conclusion is that interest rate liberalization is not synonymous with laissez-faire policies. It requires, however, the replacement of the administratively set interest rates by indirect monetary management techniques which operate through the market.

Financial Liberalization and Economic Development

Author : Ronald I. McKinnon
Publisher : ICS Press
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Financial Liberalization and Economic Development by : Ronald I. McKinnon

Download or read book Financial Liberalization and Economic Development written by Ronald I. McKinnon and published by ICS Press. This book was released on 1988 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Financial Structural Change, Liberalization and Liquidity Market Integrity in China

Author : Francis Mulenga Muma
Publisher : GRIN Verlag
ISBN 13 : 365624894X
Total Pages : 29 pages
Book Rating : 4.6/5 (562 download)

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Book Synopsis Financial Structural Change, Liberalization and Liquidity Market Integrity in China by : Francis Mulenga Muma

Download or read book Financial Structural Change, Liberalization and Liquidity Market Integrity in China written by Francis Mulenga Muma and published by GRIN Verlag. This book was released on 2012-07-31 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research Paper (undergraduate) from the year 2011 in the subject Economics - Monetary theory and policy, grade: A, Xiamen University (School of Economics), course: Economics, language: English, abstract: Money market refers to an exchange for buying and selling of financial and money market instruments where financial institutions make transactions of short-term financial instruments for short-term financing and liquidity management. China’s money market is mainly made up of interbank funding market and bond repurchase agreement market commonly referred to as repo market.Since the market-oriented economic reform in 1978, China has entered into a stage of financial deregulation and liberalization. With the growth of the national economy and change of national income structure, China’s finance has increased rapidly, which has brought a great deal of changes in the financial structure. In 1978, broad money (M2) balance was near RMB150 billion yuan. By the end of 2001, M2 balance was up to RMB16,000 billion yuan, an increase of over 100 times in the past twenty years, implying a growth rate of 5 percent a year in 20 years. However, with this financial development and deepening, China needs to liberalize the financial market further and let the liquidity conditions reflect the market realities and integrity. Some scholars argue that China’s financial liberalization remains incomplete as the behavior of short-term market-determined interest rates is influenced by regulated rates. This paper argues that to have integrity of the market China should further liberalize its retail interest rates to allow all interest rates to better reflect liquidity conditions and the scarcity of capital. China has taken important steps to liberalize its interest rates. Short-term interbank interest rates were liberalized initially, financial and treasury bond yields were liberalized soon after, followed later by the liberalization of the corporate fixed income market. The creation of the short-term financing bond in 2005 and medium-term financing note in 2008, with unregulated interest rates and liberal issuance criteria, were major advances in the development of the corporate financing market. In 2007, seeking to make interest rates better reflect market conditions and create a more stable benchmark yield curve at longer maturities, the Chinese authorities also launched the Shanghai Interbank Offered Rate (SHIBOR) benchmark rate system.In so doing we hope this will reflect a better and genuine financial Liberalization with integrity of the market that is more aspiring and creates market confidence. Keywords: Financial Liberalization, Integrity of the Market.

Financial Liberalization and the Reconstruction of State-Market Relations

Author : Robert B. Packer
Publisher : Routledge
ISBN 13 : 1351040049
Total Pages : 284 pages
Book Rating : 4.3/5 (51 download)

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Book Synopsis Financial Liberalization and the Reconstruction of State-Market Relations by : Robert B. Packer

Download or read book Financial Liberalization and the Reconstruction of State-Market Relations written by Robert B. Packer and published by Routledge. This book was released on 2018-03-15 with total page 284 pages. Available in PDF, EPUB and Kindle. Book excerpt: The central theme of this study, first published in 1998, is that parametric change has expanded the autonomy of non-state actors, and has reduced the capability of governments to extract involuntary resources from their constituents. This change has profound consequences for world politics. This title will be of interest to students of Finance and Economics.

Financial Liberalization, Credit Market Imperfections and Financial System Stability

Author : Tim Niepel
Publisher : GRIN Verlag
ISBN 13 : 3656972532
Total Pages : 43 pages
Book Rating : 4.6/5 (569 download)

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Book Synopsis Financial Liberalization, Credit Market Imperfections and Financial System Stability by : Tim Niepel

Download or read book Financial Liberalization, Credit Market Imperfections and Financial System Stability written by Tim Niepel and published by GRIN Verlag. This book was released on 2015-06-03 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2013 in the subject Business economics - Investment and Finance, grade: 1,5, Utrecht University (Utrecht School of Economics), language: English, abstract: Financial liberalization stimulates competition and thereby supposedly increases the efficiency of investment. A simple credit market model is developed to show that such efficiency improvements may be disturbed by competition-induced incentives for banks to accept higher default rates, which result in instability of the financial system. Thereby we offer a complementary explanation to the relationship between competition and stability in financial markets. Consequently we argue that government intervention, in the form of intelligent regulation, is necessary to ensure the development of sustainable financial markets.

Financial Liberalization and Its Impact on Interest Rate Determination

Author : Mathinee Subhaswadikul
Publisher :
ISBN 13 :
Total Pages : 244 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Financial Liberalization and Its Impact on Interest Rate Determination by : Mathinee Subhaswadikul

Download or read book Financial Liberalization and Its Impact on Interest Rate Determination written by Mathinee Subhaswadikul and published by . This book was released on 1995 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Money, Interest, and Banking in Economic Development

Author : Maxwell J. Fry
Publisher :
ISBN 13 :
Total Pages : 554 pages
Book Rating : 4.F/5 ( download)

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Book Synopsis Money, Interest, and Banking in Economic Development by : Maxwell J. Fry

Download or read book Money, Interest, and Banking in Economic Development written by Maxwell J. Fry and published by . This book was released on 1988 with total page 554 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Financial Repression is Knocking at the Door, Again

Author : Mr.Etibar Jafarov
Publisher : International Monetary Fund
ISBN 13 : 151351248X
Total Pages : 66 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis Financial Repression is Knocking at the Door, Again by : Mr.Etibar Jafarov

Download or read book Financial Repression is Knocking at the Door, Again written by Mr.Etibar Jafarov and published by International Monetary Fund. This book was released on 2019-09-30 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial repression (legal restrictions on interest rates, credit allocation, capital movements, and other financial operations) was widely used in the past but was largely abandoned in the liberalization wave of the 1990s, as widespread support for interventionist policies gave way to a renewed conception of government as an impartial referee. Financial repression has come back on the agenda with the surge in public debt in the wake of the Global Financial Crisis, and some countries have reintroduced administrative ceilings on interest rates. By distorting market incentives and signals, financial repression induces losses from inefficiency and rent-seeking that are not easily quantified. This study attempts to assess some of these losses by estimating the impact of financial repression on growth using an updated index of interest rate controls covering 90 countries over 45 years. The results suggest that financial repression poses a significant drag on growth, which could amount to 0.4-0.7 percentage points.

Financial Liberalization, Money Demand, and Monetary Policy in Asian Countries

Author : Ms.Wanda Tseng
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 64 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Financial Liberalization, Money Demand, and Monetary Policy in Asian Countries by : Ms.Wanda Tseng

Download or read book Financial Liberalization, Money Demand, and Monetary Policy in Asian Countries written by Ms.Wanda Tseng and published by International Monetary Fund. This book was released on 1991-03-15 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the financial reforms undertaken by nine Asian countries in the 1980s (Indonesia, Korea, Malaysia, Myanmar, Nepal, the Philippines, Singapore, Sri Lanka, and Thailand) and their implications for money demand and monetary policy.

Financial Liberalization and Financial Fragility

Author : Asli Demirgüç-Kunt
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 53 pages
Book Rating : 4./5 ( download)

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Book Synopsis Financial Liberalization and Financial Fragility by : Asli Demirgüç-Kunt

Download or read book Financial Liberalization and Financial Fragility written by Asli Demirgüç-Kunt and published by World Bank Publications. This book was released on 1998-06-01 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: A study of 53 countries during 1980-95 finds that financial liberalization increases the probability of a banking crisis, but less so where the institutional environment is strong. In particular, respect for the rule of law, a low level of corruption, and good contract enforcement are relevant institutional characteristics. the data also show that, after liberalization, financially repressed countries tend to have improved financial development even if they experience a banking crisis. This is not true for financially restrained countries. This paper’s results support a cautious approach to financial liberalization where institutions are weak, even if macroeconomic stabilization has been achieved.

Regulated Deregulation of the Financial System in Korea

Author : Ismail Dalla
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 46 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Regulated Deregulation of the Financial System in Korea by : Ismail Dalla

Download or read book Regulated Deregulation of the Financial System in Korea written by Ismail Dalla and published by World Bank Publications. This book was released on 1995 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: World Bank Discussion Paper No. 292. Examines the anatomy of the Republic of Korea's financial reform policy since 1979 in order to place the nation's financial reform plan of 1993 in a proper context. Financial deregulation in the Republic of Korea, initiated in 1979, coincided with similar programs in South America and East Asia. The reforms were successful in spite of a mild form of financial repression and a deregulation policy that ran an erratic course. The republic moved decisively in 1993 toward a conventional type of financial liberalization by announcing a blueprint of reforms to be implemented over a five-year period ending in 1997. This paper examines the anatomy of the Korean financial reform policy since 1979 in order to place its financial reform plan of 1993 in the proper context. The report presents a conceptual framework of the Korean financial system and policies, examines interest rate reforms on various levels, and discusses changes in the credit allocation system that were undertaken in earlier phases of the reforms. The book goes on to review the rationale of the final financial reform phase, the sequencing of its various elements, and the assessment. Broad conclusions are presented.

Bank Exposure to Interest Rate Risks During Financial Liberalization

Author : Raj Aggarwal
Publisher :
ISBN 13 :
Total Pages : 35 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Bank Exposure to Interest Rate Risks During Financial Liberalization by : Raj Aggarwal

Download or read book Bank Exposure to Interest Rate Risks During Financial Liberalization written by Raj Aggarwal and published by . This book was released on 2006 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study documents the changing impact of long and short term interest rate risks on the equity prices of banks in South Korea during the process of financial liberalization. Consistent with the presence of regulatory constraints, Korean bank equity returns are found to be sensitive to both anticipated and unanticipated changes in interest rates in the first period when banks were largely under government control. However, during our last period of liberalization, Korean bank equity returns were found to have a positive association only with unanticipated short-term interest rates. Consistent with the ability to manage other interest rate risks successfully, in this last liberalization period, Korean bank equity returns had no association with long-term or with anticipated short-term interest rates. In view of the continued interest in banking and financial market liberalization among many Asian, African, and formerly socialist countries including China, these results should be of much banking and policy interest.

Sequencing Financial Sector Reforms

Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 9781557757791
Total Pages : 412 pages
Book Rating : 4.7/5 (577 download)

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Book Synopsis Sequencing Financial Sector Reforms by : International Monetary Fund

Download or read book Sequencing Financial Sector Reforms written by International Monetary Fund and published by International Monetary Fund. This book was released on 1991-03-15 with total page 412 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial sector liberalization can spur economic growth and development, but reforms to liberalize the financial sector can also entail risks if they are not properly designed and implemented. One of the central questions for countries reforming their financial systems is how to sequence the reforms so as to maximize the benefits of liberalization and contain its risks. Edited by R. Barry Johnston and V. Sundararajan of the IMF's Monetary and Exchange Affairs Department, this book attempts to answer this and related questions by drawing lessons from financial sector reforms in selected countries. In particular, the book surveys financial sector reforms in Indonesia, Thailand, and Korea between the mid-1980s and mid-1990s.