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1
Sarkar, Sanjukta, and Rudra Sensarma. "Risk-taking Channel of Monetary Policy: Evidence from Indian Banking." Margin: The Journal of Applied Economic Research 13, no. 1 (2018): 1–20. http://dx.doi.org/10.1177/0973801018800088.
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Some recent articles have studied the link between the central bank’s monetary policy stance and the risk-taking behaviour of banks in the context of advanced economies. Loose monetary policy can encourage banks to reach for yield, which will increase their share of risky assets, and also induce them to use more short-term funding. We empirically examine the existence of this risk-taking channel of monetary policy transmission in India. We find that expansionary monetary policy may increase default risk particularly for foreign banks and new private sector banks. We also find that tightening of monetary policy leads to lower liquidity risk and market risk and the effects are stronger for foreign banks than for other bank groups. In terms of market risk, the effect on foreign banks is weaker in cases of monetary tightening compared to expansion. JEL Classification: G21, G28, G32
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Audu, Nathan. "E-Banking and Monetary Policy in Nigeria." Athens Journal of Τechnology & Engineering 8, no. 3 (2021): 237–58. http://dx.doi.org/10.30958/ajte.8-3-3.
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The goal of this paper is to assess the impact of e-banking, which are distinct from conventional banking systems, on central banks’ monetary policy. E-banking poses a challenge to central banks’ ability to control interest rates and it may also increase endogenous financial instability. The challenge to interest rate control stems from the possibility that e-banking may diminish the financial system’s demand for central bank liability, rendering central banks unable to conduct meaningful open market operations. Increased financial instability could emerge from the increased elasticity of private money production and from the periodic runs out of e-banking into central bank money that generates liquidity crises. Similarly, the future of e-banking is dependent on its growth, regulation and increased technological advancements that would boost the security of the new instrument. It will directly impact the central bank’s control of monetary policy unless it is included in its measurements of monetary aggregates. We therefore recommend that since the impact of e-banking on monetary policy depends solely on how fast it will spread and the extent to which it will substitute for cash, it is vital that Central Bank of Nigeria (CBN) considers taking steps to compensate the resulting decrease in its balance sheet. Also, CBN must have to impose special obligations with the money reserve on the e-banking issuer in case of any large increase in e-banking creativity that will affect the monetary policy at the end. The government must keep the rate of prices stable and with this condition, where e-banking will be equal to other forms of money which maintain by apportion percentage as a reserve ratio to the central bank. Similarly, if e-banking spreads moderately, there will be a decrease in the seigniorage income and thus, the decrease in the balance sheet of CBN will be limited. Hence, it must include e-banking in monetary aggregates that the spread of e-banking may lead to a change in the velocity of money. Keywords: monetary policy, e-banking, technology, velocity of money
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Nguyen, Thanh Nhan, Ngoc Huong Vu, and Ha Thu Le. "Impacts of Monetary Policy on Commercial Banks’ Profits: The Case of Vietnam." Asian Social Science 13, no. 8 (2017): 32. http://dx.doi.org/10.5539/ass.v13n8p32.
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This paper mainly concentrates on examining the impact of monetary policy on commercial banks’ profit in Vietnam by using panel data regression. In our study, the data is collected from 20 commercial banks which were doing business in Vietnam’s banking market, ranging from 2007 to 2014 in annually frequency. Monetary base (MB), discount rate (DIS) and required reserve ratio (RRR) are used as proxies for monetary policy. Profit before tax (PROFIT) is used to represent commercial banks’ performance. The results show that there is a positive relationship between banks’ profits and monetary policies. Among those chosen variables representing SBV’s monetary policy, only MB has a significant positive impact on bank’s profit at the significance level of 10%. On this premise, the study recommends that MB should be one of the variables in the center of being concerned in the SBV’s policies regarding the banking performance and stability.
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Chang, Te-Tsun, and Yiting Li. "BANKING, LIQUIDITY EFFECTS, AND MONETARY POLICY." Macroeconomic Dynamics 22, no. 5 (2017): 1267–97. http://dx.doi.org/10.1017/s1365100516000705.
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We study liquidity effects and monetary policy in a model with fully flexible prices and explicit roles for money and financial intermediation. Banks hold some fractions of deposits and money injections as liquidity buffers. The higher the fraction kept as reserves, the less liquid the money is. Unexpected money injections raise output and lower nominal interest rates if and only if the newly injected money is more liquid than the initial money stocks. If banks hold no liquidity buffers, liquidity effects are eliminated. In an extended model with temporary shocks, we show that failure to withdraw state-contingent money injections does not make the stabilization policy neutral, though the economy may undergo higher short-run fluctuations than otherwise. Under this circumstance, the success of stabilization policy relies on unexpected money injections being more liquid than the initial money stock.
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Hossain, Basharat. "Islamization of Monetary Policy of 27 OIC Muslim Countries in Asia: The Successes, The Barriers and The Future Directions." Global Review of Islamic Economics and Business 7, no. 2 (2020): 091. http://dx.doi.org/10.14421/grieb.2019.072-04.
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The Islamization of banking, monetary policy, and the financial system began in 1975 after the setup of the Islamic development bank (IDB). Firstly, this paper discusses a concise framework of Islamic monetary policy. Then it presents the success and obstacles of the Islamization process of the monetary policy among the 27 OIC member Muslim countries in Asia and provides future directions to enhance the Islamization process. This paper employed secondary data and used the three criteria to measure the Islamization process: 1) Islamization of commercial banking; 2) making Islamic banking guidelines & regulations; 3) innovation and starting the Islamic monetary policy instruments. This paper finds that more than 154 Islamic commercial banks are operating under the Conventional monetary policy in 23 countries with very few Islamic monetary tools. On the contrary, Iran follows full-pledged Islamic monetary policy with 30 Islamic commercial banks. More precisely, in these countries, only 17% of total banks are Islamic bank, whereas 83% are still interest-based banks. Regrettably, two countries (Turkmenistan and Uzbekistan) do not have any tools of Islamic monetary policy. This paper also finds that though 64% of Islamic banks were established during 1970-2000 periods in 27 countries, only 25% of countries prepared Islamic banking regulation at this period. On the other hand, 75% of Islamic banking regulations were made during 2000-2015 periods. Most common Islamic monetary instruments are project-based Sukuk, project-based debt instruments, etc. Finally, this paper recommends six steps to enhance the Islamization process.
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Xiao, Kairong. "Monetary Transmission through Shadow Banks." Review of Financial Studies 33, no. 6 (2019): 2379–420. http://dx.doi.org/10.1093/rfs/hhz112.
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Abstract I find that shadow bank money creation significantly expands during monetary-tightening cycles. This “shadow banking channel” offsets reductions in commercial bank deposits and dampens the impact of monetary policy. Using a structural model of bank competition, I show that the difference in depositor clienteles quantitatively explains banks’ different responses to monetary policy. Facing a more yield-sensitive clientele, shadow banks are more likely to pass through rate hikes to depositors, thereby attracting more deposits when the Federal Reserve raises rates. My results suggest that monetary tightening could unintentionally increase financial fragility by driving deposits into the uninsured shadow banking sector. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
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Ghandour, Ghassan Farouk. "APPLICATION OF TOOLS OF THE MONETARY POLICY ON ISLAMIC BANKS IN MALAYSIA." International Journal of Research -GRANTHAALAYAH 5, no. 4 (2017): 34–42. http://dx.doi.org/10.29121/granthaalayah.v5.i4.2017.1792.
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Monetary policy should be reformulated in a way that is in line with Islamic banking by studying monetary policy tools and their primary and intermediate objectives, which are used for conventional banks to reach final objectives, to know their applicability to Islamic banks, New monetary policy tools that are compatible with the principles of Islamic banking and are capable of achieving two sets of objectives:
 
 The objectives of the final monetary policy determined by the monetary authority and choose to achieve rings of primary and intermediate objectives, and be linked to these tools that arm the monetary authority.
 
 The objectives of Islamic banks, namely to preserve their capital and maximize their profits, by attracting savings and developing them, and investing them in the legally permissible fields in all sectors of agriculture, industry, trade and services, and providing all banking services with an Islamic template.
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Apergis, Nicholas, and Chi Keung Marco Lau. "How deviations from FOMC’s monetary policy decisions from a benchmark monetary policy rule affect bank profitability: evidence from U.S. banks." Journal of Financial Economic Policy 9, no. 4 (2017): 354–71. http://dx.doi.org/10.1108/jfep-02-2017-0008.
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Purpose This paper aims to provide fresh empirical evidence on how Federal Open Market Committee (FOMC) monetary policy decisions from a benchmark monetary policy rule affect the profitability of US banking institutions. Design/methodology/approach It thereby provides a link between the literature on central bank monetary policy implementation through monetary rules and banks’ profitability. It uses a novel data set from 11,894 US banks, spanning the period 1990 to 2013. Findings The empirical findings show that deviations of FOMC monetary policy decisions from a number of benchmark linear and non-linear monetary (Taylor type) rules exert a negative and statistically significant impact on banks’ profitability. Originality/value The results are expected to have substantial implications for the capacity of banking institutions to more readily interpret monetary policy information and accordingly to reshape and hedge their lending behaviour. This would make the monetary policy decision process less noisy and, thus, enhance their capability to attach the correct weight to this information.
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Diamond, Douglas W., and Raghuram G. Rajan. "Money in a Theory of Banking." American Economic Review 96, no. 1 (2006): 30–53. http://dx.doi.org/10.1257/000282806776157759.
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We examine the role of banks in the transmission of monetary policy. In economies where banks use real demand deposits to finance their lending, fluctuations in the timing of production can force banks to scramble for real liquidity, or even fail, which can greatly affect lending and aggregate output. The adverse effect on output can be reduced if banks finance with nominal deposits. Nominal deposits also open a “financial liquidity” channel for monetary policy to affect real activity. The banking system may be better off, however, issuing real deposits (e.g., foreign exchange denominated) under some circumstances.
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Simpasa, Anthony, Boaz Nandwa, and Tiguéné Nabassaga. "Bank lending channel in Zambia: empirical evidence from bank level data." Journal of Economic Studies 42, no. 6 (2015): 1159–74. http://dx.doi.org/10.1108/jes-10-2014-0172.
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Purpose – The purpose of this paper is to explore the effect of monetary policy on the lending behaviour of commercial banks in Zambia using bank-level data. Design/methodology/approach – Dynamic panel data econometric analysis is used to uncover the evidence of monetary transmission mechanism in Zambian banking industry. Other specifications are used as robustness checks. Findings – Contrary to received evidence, the authors find that the bank lending channel in Zambia operates mainly through large banks. The effect of monetary policy on medium-sized banks is moderate while it is virtually non-existent for smaller banks. Furthermore, the data does not show evidence of relationship lending for smaller banks. Originality/value – Overall, the findings of this investigation suggest that price signals, rather than quantity aggregates, matter the most in the transmission of monetary policy in Zambia. The results therefore lend support to the central bank’s recent shift in monetary policy framework from using monetary aggregates to interest rate targeting as a means to strengthen effectiveness of monetary policy.
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Ahmad, Zuriyati, and Abdul Ghafar Ismail. "ALTERNATIVE OF MONETARY POLICY INDICATOR: PANEL DATA ANALYSIS FROM ISLAMIC BANKS IN MALAYSIA." Journal of Islamic Monetary Economics and Finance 4, no. 2 (2019): 279–92. http://dx.doi.org/10.21098/jimf.v4i2.1017.
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The monetary policy indicators such as monetary aggregates, interest rates andMonetary Condition Index (MCI) are the traditional monetary policy indicatorsused in order to obtain early indication of the impact of monetary policy. Theseindicators could function as appropriate monetary policy indicators that will provideinformation to the monetary policy makers. The development in Islamic financialsystem however creates a challenge to find a monetary policy indicator, which is inconformity with Islamic teaching. Therefore, this paper is aimed to examine the futuregrowth of nominal GDP as an alternative variable for monetary policy indicator inIslamic monetary system. The investigation will benefit from data of 17 Islamic banksin Malaysia which implement full fledge or Islamic windows scheme spanning from2005 to 2010. GMM system method is used to analyze the data in hope to validatethe appropriateness of the alternative monetary policy indicator. The result suggeststhat the future growth of nominal GDP is significant as monetary policy indicator andcould be applied by the central bank in implementing the monetary policy especiallyin the dual banking system.Keywords: Monetary Policy; Monetary Policy Indicators; Bank Financing.JEL Classification: E52; E58; C33; G21.
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H. Ibrahim, Mansor. "THE BANK LENDING CHANNEL OF MONETARY POLICY TRANSMISSION IN A DUAL BANKING SYSTEM." Journal of Islamic Monetary Economics and Finance 2, no. 2 (2017): 193–220. http://dx.doi.org/10.21098/jimf.v2i2.656.
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This paper examines the impact of monetary policy on bank lending in a dual banking system, i.e. Malaysia. Making use of an unbalanced panel data set of 38 Islamic and conventional banks covering mostly 2001-2014, we find evidence that variations in monetary policy affect lending growth of Islamic banks and, to some extent, conventional banks. The results further reveal that, in conformity with studies using aggregate Islamic financing data, the Islamic financing growth reacts more strongly to monetary policy changes. Moreover, we find no marked difference between full-fledged Islamic banks and Islamic bank subsidiaries in their responses to monetary policy. While we also document some evidence indicating the significant relations between bank-specific variables and lending growth, the bank-specific variables do not seem to have any role in impacting the potency of the bank lending channel. Finally, we find that lending growth is directly related to economic growth, suggesting procyclicality of bank lending/financing in Malaysia. These results have important implications for effective implementation of monetary policy and further development of Islamic banks in Malaysia. Key words: Bank lending channel, Monetary policy, Dual banking system, Malaysia JEL Classification: E53, G21, C23
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Bidabad, Bijan. "Islamic Monetary Policy and Rastin Swap Bonds." International Journal of Islamic Banking and Finance Research 3, no. 2 (2019): 1–16. http://dx.doi.org/10.46281/ijibfr.v3i2.269.
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Purpose: This paper aims to examine monetary instruments in Islamic central banking framework. As a conclusion, to revive Islamic monetary policy, we should provide some public equity-based instrument as a necessary replacement for conventional bonds and treasury bills to activate non-usury open market operations.
 Design: We define a type of new negotiable bond as: “Rastin Swap Bonds (RSBs)”, which is based on swapping money between two persons for two different periods.
 Findings: RSB is a financial paper that observes the right for the lender to borrow an equal amount to his lending from the borrower. Four types of RSBs in domestic money and foreign currency are defined, and their Sharia allowances and monetary, fiscal, and financial effects are evaluated.
 Research limitations: This bond is a novel design, and it is required to be more elaborated for further practical development and adjustment.
 Practical implications: Islamic central banking is not different from conventional central banking as a whole, but the role of an Islamic central bank in conducting monetary policy is restricted to use interest-free monetary instruments in an environment that commercial banks are obliged to implement non-usury banking operations.
 Social implications: Islamic financial instruments should be usury-free and efficient in applying monetary, fiscal, and financial policies at different levels of the central bank, government and commercial banks and non-banking money and financial institutions. Rastin Swap Bond will serve as an important instrument for resource mobilization and will be a primary vehicle for the development of the Islamic capital market and central banking operations.
 Originality/value: Conventional interest-bearing bonds are not allowed in Islamic central banking. This restriction mostly distinguishes Islamic central banking from the conventional one in implementing monetary policy.
 Article Type: Technical paper
 JEL: G21, G28, H81
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Ayomi, Sri, Eleonora Sofilda, Muhammad Zilal Hamzah, and Ari Mulianta Ginting. "The impact of monetary policy and bank competition on banking industry risk: A default analysis." Banks and Bank Systems 16, no. 1 (2021): 205–15. http://dx.doi.org/10.21511/bbs.16(1).2021.18.
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In the financial system and economy, the banking industry plays a crucial role. Default risk takes central stage in preserving financial stability and needs to be mitigated as it can trigger a crisis. The study examines the combined effects of monetary policy and bank competition on banking defaults. Using a sample of 95 commercial banks in Indonesia between 2009 and 2019, this study employs the Generalized Method of Moments, a two-step dynamic panel-data estimation system, to analyze it. Empirical estimation results show that monetary policy, through an increase in the benchmark interest rate, negatively affects probability of default. The extent of banking stability is also enhanced by monetary policy. Banking competition has a negative and significant effect on probability of default and has a positive effect on the banking distance to default. Furthermore, the combined impact of monetary policy and banking competition positively affects probability of default but has a negative impact on the distance of default. Building on this study, to promote a stable and more efficient banking system, policymakers should develop policies that foster complementary monetary and competition policies.
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Szunke, Aleksandra. "A new paradigm of modern central banking." Journal of Governance and Regulation 2, no. 2 (2013): 75–78. http://dx.doi.org/10.22495/jgr_v2_i2_p6.
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The changes in the modern monetary policy, which took place at the beginning of the twenty-first century, in response to the global financial crisis led to the transformation of the place and the role of central banks. The strategic aim of the central monetary institutions has become preventing financial instability. So far, central banks have defined financial stability as a public good, which took care independently of other monetary purposes (Pyka, 2010). Unconventional monetary policy resulted in changes the global central banking. The aim of the study is to identify a new paradigm of the role and place of the central bank in the financial system and its new responsibilities, aimed at countering financial instability.
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Szunke, Aleksandra. "Changes in monetary policy after the crisis - towards preventing banking sector instability." Corporate Ownership and Control 11, no. 3 (2014): 470–76. http://dx.doi.org/10.22495/cocv11i3conf2p8.
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The instability of the banking sector has become the subject of wider scientific research during the global financial crisis. The financial crisis of the first decade of the twenty-first century began in the U.S. subprime mortgage market and quickly spread to the whole banking sector in the United States as well as in many countries of the global economy. Among five major American investment banks - Lehman Brothers went bankrupt, Bear Stearns and Merrill Lynch were taken over by other banks, and Goldman Sachs and Morgan Stanley were transformed into commercial banks, which were covered by the supervision and regulations of the central bank - the Federal Reserve System. The consequences of the global financial crisis also affected British banks, including The Royal Bank of Scotland, Lloyds Bank, Halifax, Abbey Bank, Barclays Bank and NBC Bank. In Iceland, during the global financial crisis which affected the Icelandic banking sector, three largest banks: Glitnir Bank, Landsbanki and Kauphting were nationalized, which means that the control was taken over by their government. It has caused, that reflections and scientific research on financial stability were replaced by the study of instability in particular in relation to the banking sector. The main aim of the study is to identify the general framework of the response system of central banks on the phenomenon of banking sector instability, in the context of preventing it in a long term. Current - the traditional system proved to be ineffective, because it did not prevent the spread of the factors that led to the destabilization of the banking market
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Chen, Kaiji, Jue Ren, and Tao Zha. "The Nexus of Monetary Policy and Shadow Banking in China." American Economic Review 108, no. 12 (2018): 3891–936. http://dx.doi.org/10.1257/aer.20170133.
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We study how monetary policy in China influences banks’ shadow banking activities. We develop and estimate the endogenously switching monetary policy rule that is based on institutional facts and at the same time tractable in the spirit of Taylor (1993). This development, along with two newly constructed micro banking datasets, enables us to establish the following empirical evidence. Contractionary monetary policy during 2009–2015 caused shadow banking loans to rise rapidly, offsetting the expected decline of traditional bank loans and hampering the effectiveness of monetary policy on total bank credit. We advance a theoretical explanation of our empirical findings. (JEL E32, E52, G21, O16, O23, P24, P34)
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Silalahi, Tumpak, Adler H. Manurung, and Yuli Teguh Hidayat. "THE MARKET STRUCTURE OF THE BANK, ITS PERFORMANCE, AND THE MACROPRUDENTIAL POLICY." Buletin Ekonomi Moneter dan Perbankan 18, no. 1 (2015): 45–60. http://dx.doi.org/10.21098/bemp.v18i1.514.
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Recently, numerous Central Banks implement various macro-prudential policies to complement the existing monetary policy. This paper analyzes the impact of these policies along with the market structure, on the bank’s performance. Using panel data analysis, this paper conclude that the reserve requirement ratio policy negatively affect the bank’s performance (ROA). The empirical test shows the banking industry in Indonesia respond to the increase of reserve requirement by raising the Net Interest Margin to achieve their targeted operating profits. Secondly, this paper fail to find uniform conclusion across model variants about the effect of the policy rate on bank’s performance. This also applies on the Loan to Value policy. Fourth, the market concentration has a more significant effect on banks’ profitability as compared to market power. Fifth, the production index significantly affects the banking profitability. These findings implies a necessity for policy makers to review the financial market structure before formulating effective policy package to promote a healthy competition in the banking industry
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Zhang, Huiyi, Richard Skolnik, Yu Han, and Jinpei Wu. "The Impacts of China's Shadow Banking Credit Creation on the Effectiveness of Monetary Policy." International Journal of Finance & Banking Studies (2147-4486) 9, no. 4 (2020): 33–46. http://dx.doi.org/10.20525/ijfbs.v9i4.899.
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This paper researches the impact that shadow banking in China has upon credit creation and the potential effectiveness of monetary policy. Using a credit creation model, we derive the effect that shadow banking has upon the money multiplier and the money supply. The model shows that shadow banking can change the money multiplier, potentially increasing it during an expansion and decreasing it during a contraction. Introducing shadow banking in a CC-LM model results in a shift of the CC and LM curves resulting in a higher equilibrium output. A vector autoregressive model is used to empirically estimate the impact of shadow banking deposits' growth rate on the growth rates of the broad money supply, GDP, and the CPI. The results show that shadow banking's credit creation function in China has a pro-cyclical characteristic, potentially reducing the money supply's controllability and increasing the difficulty in effectively regulating monetary policy. This paper introduces shadow banking into the currency creation process of traditional commercial banks, accounting for the reserve requirement ratio, the excess reserve ratio, the shadow bank leakage rate, and the reserved deduction rate. Future research can determine whether coordinating monetary policy and leverage ratio regulation mitigates the impact of shadow banking. Another area of research is how the shadow banking of non-financial companies affect monetary policy.
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Drechsler, Itamar, Alexi Savov, and Philipp Schnabl. "The Deposits Channel of Monetary Policy*." Quarterly Journal of Economics 132, no. 4 (2017): 1819–76. http://dx.doi.org/10.1093/qje/qjx019.
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Abstract We present a new channel for the transmission of monetary policy, the deposits channel. We show that when the Fed funds rate rises, banks widen the spreads they charge on deposits, and deposits flow out of the banking system. We present a model where this is due to market power in deposit markets. Consistent with the market power mechanism, deposit spreads increase more and deposits flow out more in concentrated markets. This is true even when we control for lending opportunities by only comparing different branches of the same bank. Since deposits are the main source of liquid assets for households, the deposits channel can explain the observed strong relationship between the liquidity premium and the Fed funds rate. Since deposits are also a uniquely stable funding source for banks, the deposits channel impacts bank lending. When the Fed funds rate rises, banks that raise deposits in concentrated markets contract their lending by more than other banks. Our estimates imply that the deposits channel can account for the entire transmission of monetary policy through bank balance sheets.
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Pietryka, Ilona. "The efficiency of monetary policy instruments of the European Central Bank in liquidity regulating in euro area." Equilibrium 5, no. 2 (2010): 195–208. http://dx.doi.org/10.12775/equil.2010.035.
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Mechanism of forming of liquidity level of national central banks participating in ESCB is clear. It is based on centralized and decentralized operations. The ECB decides on the direction of monetary policy, and the national central banks implement monetary policy taking into account those guidelines as well as the conditions of their country. The aim of the paper is to estimate the efficiency of the EBC monetary policy in regulating the liquidity of the banking system in euro area. The aim was achieved by characterizing the organizational and balance relationship banks of the Eurosystem because of this regulation. Special accent was placed on monetary policy instruments, which are created by national central banks and they form liquidity of the euro area.
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Hoque, Md Ariful, Afzal Ahmad, Mustafa Manir Chowdhury, and Mohammad Shahidullah. "Impact of Monetary Policy on Bank’s Profitability: A Study on Listed Commercial Banks in Bangladesh." International Journal of Accounting & Finance Review 5, no. 2 (2020): 72–79. http://dx.doi.org/10.46281/ijafr.v5i2.796.
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Monetary policy is the policy by which the government of a country control supplies of money in an economy which is announced by the central bank for every six months. Central Bank carries out monetary policy by the banking system of a country. Central Bank uses Bank rate; Cash reserve ratio and open market operation to control the availability of funds in an economy. Within these three instruments, the cash reserve ratio is directly linked to the commercial bank's profitability. Every commercial bank maintains a cash reserve ratio against their demand & time deposits. Being changes in the cash reserve ratio banks profit level may increase or decrease. The prime intention here is to show the impact of monetary policy, especially Cash Reserve Ratio on the commercial bank's profitability. This study covers only listed commercial banks in Bangladesh. As sample researcher purposively selected 15 listed commercial banks that have available information. Results revealed that CRR negatively related to Return On Assets (-0.1133), Return On Equity (-0.0577) as well as Return On Investment (-0.0504). This means the bank's profitability declined due to the increase in cash reserve ratio (CRR). Again regression analysis outlined that the cash reserve ratio negatively impacts on the profitability of studied commercial banks in Bangladesh, which is statistically significant at the 10% level. Researchers proposed that Bangladeshi commercial banks will design their profitability plan by considering monetary policy tools, particularly the Cash reserve ratio.
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Muhammad, Fidlizan, Asmak Ab Rahman, and Ahmad Azam Sulaiman. "The roles of domestic and foreign Islamic banks in Malaysian monetary transmission." International Journal of Islamic and Middle Eastern Finance and Management 7, no. 2 (2014): 161–69. http://dx.doi.org/10.1108/imefm-11-2011-0084.
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Purpose – The aim of this paper is to empirically test the presence of the bank lending channel for the Islamic banking system in Malaysia. Design/methodology/approach – Distributional effects from monetary policy changes were analyzed by three bank characteristics such as size, liquidity and capital. Using the econometric model by Kashyap and Stein (1995), the implementation of a policy contraction leads to reduction in loan supply because some banks may not able to offset a reduction in deposits. The paper explores the response shown between domestic and foreign Islamic banks in Malaysia using bank-level data from 2005 to 2010. Findings – The empirical result indicates presence of the bank lending channel in the Islamic banking system in Malaysia, size and liquidity as sources of difference response of financing supply in domestic bank and capital for foreign Islamic bank and Islamic interbank rate as an efficient tool in conducting monetary policy especially in the Islamic banking system. Originality/value – The paper manages to explore the effectiveness of Islamic the monetary policy tools in the Islamic Banking system in Malaysia. Using Islamic interbank rate as a policy tool, it provides valuable view to policy makers, who are analyzing for efficiency of transmission channel.
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Sergeeva, Elena. "Impact of Inflation on Banks’ Performance." Modern Economics 25, no. 1 (2021): 123–29. http://dx.doi.org/10.31521/modecon.v25(2021)-19.
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Abstract. Introduction. Researchers and banking practitioners pay considerable attention to the analysis of the impact of inflation on the banking sector. The statement of the scientists as to the nature of inflation, corresponding to the modern development of the economic processes, is an approach to the origin of inflation based on the imbalance in money supply and demand. Purpose. During 2014-2017, the political and economic crises in Ukraine led to imbalances in the main macroeconomic proportions, which negatively affected the development of the banking system and, as a result, caused rising of the inflation rate, cash outflow, increasing dollarization and declining purchasing power. Inflation processes had a negative impact on the banks’ performance, namely, the rise in inflation reduced lending and interest income and increased interest expenses, what, therefore, reduced banks’ net interest income. Results. While assessing the impact of inflation on the banks’ performance, it was determined that 2019 was a year of the banks’ performance record. According to the statistics, when the inflation rate fell to record low of 4.05%, BSU’s profit in 2019 reached a historic high: solvent banks received UAH 58.36 billion of net profit, which is 2.7 times higher than the previous year historical record. Thus, the implementation of the NBU’s stimulating monetary policy contributes to the achievement of the projected social and economic goals of the society and is an essential factor in ensuring the stability of the banking system, creating the appropriate basis: price stability and low inflation in the long run. Conclusions. According to the results of the analysis, it is possible to state that in 2020 and in the coming years, due to the qualitative monetary policy of the NBU and a decrease in inflation, there is a reason to expect an increase in net profit of the banking system in Ukraine. This positive trend will renew the banking sector in Ukraine, which will lead to its profitability and efficiency. Keywords: inflation, inflation component, inflation targeting, monetary policy, banks’ performance, lending.
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Świtała, Filip, Iwona Kowalska, and Karolina Malajkat. "Size of Banks as a Factor Which Impacts the Efficiency of the Bank Lending Channel." e-Finanse 16, no. 1 (2020): 36–44. http://dx.doi.org/10.2478/fiqf-2020-0005.
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AbstractIn most economies the banking sector plays the major role in the financial system. Therefore, it is of great importance to analyse and understand the mechanism of transmission of monetary policy and its impact on the banking sector. One of the possible repercussions of changing the level of official interest rates is the ability to influence the size of bank lending, by means of the bank lending channel. The key aspect our research is a thorough understanding of the functioning of the bank lending channel, with the main goal of this study being an examination of the efficiency of monetary policy transmission through the bank lending channel depending on the size of banks in the sector. This paper examines the abovementioned relation using annual data from 1995-2015 by 1709 commercial and cooperative banks from 27 EU countries and analyzing them in various econometric models. The results indicate that there is a positive impact of a bank’s size on loan growth (defined as the bank size increases, the impact of changes in interest rates in the bank’s lending policy is getting smaller), however, interaction between the variables of size and the interest rate, was proved to be insignificant (in the group of all analysed banks, as well as in commercial and cooperative banks separately).
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Vasylchyshyn, Oleksandra. "MAIN DIRECTIONS OF CRYPTOCURRENCY INFLUENCE ON THE MONETARY POLICY AND FINANCIAL SAFETY OF BANKING SYSTEMS." Economic Analysis, no. 27(4) (2017): 152–60. http://dx.doi.org/10.35774/econa2017.04.152.
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Introduction. The article deals with the peculiarities of the development of the market of cryptocurrency. The main directions of the negative influence of the growth of the capitalization of cryptocurrency market on the monetary policy of the central banks and the financial security of the banking systems are outlined. Possible variants of creation of national cryptocurrencies are investigated. The necessity of introduction of the blockchain system into the practice of organizing of currency turnover and functioning of banking systems is substantiated. Purpose. The article aims to study the impact of the expansion of cryptocurrency on the monetary policy of central banks and the financial security of banking systems. It also aims to work out the recommendations for the implementation of perspective, in our opinion, cryptocurrencies into the national banking system. Methods. In this research we have used the general scientific methods of analysis and synthesis (to understand the functional purpose of cryptocurrencies and to determine the directions of their influence on the monetary policy of central banks and financial security of banking systems); economic and statistical methods (to analyse the dynamics of capitalization of cryptocurrencies, to compare the share of cryptocurrency in the money supply of countries the world); systematic approach (to justify the prospects for the creation of national cryptocurrencies and the introduction of blockchain into the practice of the organization of fiat money circulation and the functioning of banking systems). Results. The main directions and consequences of the influence of cryptocurrencies on monetary policy and financial security of banking systems have been determined. The prospects of the introduction of blockchain into the practice of organization of the circulation of fiat money and the functioning of banking systems, as well as the positive aspects of the creation of national cryptocurrencies have been grounded.
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Casares, Miguel, Luca Deidda, and Jose E. Galdon-Sanchez. "LOAN PRODUCTION AND MONETARY POLICY." Macroeconomic Dynamics 23, no. 1 (2017): 101–43. http://dx.doi.org/10.1017/s1365100516001139.
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We examine optimal monetary policy in a New Keynesian model with unemployment and financial frictions where banks produce loans using equity as collateral. Firms and households demand loans to finance externally a fraction of their flows of expenditures. Our findings show amplifying business-cycle effects of a more rigid loan production technology. In the monetary policy analysis, the optimal rule clearly outperforms a Taylor-type rule. The optimized interest-rate response to the external finance premium turns significantly negative when either banking rigidities are high or when financial shocks are the only source of business cycle fluctuations.
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Triner, Gail D. "The Formation of Modern Brazilian Banking, 1906–1930: Opportunities and Constraints Presented by the Public and Private Sectors." Journal of Latin American Studies 28, no. 1 (1996): 49–74. http://dx.doi.org/10.1017/s0022216x00012633.
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AbstractThis article examines the Brazilian banking system from 1906 to 1930, and analyses two potential constraints to dynamic banking: government economic policy and concepts of ownership, as expressed through property rights. It finds that the banking system was quite dynamic in supporting economic change. The problems of, and constraints to, banking development are typically declared, or assumed, to result from the exigencies of government monetary policy. The results of monetary policy for private-sector development emerge as significantly less than existing historiography would suggest. However, concepts and protection of property rights constrained the ability of banks to expand their activities.
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Acharya, Viral V., Tim Eisert, Christian Eufinger, and Christian Hirsch. "Whatever It Takes: The Real Effects of Unconventional Monetary Policy." Review of Financial Studies 32, no. 9 (2019): 3366–411. http://dx.doi.org/10.1093/rfs/hhz005.
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Abstract Launched in Summer 2012, the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) program indirectly recapitalized European banks through its positive impact on periphery sovereign bonds. However, the stability reestablished in the banking sector did not fully translate into economic growth. We document zombie lending by banks that remained weakly capitalized even post-OMT. In turn, firms receiving loans used these funds not to undertake real economic activity, such as employment and investment, but to build cash reserves. Creditworthy firms in industries with a high zombie firm prevalence significantly suffered from this credit misallocation, which further slowed the economic recovery. Received March 21, 2018; editorial decision November 13, 2018 by Editor Philip Strahan. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
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Mirdala, Rajmund. "Interest rate transmission mechanism of monetary policy in the selected EMU candidate countries." Panoeconomicus 56, no. 3 (2009): 359–77. http://dx.doi.org/10.2298/pan0903359m.
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The stable macroeconomic environment, as one of the primary objectives of the Visegrad countries in the 1990s, was partially supported by the exchange rate policy. Fixed exchange rate systems within gradually widen bands (Czech Republic, Slovak Republic) and crawling peg system (Hungary, Poland) were replaced by the managed floating in the Czech Republic (May 1997), Poland (April 2000), Slovak Republic (October 1998) and fixed exchange rate to euro in Hungary (January 2000) with broad band (October 2001). Higher macroeconomic and banking sector stability allowed countries from the Visegrad group to implement the monetary policy strategy based on the interest rate transmission mechanism. Continuous harmonization of the monetary policy framework (with the monetary policy of the ECB) and the increasing sensitivity of the economy agents to the interest rates changes allowed the central banks from the Visegrad countries to implement monetary policy strategy based on the key interest rates determination. In the paper we analyze the impact of the central banks' monetary policy in the Visegrad countries on the selected macroeconomic variables in the period 1999-2008 implementing SVAR (structural vector autoregression) approach. We expect that higher sensitivity of domestic variables to interest rates shocks can be interpreted as a convergence of monetary policies in candidate countries towards the ECB's monetary policy.
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OKUR, Fatih, and Özgür Bayram SOYLU. "EFFECT OF MONETARY POLICY INSTRUMENTS ON SHADOW BANKING." Business & Management Studies: An International Journal 8, no. 3 (2020): 2531–45. http://dx.doi.org/10.15295/bmij.v8i3.1442.
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Shadow banks are financial mediators. There are maturity, credit, and liquidity transformation without access to central bank liquidity and public sector credit guarantees in their performance. The principle purpose of this study is to answer the question of the relationship between shadow banking and monetary policy, all financial activities that require a private or public payment guarantee other than traditional banking. This study analyses the short and long-term effects of national income, policy rate, CPI and money supply (M1) on shadow banking by using Panel ARDL method in selected ten countries throughout 2002-2016. The findings of the analysis point out that there is a short- and significant long-term relationship between the indicators discussed. Short-term PMG estimation results indicate that the long-term equilibrium will be reached over for approximately four years. Also, long-term PMG estimation results also pointed to the existence of a significant relationship between indicators, apart from national income. It is determined that the money supply and policy interest rate had a positive relation and the consumer price index had a negative relation with shadow banking.
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Nguyen, Huu Huan, Minh Vu Ngo, and Thanh Phuc Nguyen. "Market structure, state ownership and monetary policy transmission through bank lending channel: Evidence from Vietnamese commercial banks." Economics and Business Letters 10, no. 3 (2021): 164–77. http://dx.doi.org/10.17811/ebl.10.3.2021.164-177.
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This paper examines the impact of market structure and state ownership on bank lending as a transmission channel for monetary policies. For controlling the effects of bank heterogeneities and macroeconomic factors on bank lending, dynamic models using two-step difference GMM with panel data collected from 25 Vietnamese commercial banks and the Vietnamese banking sector from 1999 to 2017 are employed. Results indicate that a higher level of concentration in the banking market and state ownership dampen the expected impacts of interbank interest rate on the loan growth in commercial banks, which decreases the effectiveness of monetary policy via the bank lending channel. These results are robust regarding the use of alternative measures of market structure and the inclusion of event time variables in the dynamic model. Based on the findings, monetary policy could be implied using the significant moderating impacts of state-ownership as well as the market structure of the Vietnamese banking sector on the relationship between bank loan supply and interbank interest rate.
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Rakviashvili, A. "Modern Banking System as a Source of Cyclic Development of Market Economy." Voprosy Ekonomiki, no. 6 (June 20, 2011): 71–81. http://dx.doi.org/10.32609/0042-8736-2011-6-71-81.
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The article conducts theoretical analysis of the monetary policy costs. On the basis of the authors interpretation of the Austrian theory of business cycle the article shows the destructive influence of the central banks intervention in the financial system on the economy. It also analyzes market agents response to the monetary policy.
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Mikail, Ahmad, and Kenny Devita Indraswari. "The Effect of US Monetary Policy Normalization Toward The Financing Growth of Indonesian Islamic Banking Industry: Short-Term and Long-Term Approaches." AFEBI Islamic Finance and Economic Review 1, no. 01 (2017): 38. http://dx.doi.org/10.47312/aifer.v1i01.20.
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<p>The study identifies the effect of The Fed Fund Rate (FFR) normalization toward the financing growth of Islamic banks as well as toward the industrial credit growth in Indonesia. To acquire better understanding about the effect of the increasing FFR, Vector Error Correction Model is being utilized in order to identify short run and long run effects. The data employed are the quarterly data of total credit in banking industry, total financing in Islamic banking industry, FFR, real GDP growth, real interest rate, exchange rate and Indonesian composite index from 2003 - 2015. To forecast the dynamic effect of the rising FFR towards financing growth in the Islamic banks, Impulse Response Function is being applied. The result from the long run estimation suggests that the Fed’s monetary policy has negative effect toward the Indonesian banking credit growth as well as the Islamic financing growth. Moreover, the estimated coefficient shows that the effect is quite low in the long run for the conventional bank and relatively high for the Islamic banks. From the short run dynamic analysis, the study reveals that the Islamic banks financing growth is mostly determined by FFR where Islamic financing growth affects Indonesian composite index and real interest rate. However, the Impulse Response Function result exhibits that the Fed’s monetary policy normalization will not affect Islamic banks financing in Indonesia.</p><p><br />Keywords: Fed Fund Rate, Financing Growth, Islamic Banking, Indonesia, Monetary Policy</p>
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Anshori, Moch, and M. Alif Shofiyudin. "Peran Kebijakan Moneter Terhadap Kemampuan Perbankan Dalam Penyaluran Pembiayaan." Jurnal Ilmiah Ekonomi Islam 7, no. 1 (2021): 51. http://dx.doi.org/10.29040/jiei.v7i1.1758.
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The purpose of this study is to see the response of Islamic banking in Indonesia from monetary policy. This research uses quantitative methods. The data used are the 2017-2019 financial statements. The results of this study indicate that the bank is not in a financial condition. This, coupled with liquidity in banks, monetary and monetary effects will not affect financing. As for capital, monetary policy changes will affect finances.
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Ayvazli, Ayxan Nizami. "Scientific research on the improvement of commercial banks and application of innovations." Proceedings of the Voronezh State University of Engineering Technologies 81, no. 2 (2019): 280–84. http://dx.doi.org/10.20914/2310-1202-2019-2-280-284.
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It should be borne in mind that the global changes taking place in the world have led to significant innovation changes in financial institutions, one of the main mechanisms in the information economy, and have had a significant impact on the rapid development of the banking sector and the specialization of modern requirements. Proper regulation of market relations has always been a private and public sector. In particular, the study of the globalization processes and the problems that arise as a result of the activities carried out in the banking sector are on the agenda. The elimination of problems in the banking sector and further development and improvement of the service sector will always remain relevant. The new requirements for economic conditions to adapt to the requirements of the modern era come in parallel, respectively. To apply new banking products, strategy and policy based on the bank's marketing service information and materials should be prepared. Bank's strategy and policy should be formulated specifically in the plan for preparation, supply and sale of banking products. Each bank should make decisions on modification of the banking product based on marketing research and develop a long-term business plan for the introduction of new banking services. High level of production relations dynamics, special attention to the formation of commodity-market relations, necessitates the development of a clear tactic and strategy for modern monetary and credit policy and banking business management. Modern analysis and monitoring indicate that the institutional economic problems arising from monetary policy can be resolved either through the level of credit investments, concentration of bank capital, the average interest rate on loans and deposits, the ability to attract resources or many other factors. In the context of new economic relations, modeling based on mathematical statistical methods, and expert opinions should be used in the development of the scenario of banks behavior.
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Tsyhaniuk, Dmytro, and Vita Boychenko. "STRATEGIC MANAGEMENT OF TRANSNATIONAL BANKS IN THE INTERNATIONAL MARKET AFTER THE GLOBAL FINANCIAL CRISIS." Annals of Marketing Management and Economics 4, no. 1 (2018): 131–47. http://dx.doi.org/10.22630/amme.2018.4.1.10.
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The article identifies post-crisis determinants of strategic management of transnational banks in the market of direct investments by means of the correlation analysis of the dependence of growth of external assets of transnational banks of European countries on the indicators of profitability and financial stability of banking systems of the countries of placement of subsidiary banks, the efficiency of the transmission mechanism of monetary policy in these countries, the structure of a complex financial crisis and the speed of post-crisis recovery of the country, ease of doing business. There is no obvious connection between the presence of foreign banks in the banking system and indicators of profitability, ease of doing business and financial stability of banking systems. This is confirmed by the correlation analysis of 45 indicators on the example of 26 European countries for 2009–2011 (the period immediately after the end of the global financial crisis of 2008–2009). It is proved that in the post-crisis period, for transnational banks, the decision of increasing/decreasing the volume of assets in the banking system of the host country is dominated by: 1) the structure of a complex financial crisis; 2) the speed of post-crisis recovery of economies and banking systems of these countries; 3) the effectiveness of the transmission mechanism of monetary policy in these countries
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Judy, Haidar Hamza, and Noufel Smaili . "Governance of Central Banks as an Entry Point to Establish the Credibility of Monetary Policy." Iraqi Administrative Sciences Journal 1, no. 2 (2017): 120–42. http://dx.doi.org/10.33013/iqasj.v1n2y2017.pp120-142.
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Since the recent Global Financial Crisis, Central Banks Have extensive Powers and Objectives include both Monetary Sability and Financial Stability. Which required new arrangements for the Governance of Central Banks and the design of a new Institutional Framework to restrict the use of power by focusing on Independence, Accountability and Transparency. Perception of individuals to risks resulting from shifts in Monetary Policy because of the change in the multiple goals weakens the degree of the effectiveness and acceptance. As the Central Bank is responsible for Monetary Policy management, identify orientations, objectives and choose the appropriate means, it works to ensure the effectiveness of Monetary Policy, and for that warrant provided on the Independence, Accountability, and Respect for the Principles of Transparency, So the application of Banking Governance..
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Montes, Gabriel Caldas, and Gabriel Gonçalves do Vale Monteiro. "Monetary policy, prudential regulation and investment." Journal of Economic Studies 41, no. 6 (2014): 881–906. http://dx.doi.org/10.1108/jes-12-2012-0173.
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Purpose – The purpose of this paper is to analyze the influence of prudential regulation and monetary policies on the supply of credit as well as the influence of such policies on the aggregate investment through the credit channel in Brazil. Design/methodology/approach – The empirical analysis is based on estimates through ordinary least squares (OLS), generalized method of moments (GMM), system of equations through GMM (system-GMM), and impulse response functions through vector autoregressive (VAR). Findings – The results suggest that monetary policies and prudential regulation affect aggregate investment through the bank lending channel. With regards to elasticities, the findings indicate that the credit is very sensitive to variations in economic activity and, in turn, prudential regulation presents a stronger influence on credit than the basic interest rate and the reserve requirement rate. Moreover, the estimates suggest that aggregate investment is more sensitive to entrepreneurs’ expectations and credit supply. Practical implications – Aiming to reduce systemic risk in the economy, capital requirements may be increased in order to induce banks to a lower risk exposure by reducing the supply of loans. However, while this instrument strengthens the banking system, it can also lead the banking system to become less sensitive to monetary policy shocks, and also discourage aggregate demand through the influence that the credit exerts on investments. As a consequence, prudential regulation is an important tool because it acts on the balance between economic growth and low risk exposure of banks. Originality/value – The paper provides useful insights to academicians, economists and policymakers who are interested in understanding the effects of monetary policies and prudential regulation on aggregate investment through the credit channel in an emerging economy under inflation targeting. Moreover, the paper develops a theoretical model in order to show the influence of different monetary policies, as well as the influence of prudential regulation on the supply of credit.
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LUTSIV, Bohdan. "DEFIBRILLATORS OF EXPECTED MINES IN THE DEVELOPMENT OF THE BANKING SYSTEM OF UKRAINE: LESSONS OF THE CRISIS." WORLD OF FINANCE, no. 3(60) (2019): 26–36. http://dx.doi.org/10.35774/sf2019.03.026.
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Introduction. The effective functioning of the banking system determines the stability of the monetary market in the country. Stability and transparency of functioning and effective management are a guarantee of growth of deposits and attractiveness for investors. However, in recent years, the Ukrainian banking system is in a state of recession and does not fulfil the functions assigned to it. This led to the need for a so-called “purge” of the banking system and led to significant losses for both banks and for all the country’s economists. The instability that resulted from the crisis has caused even more distrust from people to banks. The main problems of the banking system of Ukraine in recent years is the curtailment of lending, a significant deterioration in the quality of loan portfolios, the reduction of its own capital and loss-making activity. Purpose. There is an analysis of the current post-crisis situation and expectations of changes in the development of the banking system of Ukraine in accordance with the new monetary policy paradigm. Results. The last economic crisis (2014–2015) is not generated by the banking system itself, but rather by economical quality. The policy of the Government and the monetary policy of the National Bank of Ukraine. Ukrainian banks are heavy and burdened with a large share of unprofitable loans, and the banking system itself is highly concentrated but not sufficiently consolidated. At the beginning of the crisis, the state of the banking sector was characterized by fictitious capitalization of banks, the involvement of the business of its shareholders, the with drawal of regulator refinancing, huge volumes of “garbage” securities in bank portfolios, etc. The National Bank of Ukraine has resorted to a “purge” of the banking system, in which the subjectivity and opacity appeared. The whole burden of reimbursing the costs associated with the withdrawal from the market of bankrupt banks took upon itself the fund for guaranteeing deposits of individuals. The influence of state banks on the general state of banking sector reform and ways to improve corporate governance in state banks is shown. The so-called defibrillators of changes which are expected in the near future in development of the banking system of Ukraine are defined. Conclusions. At present, the banking system of Ukraine demonstrates the following key trends: the end of the “bankruptcy” period; the problem of improvement of loan portfolios and optimization of operations with the bonds of an internal state loan is acute; the need for a substantial reduction of state participation in the banking system.
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Miroshnichenko, O. S., and N. A. Brand. "Banks Financing the Green Economy: A Review of Current Research." Finance: Theory and Practice 25, no. 2 (2021): 76–95. http://dx.doi.org/10.26794/2587-5671-2021-25-2-76-95.
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Achieving the goals of sustainable development and the transition to a green economy requires significant financial resources. Banks are active participants in the financing of projects and industries with a positive environmental and social impact. In this regard, the emerging responsible banking and its regulation are of scientific and practical interest, which ensures the relevance of the study. The aim of the study is to generalize and systematize the results of scientific research on the participation of banks in financing the green economy. In the context of the historical approach, the authors apply the methods of critical analysis, logical generalization, systematization, and grouping. The research is based on scientific publications by Russian and foreign authors. As a result, the authors substantiated the correlation of the concepts “green”,“sustainable”,“responsible” bank, and identified that such green financial instruments as green bonds, in some countries — green loans, green deposits, green leasing, and green insurance are being introduced into banking practices. Responsible banking is regulated using monetary and macroprudential policy instruments; in some countries, incentive-based regulation of responsible banking is mandatory. The authors concluded that responsible banking is moving towards the transformation of classic products and services into environmentally and socially oriented ones, accompanied by the transformation of business processes, management culture, and the content of banking policy. Responsible banking contributes to ensuring financial stability, but the regulator needs to use macroprudential tools to timely identify a green credit bubble, including through climate and environmental stress testing. Prospects for further research are aimed at assessing the impact of green financial instruments on the bank’s performance, the role of responsible banking in achieving sustainable development goals, at finding the most effective monetary and macroprudential tools to stimulate responsible banking and ensure financial stability.
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Rafikov, Ildus. "Monetary Policy for the Real Economic Sector in Muslim Majority Countries: A Transitional Solution." Turkish Journal of Islamic Economics 8, no. 2 (2021): 481–99. http://dx.doi.org/10.26414/a154.
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The paper examines the issue of monetary policy from an Islamic perspective and offers a transitional solution given the existing circumstances in the contemporary Muslim economies, dominated by financial institutions, fiat currencies, and fractional reserve banking. Qualitative research with a “complex systems” perspective is used to determine the state of monetary policy in several Muslim majority countries, to study the issues and challenges, as well as to point out the most problematic areas that need urgent addressing. The paper will argue that central banks are the main institutions that have the power and responsibility to maintain the country’s economic stability and the value of a local currency, as well as to affect the inflation and unemployment rates. It will be argued that in the current circumstances central banks can act within the given system to (1) encourage financing of small and medium enterprises; (2) initiate the growth of small local financial institutions, such as cooperative and savings banks; and (3) allow “monetary democracy.” The paper is therefore divided into three main parts. After the introduction, the first section will provide a historic overview of ideas on monetary policy by several influential Muslim economists over the last forty years and will offer a critique of their views. The second section will deal with the issues of money and banking from a “complex systems” perspective and demonstrate common misconceptions that lead to improper understanding amongst the general public and the academic community. And before concluding, the paper will offer intermediate solutions within the current financial system. This section will argue that central banks can use the power of the banking system to create money to finance SMEs while curbing speculation and limiting the purchase of financial assets.
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Olufemi Adeyeye, Patrick, Bolanle Aminah Azeez, and Olufemi Adewale Aluko. "Determinants of small and medium scale enterprises financing by the banking sector in Nigeria: a macroeconomic perspective." Investment Management and Financial Innovations 13, no. 1 (2016): 170–75. http://dx.doi.org/10.21511/imfi.13(1-1).2016.04.
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This study assesses from a macroeconomic perspective the determinants of small and medium scale enterprises (SMEs) financing by the banking sector in Nigeria between 1992 and 2014. The empirical model specifies commercial banks’ lending to SMEs as a function of selected macroeconomic indicators which include commercial banks’ total deposits, financial deepening, interest rate spread, lending rate, monetary policy rate, commercial banks’ total assets and inflation rate. The 2SLS estimation results show that only commercial banks’ deposit mobilization, depth of the financial sector and size of the banking sector act as determinants of SMEs financing by commercial banks
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Vittenderg, Evgeny Ya. "Problems of Increasing Public Confidence in Russian Banks in the Sociological Dimension (Part 1)." Sociologicheskaja nauka i social naja praktika 8, no. 2 (2020): 69–85. http://dx.doi.org/10.19181/snsp.2020.8.2.7304.
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The empirical basis for writing this article is based on three sociological researches of Institute of Sociology of FCTAS RAS made by order and with financial support from the Central Bank of the Russian Federation (Bank of Russia), National Bureau of credit histories (NBCH) and the Russian Bank of support of small and medium enterprises (SME Bank) in 2013, 2015 and 2019, that is, before the crisis, in the midst of crisis and in the early post-crisis period. All three studies were initiated by the Association of Russian banks (ARB). Considerable attention is paid to the analysis of assessments of the Central Bank’s monetary policy in public opinion at various historical stages and its impact on the level of public confidence in the banking system as a whole. The article analyzes objective and subjective reasons that negatively affect the level of public confidence in banks. Among them, the problems of reducing the living standards of the population, mass revocation of licenses from commercial banks, falling investment attractiveness of storing funds by individuals in banks, etc. are analyzed. In conclusion, the first part of the article provides recommendations based on the results of the study to restore and strengthen public confidence in banks through a more responsible and flexible monetary policy, increase the transparency of the banking community and expand information about its activities, promote financial literacy, systematic sociological monitoring of the population’s attitude to banks and scientific and practical understanding of its results.
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Vittenderg, Evgeniy Ya. "Problems of Increasing Public Confidence in Russian Banks in the Sociological Dimension. Part II." Sociologicheskaja nauka i social naja praktika 8, no. 3 (2020): 63–76. http://dx.doi.org/10.19181/snsp.2020.8.3.7487.
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The empirical basis for writing this article is based on three sociological researches of Institute of Sociology of FCTAS RAS made by order and with financial support from the Central Bank of the Russian Federation (Bank of Russia), National Bureau of credit histories (NBCH) and the Russian Bank of support of small and medium enterprises (SME Bank) in 2013, 2015 and 2019, that is, before the crisis, in the midst of crisis and in the early post-crisis period. All three studies were initiated by the Association of Russian banks (ARB). Considerable attention is paid to the analysis of assessments of the Central Bank’s monetary policy in public opinion at various historical stages and its impact on the level of public confidence in the banking system as a whole. The article analyzes objective and subjective reasons that negatively affect the level of public confidence in banks. Among them, the problems of reducing the living standards of the population, mass revocation of licenses from commercial banks, falling investment attractiveness of storing funds by individuals in banks, etc. are analyzed. In conclusion, the first part of the article provides recommendations based on the results of the study to restore and strengthen public confidence in banks through a more responsible and flexible monetary policy, increase the transparency of the banking community and expand information about its activities, promote financial literacy, systematic sociological monitoring of the population’s attitude to banks and scientific and practical understanding of its results.
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AL-hakim, Nasreen Mohamed, and Akram S. Yousif. "The effect of the efficiency of monetary policy educational tools on the financial soundness of banks A pilot study in the Iraq Stock Exchange (2007-2017)." Academic Journal of Nawroz University 10, no. 2 (2021): 54–75. http://dx.doi.org/10.25007/ajnu.v10n2a1002.
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The aim of the research is to identify the impact of the quantitative tools of monetary policy on the financial soundness of banks, and the research was based on a set of hypotheses, to determine the nature of the effect between independent and dependent variables, and for the purpose of testing research hypotheses, a number of financial ratios according to CAMEL indicators were used to analyze the historical data of banks, the research sample and the component From (7) banks for the period (2007-2017), the quantitative tools of monetary policy were used from the impact published in the Central Bank of Iraq, and a number of statistical methods were used, including time series testing, joint integration test and multiple regression test according to programs.EVIES10 has been reached through the research to a number of conclusions, the most important of which is that the CAMEL classification system is one of the effective supervisory methods for assessing the financial soundness of banks and determining the duration of the strength and durability of their financial positions and the extent of their ability to adapt to any variables related to their activities, as it ensures that the banks are moving in the direction. Correct or reverse, and the weakness of the monetary policy tools applied by the Central Bank of Iraq due to the limited Iraqi market for securities as it is still incomplete conditions as a secondary market that contributes to expanding the circulation of securities, which constitutes a burden on the use of quantitative tools of the Central Bank of Iraq, especially open market operations,As well as the weakness of the legal reserve ratio in the impact on the ability of commercial banks to grant credit, because commercial banks in Iraq enjoy high liquidity due to the high rate of inflation significantly. The research also presented a set of proposals, the most important of which is the activation of the monetary policy tools of the Central Bank of Iraq, which is currently being used to modernize, develop and increase the efficiency of the stock market in Iraq to keep pace with developments in global markets,nd developing the supervisory and supervisory role of the Central Bank of Iraq over Iraqi banks in terms of the extent of their commitment to regulations and laws and activating and activating the banking sector in a way that serves to build a banking infrastructure that keeps pace with the development of international banks. Delinquency and low capital adequacy ratio, thus hedging and beware of any problems that arise in the banking sector. Key words: monetary policy, quantitative tools of monetary policy, financial soundness, the CAMEL model, Iraq Stock Exchange Market.
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Soihet, Elena, and Cesar Murilo Nogueira Cabral. "Insights on monetary policy and public banking in Brazil (2008-2012)." Nova Economia 26, no. 1 (2016): 43–67. http://dx.doi.org/10.1590/0103-6351/1932.
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Abstract: This paper aims to analyze the effect of monetary and banking policy during the subprime crises between 2008 and 2009 and afterwards (2010-2012). The main actions and the monetary policy of the Brazilian Central Bank are also discussed. We found that at the peak of the crisis, the main lever for restoration of the Brazilian economy was related to domestic economic policy measures, particularly the ones implemented by the main state-owned banks: Caixa Econômica Federal, Banco do Brasil and Banco Nacional de Desenvolvimento Econômico e Social. The supporting role of other economic policies and the external economic environment are also discussed here. The findings show that in the period immediately following the crisis, (2010-2012), both credit and monetary policies did not succeed in ensuring sustained economic growth.
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Nikolaychuk, Sergiy, and Roman Pidvysotskyy. "Transformation of Central Banking. Annual Research Conference of the NBU. Key Issues." Visnyk of the National Bank of Ukraine, no. 236 (June 29, 2016): 6–18. http://dx.doi.org/10.26531/vnbu2016.236.006.
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In May 2016, the National Bank of Ukraine (NBU) held its Annual Research Conference of the NBU on Transformation of Central Banking for the first time. Over 300 participants shared in the work of the representative international forum, including experts from central banks and international financial organizations, as well as representatives of the Ukrainian and international academic community. Issues discussed during the conference included the recent development trends of in central bankings, ranging from the monetary policy at low interest rates and under the threat of deflation, financial stability and management of capital flows, and the effect of new financial technologies and cultural features on the transition process in central banks.
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Myskiv, Galina, Nazarii Grygoryshyn, and Olha Levytska-Revutska. "Efficiency of Ukraine’s monetary policy in the context of achieving monetary security." Zeszyty Naukowe Wyższej Szkoły Bankowej w Poznaniu 92, no. 1 (2021): 13–31. http://dx.doi.org/10.5604/01.3001.0014.9150.
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The article explores the effectiveness of monetary policy by identifying its main criteria and analyzing indicators of monetary security. The authors draw conclusions about the state of monetary policy and its impact on Ukraine’s economic security. The analysis indicates that the country’s monetary policy is sufficiently effective to achieve the monetary goals and guarantee economic security. Four groups of monetary threats to economic security were identified, related to monetary policy, banking, investment and institutional environment, which were rated on a scale from 0 to 5 for 2010, 2015 and 2020. At the beginning of 2020 Ukraine’s economic security was mainly threatened by excessive dollarization of the economy and a small share of long-term loans in all total loans granted by banks. The authors argue that effective monetary policy at the present stage should focus on stabilizing, modernizing and restructuring the industry.
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Ferrante, Francesco. "A Model of Endogenous Loan Quality and the Collapse of the Shadow Banking System." American Economic Journal: Macroeconomics 10, no. 4 (2018): 152–201. http://dx.doi.org/10.1257/mac.20160118.
Full textAbstract:
I develop a macroeconomic model in which banks can affect loan quality by exerting costly screening effort. Informational frictions limit the amount of external funds that banks can raise. In this framework, I consider two types of financial intermediation: traditional banking and shadow banking. By pooling different loans, shadow banks achieve a higher endogenous leverage compared to traditional banks, increasing credit availability. However, shadow banks also make the financial sector more fragile because of the lower quality of the loans they finance and because of their exposure to bank runs. In this setting, unconventional monetary policy can reduce macroeconomic instability. (JEL E32, E44, E52, G01, G21, G23, L25)