Relationships Between Financial Inclusion and Financial Stability and Economic Growth—The Opportunity or Threat for Monetary Policy?

2019 ◽  
pp. 261-278 ◽  
Author(s):  
Bożena Frączek
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Financial Stability ◽  
Financial Inclusion

scholarly journals Regular Econometric Model of Taylor for Albania

2016 ◽  
Vol 5 (1) ◽  
pp. 123
Author(s):  
Ergys Misha
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rates ◽  
Financial Stability ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Stock Exchange ◽  
Central Banks ◽  
Financial Assets

The Taylor’s Rule Central Banks is applying widely today from Central Banks for design the monetary policy and for determination of interest rates. The purpose of this paper is to assess monetary policy rule in Albania, in view of an inflation targeting regime. In the first version of the Model, the Taylor’s Rule assumes that base interest rate of the monetary policy varies depending on the change of (1) the inflation rate and (2) economic growth (Output Gap).Through this paper it is proposed changing the objective of the Bank of Albania by adding a new objective, that of "financial stability", along with the “price stability”. This means that it is necessary to reassess the Taylor’s Rule by modifying it with incorporation of indicators of financial stability. In the case of Albania, we consider that there is no regular market of financial assets in the absence of the Stock Exchange. For this reason, we will rely on the credit developmet - as a way to measure the financial cycle in the economy. In this case, the base rate of monetary policy will be changed throught: (1) Targeting Inflation Rate, (2) Nominal Targeting of Economic Growth, and (3) Targeting the Gap of the Ratio Credit/GDP (mitigating the boom cycle, if the gap is positive, and the contractiocycle if the gap is negative).The research data show that, it is necessary that the Bank of Albania should also include in its objective maintaining the financial stability. In this way, the contribution expected from the inclusion of credit gap indicators in Taylor’s Rule, will be higher and sustainable in time.

scholarly journals Assessing the Role of Digital Finance on Shadow Economy and Financial Instability: An Empirical Analysis of Selected South Asian Countries

Mathematics ◽  
2021 ◽  
Vol 9 (23) ◽  
pp. 3018
Author(s):  
Aamir Aijaz Syed ◽  
Farhan Ahmed ◽  
Muhammad Abdul Kamal ◽  
Juan E. Trinidad Segovia
Keyword(s):  
Economic Growth ◽  
South Asian ◽  
Financial Stability ◽  
Shadow Economy ◽  
Emerging Countries ◽  
Financial Inclusion ◽  
Estimation Methods ◽  
Financial Instability ◽  
Systematic Risks

The advancement in fintech technological development in emerging countries has accelerated the role of digital finance in economic development. Digital finance assists in financial inclusion; however, it may also increase the chances of financial instability due to systematic risks. Emerging countries are also in the clutches of shadow economic growth, which reduces taxable income revenue and creates pressure on financial inclusion prospects. The current study attempts to measure the impact of digital finance on the shadow economic growth and financial stability among the selected South Asian emerging countries. We have used the CUP-FM and CUP-BC estimation methods to measure the above relationship on two model frameworks from 2004 to 2018, with the former measuring the influence of digital finance on the shadow economy and the latter examining the relationship between digital finance and financial stability. In addition, the second-generation unit root test, and the Westerlund cointegration analysis are also employed to confirm the stationarity and cointegration among the variables. The result of the Westerlund’s cointegration confirms a long cointegration between the explanatory and outcome variables. Furthermore, the long-run estimation results conclude that an increase in digital finance helps in reducing the growth of the shadow economy among the selected sample countries. However, it also increases the likelihood of systematic risks and increases financial instability. The study also reveals that the control variables like unemployment and industrial productivity also have a significant influence on financial stability and the shadow economy. The findings will assist readers in comprehending how digital finance influences the shadow economy and promotes financial inclusion and stability in emerging nations.

scholarly journals ROLE OF MONETARY POLICY IN FINANCIAL SUPPORT OF ECONOMIC GROWTH OF THE RUSSIAN FEDERATION

2021 ◽  
pp. 5-11
Author(s):  
Elena Ivanovna Vorobyova
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Economic Policy ◽  
Financial Stability ◽  
Historical Analysis ◽  
The State ◽  
Negative Consequences ◽  
Monetary System ◽  
The Government

The monetary policy of the Central Bank of Russia is an integral part of the economic policy of the state, that is, the Bank of Russia, together with the government, determines the main parameters of the monetary system. However, the role of monetary policy in the socio-economic development of the state has not been sufficiently disclosed. The use of methods of monetary regulation can be effective only in combination with sound economic measures implemented by the government. The relevance of this topic lies in the fact that it is necessary to determine what methods of monetary regulation can ensure sustainable economic growth, as well as how monetary policy should be combined with national economic policy. For the purpose of research, various scientific methods and approaches were used, in particular, methods of theoretical analysis, economic and statistical methods, methods of comparison, analogy, historical analysis. As a result of the research, it was found that monetary policy is not consistent with the economic policy of the state. The use of the formed budget funds is not always expedient, which leads to such negative consequences as inflation, excessive polarization of the population’s income, and low rates of GDP development. The studies carried out made it possible to determine the main directions of monetary policy and a set of economic measures that can stop the fall of the national currency (devaluation), ensure financial stability and a gradual growth of GDP.

Central Banking and Financial Inclusion

2021 ◽  
pp. 138-145
Author(s):  
John Rwangombwa
Keyword(s):  
Monetary Policy ◽  
Financial Stability ◽  
Central Banking ◽  
Financial Inclusion ◽  
Financial Risks ◽  
Long Run ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism ◽  
The Relationship

The chapter examines the nexus between financial inclusion and central banking, and how the relationship impacts on conduct of monetary policy. It highlights the progress on financial inclusion in Africa, and how it influences the behaviour of firms and households, which in the long run affect the efficiency of monetary policy transmission mechanism. The financial risks associated with financial inclusion are well noted, including discussion on how the risks may compromise financial stability; suggestions are offered on actions that may be taken to support financial inclusion. The chapter also outlines the measures to be undertaken by financial institutions to further support financial inclusion and the key role of central banks in ensuring financial stability through its regulations, supervision, and licensing.

scholarly journals The Impact of Banking Competition on Economic Growth and Financial Stability: An Empirical Investigation

2021 ◽  
Vol 10 (1) ◽  
pp. 203
Author(s):  
George Abuselidze
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Empirical Investigation ◽  
Banking System ◽  
Economic Sector ◽  
Banking Competition ◽  
Banking Market ◽  
The Impact

The paper examines the level of competition in banking market using different econometric models and analyzes the impact of efficiency of the banking system on the economic growth of the country. The research discusses to ensure banking competition as a function of the Central Bank. Also, the paper includes some recommendations developed to improve banking competition. Our hypothesis is that the existence of high levels of banking competition and low concentration in the banking market balances the speed of money supply in the economic sector. As a result, the Central Bank's monetary policy will be more effective in achieving its core objectives. Therefore, banking competition contributes to the economic growth of the country. In addition, the monetary policy of the Central Bank concentrates on financial stability, which is one of the fundamental factors in the economic development of a country.

scholarly journals CRITICAL ASPECTS OF THE EVALUATION OF MONEY AND CREDIT POLICY BASIC PRINCIPLES OF THE NATIONAL BANK OF UKRAINE

2017 ◽  
pp. 120-133
Author(s):  
Oleksandr Dziubliuk ◽  
Vitalii Rudan
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Financial Stability ◽  
System Analysis ◽  
Policy Instruments ◽  
Scenario Planning ◽  
Credit Policy ◽  
Monetary Regime ◽  
The World ◽  
National Bank

Introduction. The article deals with the problems and drawbacks of the formation of the fundamental principles of money and credit policy. The key elements of money and credit are considered. Among these elements the authors distinguished the goals and instruments of policy implementation, the monetary regime, mechanisms for ensuring price and exchange rate stability. On the basis of the results of critical analysis of the fundamentals of money and credit policy, the authors have worked out their own recommendations to optimize the document itself and the money and credit policy of the National Bank of Ukraine as a whole. Purpose. The research aims to determine the important weaknesses in the formation of the fundamental principles of money and credit policy as an integral strategic document to form the proposals for its optimization on the basis of the necessity to revise the monetary policy of the National Bank of Ukraine in the direction of achieving financial stability and stimulating economic growth. Method (methodology). In the course of the research we have used the methods of system analysis to assess the effectiveness of the fundamental principles of money and credit policy; methods of analogy and comparison to study the money and credit policy instruments of the National Bank of Ukraine and the leading central banks of the world; statistical methods to analyse the dynamics of macroeconomic indicators. Results On the basis of the complex analysis of the fundamental principles of monetary policy, the existence of the National Bank's surface analysis of global trends in the development of the world economy and possible risks for Ukraine has been substantiated. The ineffectiveness of scenario planning of the Ukrainian economy development has been proved. The incomplete account of risks that negatively affect the efficiency of money and credit policy has been considered. Particular attention is paid to analysis of the effectiveness of monetary policy instruments in the context of ensuring price stability and supporting sustainable economic growth. It has been developed a number of methodological recommendations concerning the introduction of transitional monetary regime, optimization of monetary policy instruments, in particular long-term refinancing instruments, improvement of the analysis of external shocks and scenario planning of economic development, grounding of more logical and structured approach to the construction of the fundamental principles of money and credit policy.

scholarly journals PENGARUH INKLUSI KEUANGAN TERHADAP STABILITAS SISTEM KEUANGAN DAN PERTUMBUHAN EKONOMI DI ASEAN

2020 ◽  
Vol 2 (1) ◽  
pp. 161
Author(s):  
Iramayasari Iramayasari ◽  
Melti Roza Adry
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Significant Influence ◽  
Financial Stability ◽  
Financial System ◽  
Financial Inclusion ◽  
System Stability ◽  
Significant Positive Effect ◽  
Bank Branches ◽  
Positive Effect

This study aims to examine the effect of financial inclusion from the amount of ATMs inclusions and the amount of bank branches inclusions on financial stability and economic growth with deposit rates in ASEAN. This study uses panel data from 2004 - 2017 consisting of 6 countries in ASEAN, that are Indonesia, Malaysia, Thailand, Singapore, Philippines and Vietnam. The data processing method uses the Simultaneous Panel. Data is obtained from World Bank publications and FRED Economic Data annually. The results of the study explained that (1) Financial inclusion has a significant influence on financial system stability in ASEAN (2) The amount of inclusion ATMs has a significant effect on financial system stability in ASEAN (3) The amount of bank branches inclusions does not have a significant effect on financial system stability in ASEAN (4) Deposit interest has a significant effect on the stability of the financial system in ASEAN (5) financial inclusion has a significant effect on economic growth in ASEAN (6) The amount of inclusion ATMs has a significant effect but has a negative relationship with economic growth in ASEAN (7) The amount of inclusion bank branches has a significant influence on economic growth in ASEAN (8) Financial system stability on economic growth has a significant positive effect simultaneously on ASEAN (9) Economic growth on financial system stability has a significant positive effect simultaneously on ASEAN.

scholarly journals ВОПРОСЫ ОЗДОРОВЛЕНИЯ БАНКОВСКОГО СЕКТОРА КАЗАХСТАНА

2019 ◽  
pp. 17-20
Author(s):  
Н. А. Гумар ◽  
Г. К. Жанибекова
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Financial Stability ◽  
Stress Testing ◽  
Banking Sector ◽  
Rehabilitation Program ◽  
Wide Range ◽  
National Bank

Monetary policy is affected by a slowdown in economic growth. In the formation of financial stability cannot do without measures to improve the banking sector.Obviously, the accumulation of risks in this area is fraught with the inability of the banking sector to show resilience to external shocks.The banking sector rehabilitation program in Kazakhstan is a wide range of activities, including the assessment of the quality of banks 'assets, so-called stress testing, and support for SLBs from the resources of the National Bank, provided that they are capitalized by second-level banks' shareholders.The main directions of the Program are: increasing the financial stability of the system-forming bank; Increasing financial stability of large STBs and change the regulatory and supervisory environment to improve the financial stability of the banking sector.

scholarly journals Analysis of monetary regulation of the investment sphere in the Republic of Belarus

2021 ◽  
Vol 107 ◽  
pp. 09001
Author(s):  
Marina Zelenkevich ◽  
Natallia Bandarenka
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Open Economy ◽  
Financial Stability ◽  
Developing Economies ◽  
Small Open Economy ◽  
Price Stability ◽  
Practical Implementation ◽  
The Republic ◽  
The Impact

The purpose of the article is to substantiate the possibility and necessity of the central bank’s monetary policy to stimulate investment and economic growth for developing economies on the example of the investment sphere and monetary policy in Belarus. It was determined that the impact of monetary regulation on investment and economic growth is achieved in the course of the central bank’s activities to maintain indicators of price and financial stability which reflect favourable conditions for investment. Price stability is achieved through the implementation of various central bank strategies such as targeting the exchange rate, money supply and inflation. These strategies are defined as the objectives of monetary policy. The article discusses the advantages of monetary regulation in comparison with fiscal regulation, and also contains an analysis of its practical implementation in the Republic of Belarus in the period 2000–2019. As a result of the study the economic and financial results of the strategies applied at different stages were determined, their consequences for the economy were substantiated, and the strategies that best affect the financial and economic indicators in the country were identified. For countries with a small open economy which includes Belarus maintaining price and financial stability is complemented by a set of measures to reduce the devaluation expectations of market entities and create a favorable foreign economic environment.

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