Money, Central Banks, and Low Financial Development Countries

2021 ◽  
pp. 1-44
Author(s):  
Juan Antonio Morales ◽  
Paul Reding
Keyword(s):  
Monetary Policy ◽  
Financial Development ◽  
Central Banks ◽  
Historical Background ◽  
Special Role ◽  
Design And Implementation ◽  
Financial Depth ◽  
Per Capita ◽  
Selection Of

This chapter gives a general overview of the nuts and bolts of monetary policy and presents the low financial development countries that are the focus of this book. It discusses, with some historical background, the special role of money in the financial system, the functions of central banks, and the mandates society has entrusted them with. It also shows how monetary policy is structured within a specific framework of targets and instruments that guides the central bank’s interventions. Finally, it presents the main features that characterize the selection of developing countries that the book aims to address and that raise specific challenges for the design and implementation of their monetary policy: low per capita income, low financial depth, and weak integration with international financial markets.

scholarly journals ON THE (NONMONOTONIC) RELATION BETWEEN ECONOMIC GROWTH AND FINANCE

2018 ◽  
Vol 24 (1) ◽  
pp. 93-112 ◽  
Author(s):  
Alberto Bucci ◽  
Simone Marsiglio ◽  
Catherine Prettner
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Capital Investment ◽  
Nonlinear Models ◽  
Physical Capital ◽  
Long Run ◽  
Financial Depth ◽  
Short Run ◽  
Per Capita

We analyze the simplest possible model of endogenous growth to account for the role of financial development. In our setting, financial development affects productivity and determines the amount of resources subtracted to capital investment. We show that under very general assumptions, the relation between economic growth and financial depth is nonmonotonic, and eventually bell-shaped. We empirically assess our results in a framework that allows to distinguish between long-run and short-run effects. We establish a cointegrating relation and derive the long-run elasticities of per capita gross domestic product (GDP) with respect to employment, the physical capital stock, and financial depth–relying on linear as well as nonlinear models for the finance-growth nexus. We employ the results of the first step estimation to specify an error–correction model and find that there is strong evidence for a nonlinear relationship between financial depth and per capita GDP, consistently with what was predicted by our theoretical model.

Modelling Monetary Policy

2021 ◽  
pp. 293-316
Author(s):  
Juan Antonio Morales ◽  
Paul Reding
Keyword(s):  
Monetary Policy ◽  
Policy Analysis ◽  
Policy Decision ◽  
Central Banks ◽  
Dynamic Stochastic General Equilibrium ◽  
Dsge Models ◽  
Dynamic Stochastic ◽  
Policy Decision Making

This last chapter deals with the toolbox that central banks use to design and implement their monetary policy strategy. Central banks develop various types of model, both for forecasting and for policy analysis. The chapter discusses the main characteristics of the models used, their strengths and limitations. It assesses how dynamic stochastic general equilibrium (DSGE) models are used for monetary policy analysis. Examples are provided on how they contribute to explore fundamental, long-term policy issues specific to LFDCs. The chapter also discusses the contribution of small semi-structural models which, though less strongly theory grounded than DSGE models, can be brought closer to the available data and are therefore possibly better suited to the context of LFDCs. Attention is also drawn to the key role of judgement as the indispensable complement, in monetary policy decision-making, to model-based policy analysis.

scholarly journals Should Inequality Factor into Central Banks' Decisions?

2020 ◽  
Vol 20 (196) ◽  
Author(s):  
Niels-Jakob Hansen ◽  
Alessandro Lin ◽  
Rui Mano
Keyword(s):  
Monetary Policy ◽  
Potential Role ◽  
Central Banks ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Taylor Rules ◽  
Keynesian Model

Inequality is increasingly a concern. Fiscal and structural policies are well-understood mitigators. However, less is known about the potential role of monetary policy. This paper investigates how inequality matters for monetary policy within a tractable Two-Agent New Keynesian model that captures important dimensions of inequality. We find some support for making inequality an explicit target for monetary policy, particularly if central banks follow standard Taylor rules.

scholarly journals A new paradigm of modern central banking

2013 ◽  
Vol 2 (2) ◽  
pp. 75-78
Author(s):  
Aleksandra Szunke
Keyword(s):  
Monetary Policy ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Central Banks ◽  
Central Banking ◽  
First Century ◽  
Financial Instability ◽  
New Paradigm ◽  
The Global Financial Crisis

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.

scholarly journals ROMANIAN INTERBANK INTEREST RATES AND CENTRAL BANK’S MONETARY POLICY

2019 ◽  
Vol 66 (4) ◽  
pp. 487-506
Author(s):  
Giovanni Verga ◽  
Nicoleta Vasilcovschi
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Central Banks ◽  
The European Union ◽  
European System ◽  
National Bank ◽  
Lending Rates ◽  
Main Determinants

Interbank rates are affected by the monetary policy of a country and represent a link to other financial and credit markets. In 2007, Romania became a member of the European Union and its central bank, the National Bank of Romania (NBR), joined the European System of Central Banks (ESCB) but not the Eurosystem. This paper analyses the role of the central bank and the use of its instruments concerning interbank rates. The research evaluates the influence of the Romanian Central Bank on interbank rates and shows that the policy rate and bank liquidity are among the main determinants of interbank rate movements. It is also presented that the NBR’s deposit and lending rates can limit the free movements of the interbank rate of interest. This research confirms that interbank interest rates influence bank rates strongly. The methodology used in this research includes cointegration, dynamic econometric measurement and analyses with Granger causality. Our research uses mainly ROBID and ROBOR of different maturities, showing that the influence of the Romanian Central Bank (NBR) on the interbank rate is strong, while the influence of the ECB and Fed is weak.

scholarly journals VULNERABLE ELECTRICALLY CHARGED SARS-COV-2 POINTS, ELECTRIC MODEL OF THE VIRUS AND ROLE OF TRACE ELEMENTS IN ITS INACTIVATION

2021 ◽  
Vol 22 (1) ◽  
pp. 3-20
Author(s):  
V.G. Kaplunenko ◽  
◽  
N.V. Kosinov ◽  
A.V. Skalny ◽  
◽  
...  
Keyword(s):  
Trace Elements ◽  
Antiviral Agents ◽  
Review Article ◽  
Oxidation States ◽  
Special Role ◽  
Electrical Model ◽  
Large Molecules ◽  
Electrically Charged ◽  
Selection Of

In the review article, electrically charged molecular groups on the surface of the virus were considered as targets for antiviral agents. The prospects of trace element application in a low oxidation state as antiviral agents have been shown. An electrical model of SARS-CoV-2 has been developed in the form of a multilayer structure, where each shell corresponds to electrically charged proteins on the surface of the virus. The model reveals the role of Coulomb forces in adsorption and fusion processes and makes it possible to identify vulnerabilities in the coronavirus that are sensitive to electrically charged substances and to an electric field. The mechanism of antiviral action of trace elements is disclosed, based on the suppression of electrostatic interaction of virus with the cell by neutralizing the charges on the surface of the virus and the cell. This allows the selection of oligopeptides and trace elements in low oxidation states to suppress the adsorption capacity of viruses. The special role of trace elements is that many potential targets that are inaccessible to antibodies and other large molecules are easily available to trace elements.

scholarly journals Monetáris politikai kihívások a szubszaharai régióban

2019 ◽  
Vol 13 (1-2.) ◽  
pp. 57-74
Author(s):  
Szabolcs Pásztor
Keyword(s):  
Monetary Policy ◽  
Natural Resources ◽  
Financial Stability ◽  
Central Banks ◽  
Fiscal Policies ◽  
Appropriate Treatment ◽  
Short Synthesis ◽  
Sub Saharan ◽  
Adequate Management

The monetary policy of the Sub-Saharan countries is a lesser-known field for those Hungarian readers who are interested in Africa. In the last few decades several fundamental changes took place so a short synthesis is badly needed to better understand this issue. Apart from the fact that this study tries to shed light on the monetary policy challenges of different periods, it also places much emphasis on the contemporary issues in central banking.After the turn of the new millenium the central banks have been struggling with unpredictable fiscal policies, the appropriate treatment of the revenues of the natural resources, not to mention the inflow of foreign aid. It is also highly important to monitor the frequency of the supply shocks and the efficiency of the monetary transmission mechanism. After shedding more light on these issues, the paper tries to focus on the role of the exchange rates, the room for manoeuvre of the central banks in the financial stability and the adequate management of the revenues stemming from the export of natural resources.

scholarly journals Monetary Policy Coordination and the Role of Central Banks

2014 ◽  
Vol 14 (70) ◽  
pp. 1 ◽  
Author(s):  
Rakesh Mohan ◽  
Muneesh Kapur ◽  
◽  
Keyword(s):  
Monetary Policy ◽  
Central Banks ◽  
Policy Coordination ◽  
Monetary Policy Coordination

scholarly journals Filling the Gap

2020 ◽  
Vol 20 (150) ◽  
Author(s):  
Majid Bazarbash ◽  
Kimberly Beaton
Keyword(s):  
Financial Development ◽  
Low Income ◽  
Low Income Countries ◽  
Financial Efficiency ◽  
Financial Depth ◽  
Consumer Segment ◽  
Cross Country ◽  
Credit Gap ◽  
The Relationship

Can fintech credit fill the credit gap in the consumer and business segments? There are few cross-country studies that explore this question. Focusing on marketplace lending, an important part of fintech credit, we use data for 109 countries from 2015 to 2017 to study the relationship between fintech credit to businesses and consumers and various aspects of financial development. Marketplace lending to consumers grows in countries where financial depth declines highlighting the role of fintech credit in filling the credit gap by traditional lenders. This result is particularly strong in low-income countries. In the business segment, marketplace lending expands where financial efficiency declines. Our findings show that low-income countries take advantage of the fintech credit opportunity in the consumer segment but face important challenges in the business segment.

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