Lifting capital controls underpins Iceland’s growth

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Capital Controls ◽  
Economic Conditions ◽  
Short Term ◽  
Content Type ◽  
Short Run ◽  
Small Economy ◽  
Economic Balance ◽  
The Eu

Subject Iceland‘s macroeconomic outlook. Significance Iceland at the turn of the year took several steps towards lifting its capital controls on households and businesses. The authorities had worried that this would create an outflow of capital, destabilising the economy through a weakened krona and rising inflation. However, positive economic conditions have reversed the problem at least in the short run, with the main worries being an even stronger krona which could threaten export and tourism industries. Impacts High expected GDP growth and interest rates might be tempting for foreign investors looking for short-term gains. Fresh elections are possible if the Independence Party fails to form a government. The largest challenge for Iceland will be to find long-term economic balance as a small economy outside the EU.

How loan interest rate liberalization affects firms’ loan maturity structure

2014 ◽  
Vol 4 (2) ◽  
pp. 153-167 ◽  
Author(s):  
Jianfang Zhou ◽  
Jingjing Wang ◽  
Jianping Ding
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Manufacturing Companies ◽  
Short Term ◽  
Data Set ◽  
Content Type ◽  
Interest Rate Liberalization ◽  
Upper Limit ◽  
Maturity Structure

Purpose – After loan interest rate upper limit deregulation in October 2004, the financing environment in China changed dramatically, and the banks were eligible for risk compensation. The purpose of this paper is to focus on the influence of the loan interest rate liberalization on firms’ loan maturity structure. Design/methodology/approach – Based on Rajan's (1992) model, the authors constructed a trade-off model of how the banks choose long-term and short-term loans scales, and further analyzed banks’ loan term decisions under the loan interest rate upper limit deregulation or collateral cases. Then the authors used an unbalanced panel data set of 586 Chinese listed manufacturing companies and 9,376 observations during the period 1996-2011 to testify the theoretical conclusion. Furthermore, the authors studied the effect on firms with different characteristics of ownership or scale. Findings – The results show that the loan interest rate liberalization significantly decreases the private companies’ reliance on short-term loans and increases sensitivity to interest rates of state-owned companies’ long-term loans. But the results also show that the companies’ ownership still plays a key role on the long-term loans availability. When monetary policy tightened, small companies still have to borrow short-term loans for long-term purposes. As the bank industry is still dominated by state-owned banks and the deposit interest rate has upper limits, the effect of the loan interest rate liberalization on easing long-term credit constraints is limited. Originality/value – From a new perspective, the content and findings of this paper contribute to the study of the effect of the interest rate liberalization on China economy.

scholarly journals AN ESSAY ON CONSUMPTION HYPOTHESES: EVIDENCE FROM PAKISTAN

2020 ◽  
Vol 3 (01) ◽  
pp. 23-32
Author(s):  
Khalid Khan ◽  
Marguerite Wotto ◽  
Saima Liaqat
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Unemployment Rate ◽  
Private Consumption ◽  
Short Term ◽  
Aggregate Consumption ◽  
Short Run ◽  
Consumption Decision ◽  
Yearly Data

In this study, the ARDL method is used to assess short-term and longterm relationships between private consumption, labor income, interest rate, wealth, and unemployment rate. The real private consumption model for Pakistan has been estimated by applying yearly data from 1990 to 2016. According to long-term estimates, income and wealth determine the actual national consumption. Nevertheless, the short run national private consumption is determined by current incomes, wealth, real interest rates, and the unemployment rate. Findings of this study reveal significant impact of all the observed determinants of consumption function i.e. real disposable income, wealth, real interest rate, and unemployment rate on aggregate consumption. Whereas it is noteworthy that the coefficient for wealth was minor but significant, depicting slight impact of wealth on consumption decision. These results support validity of AIH for Pakistan.

Australian PM challenge will hinder policy agenda

2015 ◽  
Keyword(s):  
Political Parties ◽  
Interest Rates ◽  
Prime Minister ◽  
Party Leader ◽  
Content Type ◽  
Developed Economies ◽  
Housing Bubbles ◽  
The Impact ◽  
The Eu

Significance Although a victory in the short term for Abbott, the narrow margin will only intensify doubts about his long-term prospects as party leader and as prime minister. The challenge continues a trend of instability across Australia's main political parties. The country is poised to enter a record 25th year of uninterrupted economic growth, yet has changed prime minister four times since 2007. Impacts Australia will remain one of the most robust developed economies throughout 2015, with growth rates far above those of the EU. The Reserve Bank's decision to cut interest rates indicates that there are worries of the impact of the China-induced mining slowdown. Concerns in state capitals about housing bubbles will grow and may be an issue in the next federal election.

Deflecting Neoliberalism

2021 ◽  
pp. 164-193
Author(s):  
Julian Germann
Keyword(s):  
Political Economy ◽  
Emerging Markets ◽  
Interest Rates ◽  
Economic Conditions ◽  
Perceived Threat ◽  
International Pressures ◽  
Anglo American ◽  
The Eu

This chapter explores how the German political economy was transformed by the global rise of neoliberalism and how this change feeds into Germany’s approach to the eurocrisis. Rather than being pushed down an Anglo-American road, German policymakers still seek to preserve what is left of the domestic compromise between capital and labor. The chapter argues that China’s massive demand for German exports informs the long-term vision of a neoliberal Europe structurally adjusted to support the global position of German manufacturers. At the same time, the perceived threat of US interest rates rising out of step with economic conditions in Europe and emerging markets hardened the German stance on austerity during the fever-pitched policy battles at the height of the eurocrisis. Together, these international pressures and opportunities have produced the predicament of German primacy as a transformative and yet destabilizing force within the EU.

Dynamic lag structure of deposits and loans interest rates and business cycles formation

2017 ◽  
Vol 25 (2) ◽  
pp. 114-132
Author(s):  
Bijan Bidabad ◽  
Abul Hassan
Keyword(s):  
Interest Rate ◽  
Business Cycles ◽  
Interest Rates ◽  
Banking System ◽  
Real Economy ◽  
Short Term ◽  
Structural Dynamic ◽  
Content Type ◽  
The Real

Purpose This paper aims to study the structural dynamic behaviour of the depositors, banks and investors and the role of banks in the business cycles. The authors test the hypothesis: do banks’ behaviour make oscillations in the economy via interest rate? Design/methodology/approach The authors dichotomized banking activities into two markets: deposit and loan. The first market forms deposit interest rate, and the second market forms credit interest rate. The authors show that these two types of interest rates have non-synchronized structures, and that is why money sector fluctuation starts. As a result, the fluctuation is transferred to the real economy through saving and investment functions. Findings The empirical results show that in the USA, the banking system creates fluctuations in money and real economy, as well as through interest rates. Short-term interest rates had complex roots in their characteristic, while medium and long-term interest rates, though they were second-order difference equations, had real characteristic roots. However, short-term interest rates are the source of oscillation and form the business cycles. Research limitations/implications The authors tested the hypothesis for USA economy, while it needs to be tested for other economies as well. Practical implications The results show that though the source of fluctuations in the real economy comes from short-term interest rates, medium- and long-term interest rates dampen real economy fluctuations and also work as economic stabilisers. Originality/value Regarding the applied method, the topic is new.

Nigerian central bank faces short-term debt hazards

2019 ◽  
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Foreign Currency ◽  
Capital Controls ◽  
Financial Inclusion ◽  
Medium Term ◽  
Short Term ◽  
Content Type ◽  
Double Digit

Significance Emefiele has vowed that the CBN will significantly increase financial inclusion, recapitalise banks and help the economy achieve double-digit growth over his second term. However, the significant amount of CBN bills in circulation, a key but costly component of the Bank’s recent exchange rate strategy, poses serious medium-term risks. Impacts The CBN's continued focus on exchange rate stability leaves limited space for reducing interest rates over the short term. Effective foreign currency yields of over 10% are appealing for portfolio investors, but a sudden naira slide would prompt major losses. Significant divestment by foreign portfolio investors may make the CBN resort to temporary capital controls to limit damage to the naira.

EU must compete with other powers for Balkan influence

2019 ◽  
Keyword(s):  
Western Balkans ◽  
Political Leaders ◽  
Short Term ◽  
Content Type ◽  
Military Presence ◽  
Previous Decade ◽  
Near Term ◽  
The Eu ◽  
Made In

Subject EU's rivals in Western Balkans. Significance Despite last year’s Austrian presidency of the Council of the EU, and the current Romanian presidency’s interest in the region, the Western Balkans is still largely ignored by European capitals. This is allowing other actors, specifically Russia, Turkey and China, to gain influence. Waning belief in near-term EU expansion has reduced incentives to continue the progress made in the previous decade. Impacts A Western military presence in the region will continue as a means of ensuring stability in the absence of reforms. Domestic political leaders’ reliability will diminish as short-term considerations supersede long-term goals. Public trust in the EU will continue to fall, though EU accession will remain a popular objective.

scholarly journals Determinant Return on Assets on Rural Banks in Indonesia

JEJAK ◽  
2021 ◽  
Vol 13 (2) ◽  
pp. 447-459
Author(s):  
Amanah Amanah
Keyword(s):  
Interest Rates ◽  
Descriptive Analysis ◽  
Analysis Method ◽  
Short Term ◽  
Return On Assets ◽  
Quantitative Descriptive Analysis ◽  
Correction Model ◽  
Short Run ◽  
Quantitative Descriptive

The problem in this study is that the Trend of Return on Assets (ROA) in Rural Banks tends to decrease. The author uses a quantitative descriptive analysis method and the analytical tool used is the ECM (Error Correction Model), the aim of which is to determine what factors influence the Return on Assets (ROA) of Rural Banks in Indonesia. The findings empirically show that the Amount of Money Supply in the long term had a significant effect on the Return on Assets (ROA) of Rural Banks. Whereas in the short term, no significant effect on ROA, General Capital Reserves in the long term have a significant effect on Return on Assets (ROA), while in the short term have no significant effect on ROA, Non Performing Loan (NPL) in the long term and short term effect significant to Return on Assets (ROA), Consumptive Interest Rates in the long term and short term have no significant effect on Return on Assets (ROA), and Working Capital Interest Rates in the long term and short run have no significant effect on Return on Assets ( ROA) Rural Banks in Indonesia

Turkish economic policy will be inconsistent to 2019

2017 ◽  
Keyword(s):  
Economic Policy ◽  
Financial Markets ◽  
Interest Rates ◽  
Capital Inflows ◽  
Policy Uncertainty ◽  
Economic Policies ◽  
Short Term ◽  
Content Type ◽  
Doing Business ◽  
The Eu

Subject Economic policy to 2019. Significance In a climate of global monetary tightening, domestic and international political tensions, and brittle ties with the EU, investor-friendly economic policies would help secure continued capital inflows and investment in Turkey, thus keeping the lira stable and maintaining a tenuous economic recovery. However, economic policy has recently been geared towards achieving a short-term boost rather than longer-term stability and competitiveness. Impacts The AKP may not regain the confidence of international financial markets, which once saw it as a 'safe pair of hands' for the economy. Sharp variations in exchange rates, interest rates, prices and demand are likely given global conditions and unpredictable policy-making. Economic policy uncertainty will add to the complexity of the environment for doing business.

Turkey may be edging towards capital controls

2019 ◽  
Keyword(s):  
Central Bank ◽  
Financial Markets ◽  
Interest Rates ◽  
Foreign Exchange ◽  
Credit Rating ◽  
Capital Controls ◽  
Short Term ◽  
Content Type ◽  
Rating Agencies ◽  
Equity Funds

Significance A score below 100 indicates a pessimistic outlook -- the index has not exceeded 100 since March 2018. Increasingly frequent and heavy-handed interventions by the Turkish Central Bank (TCMB) to help shore up the lira have fuelled concerns in financial markets that Turkey is edging closer to full capital controls. Markets and credit rating agencies are particularly focused on Turkey’s dangerously low level of net foreign-exchange (FX) reserves, once short-term dollar borrowing is excluded. Impacts Renewed escalation of the trade conflict and continued dollar strength are turning inflows into EM bond and equity funds into outflows. Market expectations of a cut in US interest rates by the year-end will help mitigate recent marked declines in EM asset prices. The rise in the price of Brent crude since late 2018 will put pressure on major energy importers such as Turkey, fuelling inflation.

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