IMPACT OF REAL INTEREST RATES ON REAL OUTPUT GROWTH IN INDIA: A LONG-RUN ANALYSIS IN A LIBERALIZED FINANCIAL REGIME

2007 ◽  
Vol 52 (02) ◽  
pp. 215-231 ◽  
Author(s):  
HRUSHIKESH MALLICK ◽  
SHASHI AGARWAL
Keyword(s):  
Growth Rate ◽  
Interest Rate ◽  
Interest Rates ◽  
Banking System ◽  
Poor Quality ◽  
Output Growth ◽  
Long Run ◽  
Ardl Approach ◽  
The Impact

The study attempts to evaluate the impact of short-term real interest rate on growth rate in India in a liberalized financial and trade regime (March 1993 to March 2005). Using ARDL approach to cointegration of Pesaran and Shin (1999), the study finds that interest rate does not have a direct impact; rather, it may have an indirect and adverse impact on growth rate through the transmission channel of bank credit, thereby neither supporting the arguments advocated by Keynesians nor the explanations offered by the proponents of Financial Liberalization School. This incredible result may be attributed to the poor quality of credit disbursal of the banking system in India or low credit offtake for productive investment purposes as investment, an important determinant of economic growth, is governed by several other factors.

Macro Stress Testing of Indian Bank Groups

2017 ◽  
Vol 11 (4) ◽  
pp. 375-403
Author(s):  
Pami Dua ◽  
Hema Kapur
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Private Sector ◽  
Stress Testing ◽  
Inflation Rate ◽  
Output Growth ◽  
Foreign Banks ◽  
Credit Quality ◽  
The Impact

This study examines how various bank groups operating in India have fared macro stress events and conduct macro stress testing (MST) to trace the impact of certain macroeconomic stress scenarios on the credit quality of five Indian bank groups, that is, the State Bank of India (SBI) and its associates (SBGs), nationalised banks (NBs), old private sector banks (OPBs), new private sector banks (NPBs) and foreign banks (FBs), using panel data from 1997 to 2014. Credit quality is modelled as a function of both macroeconomic variables (output growth, interest rate, inflation rate and exchange rate) and idiosyncratic variables (profitability and size indicator of bank business activity). The model is estimated by employing a panel cointegration approach, and the impact of adverse scenarios on the estimated credit quality is computed. Empirical findings show that credit quality is pro-cyclical in nature and rises in the event of a slowdown in the economy. In general, the credit quality of Indian bank groups is found to be inversely and significantly related to the economy’s growth rate, inflation rate, exchange rate and profits of banks and positively and significantly related to the interest rate. Shock analysis also reveals that a downturn in the economy through certain adverse scenarios has a significant adverse impact on the credit quality. The shocks are quickly propagated across banks with substantial heterogeneities present in different bank groups. Thus, macroeconomic policy measures promoting growth with price stability are expected to impact credit quality positively. Further, measures at the bank level can improve credit quality by enhancing their profitability. JEL Classifications: C32, C58, E170, G21

scholarly journals FOREIGN DIRECT INVESTMENT AND EXPORT PERFORMANCE OF THE PAKISTAN COINTEGRATION AND CAUSALITY APPORACH

2015 ◽  
Vol 11 (1) ◽  
Author(s):  
Abdur Rahman Aleemi ◽  
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Export Performance ◽  
Gdp Growth ◽  
Local Market ◽  
Long Run ◽  
Gdp Growth Rate

FDI is a bridge between the world markets and local market and works as a way to increase the capabilities of the host country through investments that help in transfer of technology and creation of employment opportunities. The aim of this paper was to investigate the nexus of Foreign Direct Investment and the Export performance in the economic settings of Pakistan along in the presence of explanatory variables, based on well-established economic theory and long standing relationships. Supplementing the variables into a linear regression model, tested under the OLS and checked for the assumptions of normally and identically distributed errors, it was found that exports are positively affected by FDI and CPI whereas negatively affected by the interest rates in the case of Pakistan. Furthermore the long run relationship between the variables has been tested under the Johensen Cointegration test, which suggest that a long run relationship exist between the variables. Finally the direction of causality has been investigated with the help of Granger Causality test, indicating a bidirectional causality between CPI and interest rate, exports and interest rate, unidirectional causality from exports to CPI, CPI to GDP growth rate, interest rate to GDP growth rate, exports to FDI and exports to GDP growth rate.

scholarly journals Medium-Run Implications of Changing Demographic Structures for the Macro-Economy

2017 ◽  
Vol 241 ◽  
pp. R58-R64 ◽  
Author(s):  
Yunus Aksoy ◽  
Henrique S. Basso ◽  
Ron P. Smith
Keyword(s):  
Interest Rates ◽  
Poor Performance ◽  
Theoretical Work ◽  
Output Growth ◽  
Annual Growth Rate ◽  
Demographic Structure ◽  
Real Interest Rates ◽  
Long Run ◽  
The Uk ◽  
The Impact

While there may be an important, but transitory, cyclical component in the poor performance of the past decade, we will emphasise the secular forces: the impact of demographic structure and innovation. We draw on the empirical and theoretical work reported in Aksoy, Basso, Smith and Grasl (2015), ABSG, about the impact of changes in demographic structure on macroeconomic outcomes. This suggests that changes in age profile not only have significant implications for savings, investment, real interest rates and growth but also for innovation. The size of the effects seems plausible. For instance, if in 2015 the UK had the 1970 age structure, it would have added 0.68 percentage points to the long-run annual growth rate. The model suggests that the population ageing predicted for the next decades will tend to reduce output growth and real interest rates across OECD countries.

The Impact of Interest Rate on Exchange Rate Within ASEAN Countries: Evidence from Linear and Nonlinear ARDL Frameworks

2021 ◽  
Vol 13 (1) ◽  
pp. 7-34
Author(s):  
H. F. Tareq Ahmed ◽  
Nur Syazwani Mazlan
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Exchange Rates ◽  
Interest Rates ◽  
The Philippines ◽  
Distributed Lag ◽  
Nonlinear Ardl ◽  
Long Run ◽  
Asean Countries ◽  
The Impact

This study examines the symmetric and/or asymmetric effects of changes in the interest rate on exchange rate of the ASEAN countries. It further aims to compare these linkages by using a dataset consisting of 48–68 quarterly data items, ranging over the period 2002–2017, of the ASEAN countries. Using both the linear autoregressive distributed lag (ARDL) and nonlinear ARDL (NARDL) approaches, the findings indicate that these effects vary from one country to another. We observe that changes in interest rates have short-run symmetric effects on the exchange rates, which also hold in the long run for five ASEAN countries, namely, Cambodia, Malaysia, Thailand, Vietnam, and Singapore. On the other hand, changes in interest rates have asymmetric (negative) effects on the exchange rates, which also hold in the long run for seven ASEAN countries, namely, Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

scholarly journals FOREIGN DIRECT INVESTMENT AND EXPORT PERFORMANCE OF THE PAKISTAN COINTEGRATION AND CAUSALITY APPORACH

2015 ◽  
Vol 11 (1) ◽  
Author(s):  
Abdur Rahman Aleemi ◽  
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Export Performance ◽  
Gdp Growth ◽  
Local Market ◽  
Long Run ◽  
Gdp Growth Rate

FDI is a bridge between the world markets and local market and works as a way to increase the capabilities of the host country through investments that help in transfer of technology and creation of employment opportunities. The aim of this paper was to investigate the nexus of Foreign Direct Investment and the Export performance in the economic settings of Pakistan along in the presence of explanatory variables, based on well-established economic theory and long standing relationships. Supplementing the variables into a linear regression model, tested under the OLS and checked for the assumptions of normally and identically distributed errors, it was found that exports are positively affected by FDI and CPI whereas negatively affected by the interest rates in the case of Pakistan. Furthermore the long run relationship between the variables has been tested under the Johensen Cointegration test, which suggest that a long run relationship exist between the variables. Finally the direction of causality has been investigated with the help of Granger Causality test, indicating a bidirectional causality between CPI and interest rate, exports and interest rate, unidirectional causality from exports to CPI, CPI to GDP growth rate, interest rate to GDP growth rate, exports to FDI and exports to GDP growth rate.

scholarly journals Analysis of Interest Rate Impact on the Profitability Level of the Banking System in Albania during the Period 2005 -2014

2015 ◽  
Vol 3 (1) ◽  
pp. 203
Author(s):  
Sokol Ndoka ◽  
Anilda Bozdo
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Banking System ◽  
The Other ◽  
Factors Affecting ◽  
The Interest Rate ◽  
The Global Financial Crisis ◽  
The Impact

This study is an analysis of the movement and impact of interest rates on the profitability level of the banking system in Albania. This analysis covers a 10-year timeframe (is organized in three time segments - before, during and after the financial crisis), taking into consideration the critical point of the years 2008-2009 considered as the “peak” of the global financial crisis. Such separation is made in order to see the possible changes of each period of time and to identify the impact differences of this factor in each period of study. This study is based on the hypothesis that the decrease of the interest rate has positively affected the income increase from interest as a result of the impact of two factors, negative levels of Gaps and an increased level of spread toward the average assets. As a matter of fact, it has neutralized on a certain level the other risks such as that of the loan which has dominated over the other risks. This paper is based on an empirical study with secondary quantitative and qualitative data. This study provides a considerable contribution in the framework of identification of factors affecting the profitability of the banking system in Albania, namely in the context of interest rate; In addition, this study aims at highlighting the importance of open Gaps minimization for the efficient profitability increase of the financial system.

Natural Interest Rate and Money Interest Rates

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Ulrich van Suntum
Keyword(s):  
Growth Rate ◽  
Interest Rate ◽  
Interest Rates ◽  
Durable Goods ◽  
Golden Rule ◽  
Precious Metals ◽  
Welfare Economic ◽  
Economic View ◽  
Long Run ◽  
The Interest Rate

AbstractThe long lasting period of declining interest rates raises the question, whether the latter result from a savings glut, from a money glut, or from both. Moreover, it renewed the old question how the natural interest rate should be sensibly defined, and if it could ever fall below the growth rate, thereby causing dynamic inefficiency. The present article contributes to this debate on a pure theoretical base, leaving the empirical issue for other research. In particular, I briefly discuss Böhm-Bawerk’s three causes for the existence of an interest rate in a private barter economy. I argue that the natural interest rate remains a meaningful concept even in an economy with both a public sector and money. From a welfare economic view, it is also preferable above the so-called golden rule, provided the interest rate does not fall below the growth rate. Although the natural interest rate could well get negative by excess saving in principle, this is normally prevented when durable goods like land or precious metals are available for storing private wealth. On the other hand, issuing credit money tends to push the interest rate below its natural level, even in the long run. In order to prevent this, one could either replace it by neutral helicopter money or return to a gold currency.

FAKTOR DETERMINAN PENYALURAN KREDIT BANK PERSERO

2018 ◽  
Vol 23 (1) ◽  
pp. 60-71
Author(s):  
Wigiyanti Masodah
Keyword(s):  
Interest Rate ◽  
Linear Regression ◽  
Interest Rates ◽  
Regression Models ◽  
Linear Regression Models ◽  
Negative Impacts ◽  
Main Activity ◽  
The Impact ◽  
The Given ◽  
Multiple Linear Regression Models

Offering credit is the main activity of a Bank. There are some considerations when a bank offers credit, that includes Interest Rates, Inflation, and NPL. This study aims to find out the impact of Variable Interest Rates, Inflation variables and NPL variables on credit disbursed. The object in this study is state-owned banks. The method of analysis in this study uses multiple linear regression models. The results of the study have shown that Interest Rates and NPL gave some negative impacts on the given credit. Meanwhile, Inflation variable does not have a significant effect on credit given. Keywords: Interest Rate, Inflation, NPL, offered Credit.

scholarly journals Mobile Money Use: The Impact of Macroeconomic Policy and Regulation

Economies ◽  
2021 ◽  
Vol 9 (2) ◽  
pp. 51
Author(s):  
Lorna Katusiime
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Financial Innovation ◽  
Macroeconomic Policy ◽  
Mobile Money ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
The Impact

This paper examines the effects of macroeconomic policy and regulatory environment on mobile money usage. Specifically, we develop an autoregressive distributed lag model to investigate the effect of key macroeconomic variables and mobile money tax on mobile money usage in Uganda. Using monthly data spanning the period March 2009 to September 2020, we find that in the short run, mobile money usage is positively affected by inflation while financial innovation, exchange rate, interest rates and mobile money tax negatively affect mobile money usage in Uganda. In the long run, mobile money usage is positively affected by economic activity, inflation and the COVID-19 pandemic crisis while mobile money customer balances, interest rate, exchange rate, financial innovation and mobile money tax negatively affect mobile money usage.

scholarly journals Quality of care in the free maternal healthcare era in sub-Saharan Africa: a scoping review of providers’ and managers’ perceptions

2021 ◽  
Vol 21 (1) ◽  
Author(s):  
Monica Ansu-Mensah ◽  
Frederick Inkum Danquah ◽  
Vitalis Bawontuo ◽  
Peter Ansu-Mensah ◽  
Tahiru Mohammed ◽  
...  
Keyword(s):  
Quality Of Care ◽  
Research Question ◽  
Healthcare Providers ◽  
Poor Quality ◽  
Sub Saharan Africa ◽  
Healthcare Financing ◽  
Maternal Healthcare ◽  
Sub Saharan ◽  
The Impact

Abstract Background Free maternal healthcare financing schemes play an essential role in the quality of services rendered to clients during antenatal care in sub-Saharan Africa (SSA). However, healthcare managers’ and providers’ perceptions of the healthcare financing scheme may influence the quality of care. This scoping review mapped evidence on managers’ and providers’ perspectives of free maternal healthcare and the quality of care in SSA. Methods We used Askey and O’Malley’s framework as a guide to conduct this review. To address the research question, we searched PubMed, CINAHL through EBSCOhost, ScienceDirect, Web of Science, and Google Scholar with no date limitation to May 2019 using keywords, Boolean terms, and Medical Subject Heading terms to retrieve relevant articles. Both abstract and full articles screening were conducted independently by two reviewers using the inclusion and exclusion criteria as a guide. All significant data were extracted, organized into themes, and a summary of the findings reported narratively. Results In all, 15 out of 390 articles met the inclusion criteria. These 15 studies were conducted in nine countries. That is, Ghana (4), Kenya (3), and Nigeria (2), Burkina Faso (1), Burundi (1), Niger (1), Sierra Leone (1), Tanzania (1), and Uganda (1). Of the 15 included studies, 14 reported poor quality of maternal healthcare from managers’ and providers’ perspectives. Factors contributing to the perception of poor maternal healthcare included: late reimbursement of funds, heavy workload of providers, lack of essential drugs and stock-out of medical supplies, lack of policy definition, out-of-pocket payment, and inequitable distribution of staff. Conclusion This study established evidence of existing literature on the quality of care based on healthcare providers’ and managers’ perspectives though very limited. This study indicates healthcare providers and managers perceive the quality of maternal healthcare under the free financing policy as poor. Nonetheless, the free maternal care policy is very much needed towards achieving universal health, and all efforts to sustain and improve the quality of care under it must be encouraged. Therefore, more research is needed to better understand the impact of their perceived poor quality of care on maternal health outcomes.

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