Financial development and asset price reaction to monetary policy: case study of Thailand

2021 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
Attasuda Lerskullawat
Keyword(s):  
Monetary Policy ◽  
Financial Development ◽  
Asset Price ◽  
Price Reaction

MONETARY POLICY AND FINANCIAL SECTOR DEVELOPMENT

2015 ◽  
Vol 60 (03) ◽  
pp. 1550031 ◽  
Author(s):  
PETER WILSON
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Financial Crisis ◽  
Financial Development ◽  
Asset Management ◽  
Global Financial Crisis ◽  
Asset Price ◽  
Rate System ◽  
Asset Price Bubbles ◽  
High Degree

This paper reviews Singapore's monetary policy and financial development since independence, including the immediate challenges in the 1960s, the turbulent years of the 1970s with the collapse of the Bretton Woods fixed exchange rate system and the global oil shocks of 1973 and 1979, the introduction of a unique exchange rate-centered monetary policy in 1981, the Asian financial crisis of 1997–1998 and the global financial crisis of 2007–2009. Despite being a late starter (1971) and given a number of obstacles, not least the high degree of openness of the Singapore economy to trade and capital flows, the Monetary Authority of Singapore has built up a high degree of credibility within a relatively short space of time and delivered low and stable inflation. Although financial development has been "government made" rather than market-driven, proactive and sensible policies have built on Singapore's long history as a regional trading hub to turn Singapore into a premier financial center in terms of foreign exchange trading, offshore money market intermediation and asset management. Nonetheless, some challenges remain: How monetary policy can deal with asset price bubbles and deflationary pressures and steer a careful course to maintain price stability without jeopardizing Singapore's transitory restructuring process to achieve sustainable economic growth.

Introduction to Part I

2018 ◽  
Author(s):  
Andrew Berg ◽  
Rafael Portillo
Keyword(s):  
Monetary Policy ◽  
Structural Models ◽  
Stylized Facts ◽  
Policy Regimes ◽  
Detailed Case ◽  
Inaccurate Data ◽  
Cross Country

Developing an understanding of monetary policy in LICs must start with the evidence. This chapter briefly reviews the challenges facing the empirical researcher in SSA, including scarce and inaccurate data, short policy regimes that make powerful inference difficult, and the lack of structural models to help interpret the data. It provides an overview of Chapters 4–6, which take three very different approaches to looking at these data: a broad search for cross-country stylized facts (Chapter 4), a detailed case study of a major monetary policy event (Chapter 5), and an examination of whether vector auto-regressions (VARs)—the workhorse empirical tool in this area—are likely to yield useful results in the SSA context (Chapter 6).

An Historical Perspective on the Quest for Financial Stability and the Monetary Policy Regime

2018 ◽  
Vol 78 (2) ◽  
pp. 319-357 ◽  
Author(s):  
Michael D. Bordo
Keyword(s):  
Monetary Policy ◽  
Financial Crises ◽  
Financial Stability ◽  
Historical Perspective ◽  
Asset Price ◽  
Financial Instability ◽  
Historical Evidence ◽  
Policy Regime ◽  
Extreme Form ◽  
Credit Booms

This article surveys the co-evolution of monetary policy and financial stability for a number of countries from 1880 to the present. Historical evidence on the incidence, costs, and determinants of financial crises (the most extreme form of financial instability), combined with narratives on some famous financial crises, suggests that financial crises have many causes, including credit-driven asset price booms, which have become more prevalent in recent decades, but in general financial crises are very heterogeneous and hard to categorize. Moreover, evidence shows that the association across the country sample between credit booms, asset price booms, and serious financial crises is quite weak.

INFLATION TARGETING: IT'S NOT BROKE, IT DOESN'T NEED FIXING, BUT CAN IT SURVIVE?

2010 ◽  
Vol 01 (01) ◽  
pp. 59-80
Author(s):  
PIERRE L. SIKLOS
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Global Financial Crisis ◽  
Emerging Market ◽  
Asset Price ◽  
Central Banks ◽  
Economic Downturn ◽  
Price Increases ◽  
The Global Financial Crisis ◽  
Nominal Anchor

Until the end of 2005 there were few outward signs that the inflation targeting (IT) monetary policy strategy was deemed fragile or that the likelihood of abandoning it was high. In light of the severe economic downturn and the global financial crisis that has afflicted most economies around the world since at least 2008, it is worth reconsidering the question of the fragility of the inflation targeting regime. This paper reprises the approach followed in Siklos (2008) but adds important new twists. For example, the present study asks whether the continued survival of IT is due to the fact that some of the central banks in question did take account of changes in financial stress. The answer is no. Indeed, many central banks are seen as enablers of rapid asset price increases. The lesson, however, is not that inflation targeting needs to be repaired. Instead, refinements should be considered to the existing inflation targeting strategy which has evolved considerably since it was first introduced in New Zealand 20 years ago. Most notably, there should be continued emphasis on inflation as the primary nominal anchor of monetary policy, especially in emerging market economies (EME), even if additional duties are assigned to central banks in response to recent events.

Sukuk and monetary policy transmission in Indonesia: the role of asset price and exchange rate channels

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suriani Suriani ◽  
M. Shabri Abd. Majid ◽  
Raja Masbar ◽  
Nazaruddin A. Wahid ◽  
Abdul Ghafar Ismail
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Asset Price ◽  
Transmission Mechanism ◽  
Monetary Policy Transmission ◽  
Content Type ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism

Purpose The purpose of this study is to empirically analyze the role of sukuk in the monetary policy transmission mechanism through the asset price and exchange rate channels in the Indonesian economy. Design/methodology/approach Using the monthly data from January 2003 to November 2017, this study uses a multivariate vector error correction model causality framework. To examine the role of sukuk in the monetary policy transmission mechanism through the asset price channel, this study uses the variables of consumption, inflation, interest rates, economic growth and the composite stock price index. Meanwhile, to examine the role of sukuk in the monetary policy transmission mechanism through the exchange rate channel, this study used variables of inflation, interest rates, economic growth, foreign investment and exchange rate. Findings This study documented that sukuk has no causal relationship with inflation through asset price and exchange rate channels. Nevertheless, sukuk has a bidirectional causal relationship with economic growth through asset price and exchange rate channels. Sukuk is also documented to have a causal relationship with monetary policy variables of interest rate and stock prices through asset price and exchange rate channels. Finally, a unidirectional causality is recorded running from the exchange rate to sukuk in the exchange rate channel. Research limitations/implications The finding of independence of the sukuk market from interest rates provides evidence that the trading of the sukuk in Indonesia has been in harmony with the Islamic tenets. Practical implications The relevant Indonesian authorities need to enhance both domestic and global sukuk markets as part of efforts to promote the sustainability of Islamic capital market development in Indonesia. Originality/value To the best of the authors’ knowledge, this study is among the first attempts to empirically investigate the role of sukuk in monetary policy transmission through asset price and exchange rate channels in the context of the Indonesian economy.

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