Money Market Discipline and Central Bank Lending

2016 ◽  
Author(s):  
Marie Hoerova ◽  
Cyril Monnet
Keyword(s):  
Central Bank ◽  
Bank Lending ◽  
Money Market ◽  
Market Discipline

Central Bank Liquidity Management and the Signal Extraction Problem on the Money Market / Die Liquiditätssteuerung der Notenbank und das Signal-extraktionsproblem am Geldmarkt

2000 ◽  
Vol 220 (3) ◽  
pp. 284-301
Author(s):  
Ulrich Bindseil
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Term Structure ◽  
Management Strategies ◽  
Money Market ◽  
Signal Extraction ◽  
Maintenance Period ◽  
Liquidity Management ◽  
Expectation Theory

Summary Understanding the factors determining overnight rates is crucial both for central bankers and private market participants, since, assuming the validity of the expectation theory of the term structure of interest rates, expectations with regard to this “monadic” maturity should determine longer term rates, which are deemed to be relevant for the transmission of monetary policy. The note proposes a simple model of the money market within a two-day long reserve maintenance period to derive relationships between the relevant quantities, expectations concerning these quantities for the rest of the reserve maintenance period, and overnight rates. It is argued that a signal extraction problem faced by banks when observing quantities such as their aggregate reserve holdings and allotment amounts of monetary policy operations is at the core of these relationships. The usefulness of the model is illustrated by applying it to the analysis of three alternative liquidity management strategies of a central bank.

Commercial Banks Credit and the Performance of Real Sector in Nigeria: 1990-2017

2020 ◽  
pp. 1-15
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Agricultural Sector ◽  
Manufacturing Sector ◽  
Bank Lending ◽  
Real Sector ◽  
Agricultural Credit ◽  
The Real ◽  
Scientific Discussion ◽  
The Cost

The study examined the arguments and counterarguments within the scientific discussion on commercial banks credit and the performance of real sector in Nigeria. The main objective of the study is to examine the effect of commercial banks credit on the performance of the real sector in Nigeria.Data was sourced from Central Bank of Nigeria Statistical Bulletin. A systematization literary approach for data analysis was Regression Analysis. Findings revealed that bank credit and bank lending rate does not have significant impact on real sector performance in Nigeria. It was showed that there was a positive and significant relationship between agricultural credit guarantee scheme fund and agricultural production in Nigeria. The study therefore recommends that banks should be directed to channel their credits towards the real sector to facilitate overall economic growth and development in Nigeria. It was recommended that there is the need policies that will favor the revamp of the agricultural sector in Nigeria should be given pride of place. Also, monetary authority through the Central Bank of Nigeria should create adequate policies and strategies towards deepening of the financial sector and reducing the cost of credit/loans so as to enhance productivity and consequently enhance the growth of the key sectors of economy such as manufacturing sector.

scholarly journals Central bank independence and its effect on money market stability

2012 ◽  
Vol 2 (1) ◽  
pp. 112
Author(s):  
MSc. Anera Alishani
Keyword(s):  
Central Bank ◽  
Transition Countries ◽  
Money Market ◽  
Central Bank Independence ◽  
Western Balkans ◽  
Market Growth ◽  
Main Research ◽  
Research Task ◽  
Stable Growth ◽  
The Relationship

Since 1990s many countries have moved toward greater central bank independence (CBI) by either amending their Central Bank’s laws or writing them de novo. Also countries of Western Balkans and many other transition countries have moved toward greater CBI. There are many potential benefits associated with greater CBI, and one of them is stable growth of money and liquidity. For a given level of money market development the hypothesis is that a more independent CB is likely to promote more stable growth of money supply (Dželetović et al., 2008). As a result the main research task of this work is to estimate the effects of CBI on money market growth for five Western Balkans countries and five other European transition countries. Because the empirical studies were very limited for the relationship between CBI and money market growth, there were no clear conclusions. In addition, there were different measuring methodologies that attempt to quantify the extent of legal and actual CBI. Related to the main research task, this dissertation has examined the effects of CBI on money market stability (proxied by bank deposit growth) for a sample of 10 countries for a period from 1999-2009 by using fixed effect model. Through this methodology different regressions have been estimated, but the results were not robust and there are no clear finding on the relationship between CBI and money market growth.

Analysis of the Analytical Balance Sheet of Central Bank of Republic of Turkey During 2000 - 2009 Period in Terms of Crises

2014 ◽  
pp. 1284-1302
Author(s):  
Yıldız Özkök
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Balance Sheet ◽  
Central Banks ◽  
Money Market ◽  
Price Stability ◽  
Primary Target ◽  
Monetary Aggregates ◽  
Analytical Balance ◽  
Republic Of Turkey

Today, Central Banks' primary target is to maintain the price stability. In that context, through their monetary policy, they intervene in the money market with different tools. The Analytical Balance Sheet was created upon summing up and offsetting Balance Sheet of the Central Bank of Republic of Turkey (CBRT) in order to represent specific monetary aggregates. By means of that, CBRT aims to make the balance sheet more understandable and simple. In this chapter, firstly the sub items of the Analytical Balance Sheet are explained; secondly, the economic crises of Turkey during 2000-2009 is mentioned; finally, effects of these crises on the CBRT's Analytical Balance Sheet, changes in monetary aggregates which are Currency Issued, Reserve Money, Monetary Base, and Central Bank's Money, and in this context structure of the monetary policy of the CBRT in this period is analyzed.

Inside the Bank Box

2019 ◽  
pp. 368-405
Author(s):  
Leonardo Gambacorta ◽  
Paul Mizen
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Adjustment Costs ◽  
Bank Lending ◽  
Bank Capital ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Pass Through ◽  
The Interest Rate

Central bank policy operates first through financial markets and then through banks as they adjust their interest rates. This chapter discusses the transmission of policy in this first step of the monetary transmission mechanism, known as interest-rate pass-through. Historically, the focus of attention has been the interest-rate channel. We show the origins of this channel via a microfounded model of interest-rate setting by deposit-taking institutions that are Cournot oligopolists facing adjustment costs. We then examine other channels such as the bank lending channel and the bank capital channel and the role of central bank communications, signaling, and forward guidance over future interest rates. Each is shown to influence the setting of current short-term interest rates. The chapter closes with some issues for the future of pass-through in the transmission process.

scholarly journals With a Bang, not a Whimper: Pricking Germany's “Stock Market Bubble” in 1927 and the Slide into Depression

2003 ◽  
Vol 63 (1) ◽  
pp. 65-99 ◽  
Author(s):  
Hans-Joachim Voth
Keyword(s):  
Stock Market ◽  
Central Bank ◽  
Stock Prices ◽  
Money Market ◽  
Short Term ◽  
Real Effects ◽  
Foreign Borrowing ◽  
Relative Stabilization

In May 1927, the German central bank intervened indirectly to reduce lending to equity investors. The crash that followed ended the only stock market boom during Germany's relative stabilization 1924–1928. The evidence strongly suggests that the German central bank under Hjalmar Schacht was wrong to be concerned about stock prices—there was no bubble. Also, the Reichsbank was mistaken in its belief that a fall in the market would reduce the importance of short-term foreign borrowing and improve conditions in the money market. The misguided intervention had important real effects. Investment suffered, helping to tip Germany into depression.

scholarly journals Determinants of loans and deposits strategies of foreign bank subsidiaries in emerging countries

2013 ◽  
Vol 3 (2) ◽  
pp. 29-45
Author(s):  
Mehdi Mili ◽  
Jean-Michel Sahut
Keyword(s):  
Bank Lending ◽  
Emerging Countries ◽  
Market Discipline ◽  
Foreign Bank ◽  
Path Model ◽  
Foreign Banks ◽  
Foreign Subsidiaries ◽  
Factors Affecting ◽  
Macroeconomic Variables ◽  
Financial Variables

Abstract. This paper focuses on the transmission of bank liquidity shocks in Loan and deposit in emerging markets. First, we attempt to identify factors affecting the credit strategy of foreign banks in emerging countries. Second, we test whether depositors exert market discipline on foreign subsidiaries. By combining financial variables of subsidiaries and their parent banks and macroeconomic variables of host and home countries, we investigate the factors that may affect the behavior of depositors. Our empirical approach is based on a Partial Least Squares-Path model that allows us to indentify the causal relationships between the various groups of variables. Our results show that foreign bank lending is determined by the specific financial variables of the parent bank and macroeconomic variables of the country of origin. This support that the strategy's credit of foreign subsidiary is centrally managed at the parent bank and credit supply of subsidiaries depends primary on the financial situation of its parent bank. Finally we find evidence of market discipline exercised over foreign subsidiaries in emerging countries. We show that market discipline is strongly affected by the specific characteristics of the subsidiary.

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