Changing Landscape in Credit Management and Loan Performance: The Role of Central Bank Regulations in the Context of Commercial Banks in Kenya

AbstractThis chapter develops further the role of a central bank and its interplay with commercial banks. Together, the two ensure the provision of liquidity to the economy, such that the real sectors are shielded from flows of funds originating from household and investors. We also disaggregate the banking system into two banks to represent deposit flows between banks and their impact on the central bank’s balance sheet, and to distinguish between what we call “relative” and “absolute” central bank intermediation. We then integrate deposit money creation by commercial banks into our system of financial accounts, and revisit some old debates, such as the limits of bank money creation and the role of related parameters that the central bank can set (not only the reserve requirement ratio, but also the collateral framework). Finally, we explain the concepts of “plain money” and “full reserve banking” within the financial accounts, and also discuss in this framework the recent proposals regarding central bank digital currency (CBDC).

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Theoretical aspects of mechanism of interaction between money and credit

VESTNIK OF ASTRAKHAN STATE TECHNICAL UNIVERSITY SERIES ECONOMICS ◽

10.24143/2073-5537-2019-4-83-93 ◽

2019 ◽

Vol 2019 (4) ◽

pp. 83-93

Author(s):

Oleg Usherovich Avis

Keyword(s):

Monetary Policy ◽

Central Bank ◽

Commercial Banks ◽

Banking System ◽

Financial System ◽

Bank Lending ◽

National Bank ◽

Weak Points ◽

The Stability

The paper describes the central bank monetary policy that has been heavily criticized, largely due to the banks’ inability to identify emerging risks in a timely manner and to prevent threats to the stability of the entire global financial and banking system. A more rigorous expert-theoretical and public assessment is typical for analyzing the role of commercial banks in these processes, whereby they are recognized as the main culprits of recurrent crises. The excursion into the evolution of theoretical views on the problem under study allows to conclude that it is related to the credit nature of money, in which the activities of commercial banks are of great importance. This idea was shared by many foreign and Russian scientists, who at one time offered their recipes for improving the monetary mechanism, but remained not taken into account in practice. The initial positions of bank lending processes and money making on their basis in volumes and quality, often unregulated, have been analyzed. Much attention is paid to the role of the Central Bank, the bank customers and the state in shaping the credit nature of money. As an alternative to modern methods of monetary regulation, the idea of full-value money has been described. As an example, the phenomenon of the Swiss full-value money initiative in 2018 has been given. It is noted that the initiative demanded to ban issuing electronic (non-cash) money from the commercial banks in order to stabilize the financial system. The weak points of the reform include a threat to the stability of the money value, the low degree of independence of the National Bank of Switzerland. It has been inferred that the events taking place in the modern financial system may indicate significant transformations of the design and toolkit of the modern monetary policy

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On the Role of Monetary and Fiscal Policies in Russia at the Crisis and Post-crisis periods

Voprosy Ekonomiki ◽

10.32609/0042-8736-2010-12-17-32 ◽

2010 ◽

pp. 17-32 ◽

Cited By ~ 1

Author(s):

V. Manevich

Keyword(s):

Monetary Policy ◽

Central Bank ◽

Commercial Banks ◽

Budget Deficit ◽

Acute Stage ◽

Fiscal Policies ◽

Exchange Market ◽

Capital Export ◽

Banking Credit

In the paper the author examines the monetary policy, which was carried out at the acute stage of the crisis and during the years 2009-2010, as well as the forecasts of monetary and fiscal policies for 2011-2013. The author comes to the conclusion that decreasing banking credit activity during the 2nd-4th quarters of 2009 and the 1st quarter of 2010 was due to reduced lending of commercial banks by the Central Bank and the reversion of its monetary policy to floppy following the situation on the exchange market. According to the authors calculations the budget deficit financed by domestic lending may grow to 6-7% of GDP provided that capital export be limited, and the money supply expand mainly on the basis of increases in the net domestic assets.

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The Role of the Central Bank and Commercial Banks in Creating and Maintaining a Favorable Investment Climate in the Country

Modern Corporate Finance, Investments, Taxation and Ratings ◽

10.1007/978-3-319-99686-8_20 ◽

2018 ◽

pp. 415-437

Author(s):

Peter Brusov ◽

Tatiana Filatova ◽

Natali Orekhova ◽

Mukhadin Eskindarov

Keyword(s):

Central Bank ◽

Commercial Banks ◽

Investment Climate

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Stabilność i bezpieczeństwo systemu bankowego - aspekty instytucjonalne i operacyjne

Kwartalnik Kolegium Ekonomiczno-Społecznego Studia i Prace ◽

10.33119/kkessip.2017.1.8 ◽

2017 ◽

pp. 121-142

Author(s):

Bogusław Pietrzak ◽

Katarzyna Wasiak

Keyword(s):

Central Bank ◽

Commercial Banks ◽

Banking System ◽

Safety Net ◽

Operational Conditions ◽

Banking Institutions ◽

The Stability ◽

Conditions Of Stability ◽

Financial Safety Net

This article attempts to systematize the institutional and operational conditions of stability and security of the banking system. The intention of the authors is to analyse some factors strongly affecting the functions and principles of two members of modern banking systems - the central bank and commercial banks. The authors start the analyses by defining stability and security of the banking system. Then point out to the role of the various segments of the financial safety net in providing conditions for stable and secure system, and determine the necessary requirements of the stabilization as demanded from the banking institutions management system. In conclusion, they define the set of requirements (institutional and operational) necessary for achieving the stability and security of the banking system

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FASILITAS DISKONTO (DISCOUNT WINDOWS) SEBAGAI INSTRUMEN MONETER DITINJAU DALAM PERSPEKTIF EKONOMI ISLAM

Al-Masraf : Jurnal Lembaga Keuangan dan Perbankan ◽

10.15548/al-masraf.v4i1.236 ◽

2019 ◽

Vol 4 (1) ◽

pp. 71

Author(s):

RINA EL MAZA ◽

EGI PUTRA SETIAWAN

Keyword(s):

Interest Rate ◽

Central Bank ◽

Interest Rates ◽

Commercial Banks ◽

Profit Sharing ◽

The Public ◽

The Government ◽

Islamic Economic ◽

The Interest Rate

The government has an important role in the welfare of the people's economy. One of them is through the role of the central bank by carrying out monetary policy. This policy was adopted by the central bank or Bank Indonesia (BI) through several instruments, including through regulating discount rates for commercial banks. In this case, BI sets the inflation target as a reference for determining interest rates. When the inflation rate exceeds the targeted, BI will raise interest rates which in turn will reduce the credit issued by commercial banks to the public, because commercial banks must pay higher interest rates to the central bank. And the results of the analysis that the interest rate charged in the credit (Lending Facility) discount facility is classified as an act of usury. Meanwhile, the profits obtained from the deposit of funds in the Facility Deposit transaction are not permitted in the Islamic economy, because in the Islamic economy there is no interest rate but profit sharing, given the fixed and concrete interest rates. In addition, the discount facility is also incompatible with some Islamic economic principles, including; the principle of Illahiyah, Justice, and the government.

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The Role of Monetary Policy in Activating the Bank Credit Channel: Iraq Case Study

Revista Gestão Inovação e Tecnologias ◽

10.47059/revistageintec.v11i4.2517 ◽

2021 ◽

Vol 11 (4) ◽

pp. 4990-5009

Author(s):

Mustafa Mohammed Sabri

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Central Bank ◽

Commercial Banks ◽

Foreign Currency ◽

Active Role ◽

Bank Credit ◽

Credit Channel

The main objective of the research is to find out how monetary policy has influenced the support and promotion of bank credit to promote the economy by creating jobs and addressing unemployment, where the central bank after2003 played a leading and active role in supporting commercial banks and promoting bank credit ‘One of the central bank's important objectives is to stabilize the overall level of prices set out in law No 56 For the year ( ( 2004 Article (3) The Central Bank of Iraq has used the policy of stability in the exchange rate of the dinar as a key tool in stabilizing prices in Iraq through the window of selling foreign currency.

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Internal audit and financial performance of Yemeni commercial banks: Empirical evidence

Banks and Bank Systems ◽

10.21511/bbs.16(2).2021.13 ◽

2021 ◽

Vol 16 (2) ◽

pp. 137-147

Author(s):

Saddam A. Hazaea ◽

Mosab I. Tabash ◽

Jinyu Zhu ◽

Saleh F. A. Khatib ◽

Najib H. S. Farhan

Keyword(s):

Central Bank ◽

Financial Performance ◽

Empirical Evidence ◽

Commercial Banks ◽

Positive Impact ◽

Internal Audit ◽

Internal Auditors ◽

Overall Performance

This study seeks to verify the contribution of internal audit (IA), especially its role in improving financial performance in Yemeni commercial banks, with a specific focus on three factors, namely: the independence and objectives of IA, the quality of IA and the size of IA. This study reviews some existing literature on the contribution and role of IA in improving financial performance. It relies on available data from questionnaires. 90 questionnaires were distributed to nine commercial banks in Yemen (23 branches) working under the supervision of the Central Bank of Yemen; 81 questionnaires (90%) were regained and used in the process of analysis. To analyze the data, three analysis approaches were used, including description, correlation, and regression. The results showed that the IA has a significant impact on the overall performance of Yemeni commercial banks. Furthermore, the results showed that the auditors’ efficiencies, as well as their financial and accounting experiences, have a significant and positive impact on financial performance. It was revealed that the independence and objectivity of internal auditors are highly insignificant for financial performance. However, the size of IA and the frequency of the auditors’ meetings have a negative and significant effect on financial performance. This study provides some recommendations for improving the effectiveness of IA, which in turn will contribute to improving financial performance.

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