Financial development and the effectiveness of monetary policy

Yong, Ma; Lin, Xingkai

doi:10.1016/j.jbankfin.2016.03.002

Cited by 68 publications

(60 citation statements)

References 44 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Furthermore, the restructuring polices of the central bank has rapidly improved the impact of the lending rate. In a divergent views, Ma and Lin (2016) investigate the relationship between financial development and the effectiveness of monetary policy using a panel data from 41 economies [52]. The results show that the effects of monetary policy on output and inflation are significantly and negatively correlated with financial development, indicating that the effectiveness of monetary policy declines as the financial system becomes more developed.…”

Section: Monetary Policy Inequality and Financial Developmentmentioning

confidence: 99%

Monetary Policy and Economic Growth in Developing Countries: Evaluating the Policy Nexus in Nigeria

Idris¹

2019

IJBER

View full text Add to dashboard Cite

While there are numerous studies on the relationship between monetary policy and economic growth, evaluating the policy nexus between the two phenomena remain inconclusive. Undeniably, monetary policy is believe to influence the employment level, price stability, growth of aggregate output and equilibrium in the balance of payment-for the case of developing economies. But the magnitude of its influence largely depends on how it is conducted through various channels and the independency of the apex bank to select the appropriate instruments for formulating the monetary policy. In lieu of that, this study examines the relationship between monetary policy and economic growth in Nigeria using time series data covering the period of 1980 to 2017. The study employs the Cointegration test and the Ordinary Least Square (OLS) technique with the view to estimating the model coefficients and showcase the policy nexus between the variables. Result indicates the existence of long-run relationship between monetary policy indicators and economic growth. Further empirical findings show that money supply has positive effect, while both exchange rate and interest rate have negative effect on the real GDP. As such, monetary authorities in Nigeria should adequately managed and monitored the growth level of money supply in order to realise the desired growth level. Given the socio-economic and political conditions in Nigeria, there is growing needs to formulate appropriate monetary measures which might encourage borrowing through sound and productive interest rate as well as stable exchange rate.

show abstract

Section: Monetary Policy Inequality and Financial Developmentmentioning

confidence: 99%

Monetary Policy and Economic Growth in Developing Countries: Evaluating the Policy Nexus in Nigeria

Idris¹

2019

IJBER

View full text Add to dashboard Cite

show abstract

“…Empirical studies relating to the role of FD on MPE produced mixed results, where some studies argued that more developed financial markets tend to improve the MPE (for example, Singh et al, 2007, Krause andRioja, 2006), whereas some studies conversely showed that other markets tend to reduce the MPE (for example, Carranza et al, 2009, andMa andLin, 2016). Singh et al (2007) argued that monetary policy affects prices in the financial system, thus generating an important impact on the MPE.…”

Section: Literature Reviewmentioning

confidence: 99%

“…This outcome may be due to the size, capitalisation, and liquidity of the central banks in controlling economic activities. A recent study by Ma and Lin (2016) examined the relationship between FD and MPE using panel data from 41 economies. The main findings indicate that the effect of monetary policy on output and inflation are significantly and negatively correlated with FD which indicates that the MPE declines as the financial system become more developed.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In Equations 6 and 7, there are two indicators that represent the level of FD, namely Liquid Liabilities (FD1), and Market Capitalization (FD2) as suggested by Demirgüç-Kunt and , Levine et al (2000), Levine and Zervos (1996), Beck et al (2006), Demirgüç-Kunt et al (2011), and Ma and Lin (2016). Liquid Liabilities indicate the value of financial intermediary credits to the public and private sectors, whereas Market Capitalisation represented the role of stock market as financial intermediaries.…”

Section: The Relationship Between Fd and Mpementioning

confidence: 99%

See 1 more Smart Citation

Financial Development and the Effectiveness of Monetary Policy: New Evidence from Malaysia

Basa

Karim

Zaidi

2019

AAMJ

View full text Add to dashboard Cite

This paper examines the relationship between financial development (FD) and the monetary policy effectiveness (MPE) in Malaysia. Two indicators designate the level of FD, namely liquid liabilities and stock market capitalisation, and gross fixed capital formation are used in estimating the determinants of MPE which is generated using structural vector auto regressive (SVAR) in an open economy approach. Accordingly, an autoregressive distributed lag (ARDL) model is used in examining the effects of FD and gross fixed capital formation on MPE. Using a yearly time series data spanning from 1991 to 2016, the results revealed that there is a cointegration between FD and gross fixed capital formation on MPE. Interestingly, FD has a negatively significant effect on MPE on output and inflation, which indicates that a more developed financial system has hindered the effectiveness of the monetary policy.

show abstract

“…A cross-country comparative study by Ma and Lin (2016) showed that the financially developed countries, the monetary policies were lower effective to the GDP and declined in controlling the inflation if compared to financially less developed countries. A case study from neighboring Vietnam shows that manipulation of exchange and interest rates will have impacts on inflation rates only in the short-term.…”

Section: Literature Reviewsmentioning

confidence: 99%

The Study of Monetary Policy Instruments and Implementation Challenge in Laos

Sourigna¹,

Zhu²,

Chanthavieng³

2018

IJEF

View full text Add to dashboard Cite

The monetary policies have been developed and implemented by the Bank of Lao PDR (BOL). This article presents the monetary policy framework in Laos which includes the policy instruments and implementation mechanism. The author applied the actual implementation and the existing theories to display the Lao monetary tools such as interest rate, open market operation, reserve ratio, exchange rate, credit control, cash flow management and relevant regulations. As well as the policy implementation mechanism has been presented in policy decision, operation department and operation mechanism.The author applies the descriptive analysis on the monetary policy implementation challenge and addressing. They based on monetary policy theories, literature studied, and practical experience from the operation authority. The analysis has found the challenges as The limited of market operation; the dollarization and multiples currencies consumer preference; the challenge in Kip prices, and Kip lending; the foreign capital outflow. Then, the analysis moved forward to the challenge addressing. All of these measures are taken to maintain the efficient management of the monetary system, ensure an effectiveness of the monetary policy implementation in the long-term.

show abstract

Financial development and the effectiveness of monetary policy

Cited by 68 publications

References 44 publications

Monetary Policy and Economic Growth in Developing Countries: Evaluating the Policy Nexus in Nigeria

Monetary Policy and Economic Growth in Developing Countries: Evaluating the Policy Nexus in Nigeria

Financial Development and the Effectiveness of Monetary Policy: New Evidence from Malaysia

The Study of Monetary Policy Instruments and Implementation Challenge in Laos

Contact Info

Product

Resources

About