Interest rate liberalization and capital adequacy in models of financial crises

Barrell, Ray; Karim, Dilruba; Ventouri, Alexia

doi:10.1016/j.jfs.2016.09.001

Cited by 25 publications

(25 citation statements)

References 25 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Excessive government spending often leads to inefficiency, possibly through the channels of bureaucracy, waste, and lower productivity. Moreover, banks in states where the overall environment is conducive to the protection of the private sector property rights and the financial system is characterized by relatively high levels of openness tend to have higher efficiency These results are broadly in line with recent empirical international evidence considering the implications of financial freedom indices (e.g., Chortareas et al, 2013) and/or liberalization and reforms in the financial sector (Barrell et al, 2015).…”

Section: Accepted Manuscriptsupporting

confidence: 86%

Credit market freedom and cost efficiency in US state banking

Chortareas

Kapetanios

Ventouri

2016

Journal of Empirical Finance

Self Cite

View full text Add to dashboard Cite

This paper investigates the dynamics between the credit market freedom counterparts of the economic freedom index drawn from the Fraser institute database and bank cost efficiency levels across the U.S. states. We consider a sample of 3,809 commercial banks per year, on average, over the period 1987-2012. After estimating cost efficiency scores using the Data Envelopment Analysis (DEA), we develop a fractional regression model to test the implications of financial freedom for bank efficiency. Our results indicate that banks operating in states that enjoy a higher degree of economic freedom are more cost efficient. Greater independence in financial and banking markets from government controls can result in higher bank efficiency. This effect emerges in addition to the efficiency enhancing effects of interstate banking and intrastate branching deregulation.

show abstract

Section: Accepted Manuscriptsupporting

confidence: 86%

Credit market freedom and cost efficiency in US state banking

Chortareas

Kapetanios

Ventouri

2016

Journal of Empirical Finance

Self Cite

View full text Add to dashboard Cite

show abstract

“…Other studies found instead that financial liberalization reduces significantly the likelihood of a crisis (Loizos, 2018;Lee, Lin, and Zerng 2016;Barrell, Karim, and Ventouri 2017); and that financial liberalization has a destabilizing effect in the short run, but over time promotes institutional improvements and more stable conditions (Kaminsky and Schmuckler 2002).…”

Section: The Impact Of Liberalization On the Risk Of Crisismentioning

confidence: 99%

Financial Repression is Knocking at the Door, Again

Jafarov

Maino

2019

IMF Working Papers

View full text Add to dashboard Cite

Financial repression (legal restrictions on interest rates, credit allocation, capital movements, and other financial operations) was widely used in the past but was largely abandoned in the liberalization wave of the 1990s, as widespread support for interventionist policies gave way to a renewed conception of government as an impartial referee. Financial repression has come back on the agenda with the surge in public debt in the wake of the Global Financial Crisis, and some countries have reintroduced administrative ceilings on interest rates. By distorting market incentives and signals, financial repression induces losses from inefficiency and rent-seeking that are not easily quantified. This study attempts to assess some of these losses by estimating the impact of financial repression on growth using an updated index of interest rate controls covering 90 countries over 45 years. The results suggest that financial repression poses a significant drag on growth, which could amount to 0.4-0.7 percentage points.

show abstract

“…Result shows that interest have a negative impact and while exchange rate reveals a positive and significant relationship. Moreover, Barrell, Karim and Ventouri (2017) examine the impact of interest rate liberalisation on OECD banking crises, controlling for the standard macro prudential indicators that exist in the present literature covering the sample period of 1980 to 2012 [62]. The authors further test the direct effect of interest rate liberalisation on crisis probabilities and its indirect impacts through capital adequacy.…”

Section: Review Of the Empirical Literaturementioning

confidence: 99%

Macroeconomic Analysis of Interest Rate and Economic Growth in Nigeria: A Time Series Approach

Idris¹

2019

IJFBR

View full text Add to dashboard Cite

This study examines the impact of interest rate on economic growth in Nigeria using annual time series data spanning 1980 to 2017. This phenomenon is particularly interesting from a theoretical standpoint as well as for the understanding of financial market mechanisms. The Vector Autoregression (VAR) model and the Granger causality test are employed to estimate the model coefficients and measure the causal relationship among the concerned variables. From the VAR-based impulse response function and its corresponding variance decomposition estimates, result shows the existence of negative relationship between interest rate and economic growth in Nigeria. In addition, the Granger causality test indicates the presence of bi-directional causal relationship between interest rate and economic growth. Consequently, monetary authorities should designed and implement interest rate policies that enhance investment and take into cognisance other elements that retard investment progression. To attain the desired growth level in Nigeria, monetary authorities and policy makers should adopt policy measures that are growth oriented and have the potentials to accelerate the economy to higher productivity and sustainable economic growth.

show abstract

Interest rate liberalization and capital adequacy in models of financial crises

Cited by 25 publications

References 25 publications

Credit market freedom and cost efficiency in US state banking

Credit market freedom and cost efficiency in US state banking

Financial Repression is Knocking at the Door, Again

Macroeconomic Analysis of Interest Rate and Economic Growth in Nigeria: A Time Series Approach

Contact Info

Product

Resources

About