Narrow Your Choices

Refine By Topic

Refine By Series

Refine By Language

Refine By Date

—

Refine By IMF Taxonomy

Refine By JEL Taxonomy

Refine by LOC Taxonomy

Refine By THEMA Taxonomy

  • Print
  • Save

Africa > Uganda

You are looking at 1 - 10 of 10 items for :

  • Type: Journal Issue x
  • Financial services x
  • IMF Working Papers x
Clear All Modify Search
Cover IMF Working Papers
E-Money and Monetary Policy Transmission
Zixuan Huang
,
Amina Lahreche
,
Mika Saito
, and
Ursula Wiriadinata
E-money development has important yet theoretically ambiguous consequences for monetary policy transmission, because nonbank deposit-taking e-money issuers (EMIs) (e.g., mobile network operators) can either complement or substitute banks. Case studies of e-money regulations point to complementarity of EMIs with banks, implying that the development of e-money could deepen financial intermediation and strengthen monetary policy transmission. The issue is further explored with panel data, on both monthly (covering 21 countries) and annual (covering 47 countries) frequencies, over 2001 to 2019. We use a two-way fixed effect estimator to estimate the causal effects of e-money development on monetary policy transmission. We find that e-money development has accompanied stronger monetary policy transmission (measured by the responsiveness of interest rates to the policy rate), growth in bank deposits and credit, and efficiency gains in financial intermediation (measured by the lending-to-deposit rate spread). Evidence is more pronounced in countries where e-money development takes off in a context of limited financial inclusion. This paper highlights the potential benefits of e-money development in strengthening monetary policy transmission, especially in countries with limited financial inclusion.
Keywords:
Monetary policy transmission; banks; nonbank financial institutions; e-money; panel data; e-money development; e-money issuer; e-money intensity; E-Money intensity; Financial inclusion; Central bank policy rate; Deposit rates; Bank credit; Sub-Saharan Africa; Africa
Cover IMF Working Papers
Drivers of Financial Access: the Role of Macroprudential Policies
Ms. Corinne C Delechat
,
Lama Kiyasseh
,
Ms. Margaux MacDonald
, and
Rui Xu
This study analyzes the drivers of the use of formal vs. informal financial services in emerging and developing countries using the 2017 Global FINDEX data. In particular, we investigate whether individuals’ choice of financial services correlates with macro-financial and macro-structural policies and conditions, in addition to individual and country characteristics. We start our analysis on middle and low-income countries, and then zoom in on sub-Saharan Africa, currently the region that most relies on informal financial services, and which has the largest uptake of mobile banking. We find robust evidence of an association between macroprudential policies and individuals’ choice of financial access after controlling for personal and country-level characteristics. In particular, macroprudential policies aimed at controlling credit supply seem to be associated with greater resort to informal financial services compared with formal, bank-based access. This highlights the importance for central bankers and financial sector regulators to consider the potential spillovers of monetary policy and financial stability measures on financial inclusion.
Keywords:
WP; informal financial services; IMF staff; low income; asset ratio; SSA sample; loan restriction; Financial inclusion; Mobile banking; Macroprudential policy; Macroprudential policy instruments; Sub-Saharan Africa; Global; formal financial services; financial service access; SSA population
Cover IMF Working Papers
Monetary Policy Implementation and Volatility Transmission along the Yield Curve: The Case of Kenya
Mr. Emre Alper
,
Mr. R. Armando Morales
, and
Mr. Fan Yang
This paper analyzes the degree to which volatility in interbank interest rates leads to volatility in financial instruments with longer maturities (e.g., T-bills) in Kenya since 2012, year in which the monetary policy framework switched to a forward-looking approach, relative to seven other inflation targeting (IT) countries (Ghana, Hungary, Poland, South Africa, Sweden, Thailand, and Uganda). Kenya shows strong volatility transmission and high persistence similar to other countries in transition to a more forward-looking monetary policy framework. These results emphasize the importance of a strong commitment to an interbank rate as an operational target and suggest that the central bank could reduce uncertainty in short-term yields significantly by smoothing out the overnight interest rates around the policy rate.
Keywords:
WP; Kenya; rate; Monetary policy implementation; inflation targeting; volatility transmission; interbank rate; overnight rate; headline inflation; inflation objective; money market rate; monetary policy Analysis Unit; interbank rate corridor; inflation target range; interbank market rate; overnight market interest rate; inflation modeling; inflation expectation; Interbank rates; Central bank policy rate; Yield curve; Treasury bills and bonds; Monetary policy frameworks; Africa; Global; interest rate volatility; policy rate change; interbank rate series; year inflation expectation
Cover IMF Working Papers
Taylor Visits Africa
Carlos Goncalves
Many low-income countries do not use interest rates as their main monetary policy instrument. In East Africa, for instance, targeting money aggregates has been pretty much the rule rather than the exception. Nevertheless, these targets are seldom met and often readjusted according to the economic environment. This opens up the possibility that central banks are de facto pursuing a strategy more akin to a Taylor Rule. Estimations of small-scale models for Kenya, Uganda and Tanzania suggest that these self-styled "monetary targeters" are respecting the Taylor Principle, that is are on average increasing nominal interest rates more than proportionally to inflation. Nevertheless, steep deviations from the Taylor Rule have taken place in Kenya and Tanzania. In Uganda, these errors are much smaller, in fact similar in size to Taylor Rule deviations found for Brazil. More surprisingly, they are smaller than South Africa’s, the continent’s sole long-term inflation targeter.
Keywords:
WP; inflation deviation; interest rate equation; Neutral interest rates; central bank; inflation target; monetary policy tightness; interest rates instrument; deviations from the Taylor Rule; inflation goal; Inflation; Output gap; Interbank rates; Inflation targeting; Africa
Cover IMF Working Papers
The Monetary Transmission Mechanism in the Tropics: A Narrative Approach
Mr. Andrew Berg
,
Ms. Luisa Charry
,
Mr. Rafael A Portillo
, and
Mr. Jan Vlcek
Many central banks in low-income countries in Sub-Saharan Africa are modernising their monetary policy frameworks. Standard statistical procedures have had limited success in identifying the channels of monetary transmission in such countries. Here we take a narrative approach, following Romer and Romer (1989), and center on a significant tightening of monetary policy that took place in 2011 in four members of the East African Community: Kenya, Uganda, Tanzania and Rwanda. We find clear evidence of the transmission mechanism in most of the countries, and argue that deviations can be explained by differences in the policy regime in place.
Keywords:
WP; exchange rate; Kenya; central bank; rate; Uganda; Monetary Transmission Mechanisms; Low Income Countries; core inflation; nominal exchange rate; policy regime; headline inflation; interest rate transmission mechanism; economic structure; excess reserves; interest rate channel; exchange rate pressure; exchange rate channel; monetary policy response; Exchange rates; Inflation; Short term interest rates; Central bank policy rate; Exchange rate arrangements; Global
Cover IMF Working Papers
Monetary Transmission Mechanism in the East African Community: An Empirical Investigation
Mr. Hamid R Davoodi
,
S. V. S. Dixit
, and
Gabor Pinter
Do changes in monetary policy affect inflation and output in the East African Community (EAC)? We find that (i) Monetary Transmission Mechanism (MTM) tends to be generally weak when using standard statistical inferences, but somewhat strong when using non-standard inference methods; (ii) when MTM is present, the precise transmission channels and their importance differ across countries; and (iii) reserve money and the policy rate, two frequently used instruments of monetary policy, sometimes move in directions that exert offsetting expansionary and contractionary effects on inflation—posing challenges to harmonization of monetary policies across the EAC and transition to a future East African Monetary Union. The paper offers some suggestions for strengthening the MTM in the EAC.
Keywords:
WP; price level; contractionary monetary policy; exchange rate; central bank; money multiplier; Monetary policy; reserve money; policy rate; vector autoregressions; monetary policy shock; transmission mechanism; monetary policy authority; interest rate channel; rising prices; monetary policy transmission; Monetary base; Central bank policy rate; Vector autoregression; Credit; Exchange rates; Global
Cover IMF Working Papers
Monetization in Low- and Middle-Income Countries
Mr. Noriaki Kinoshita
and
Mr. Cameron McLoughlin
The degree of an economy’s monetization, which has an important implication on economic growth, can be affected by the conduct of monetary policy, financial sector reform, and episodes of financial crises. The paper finds that monetization--measured by the ratio of broad money to nominal GDP-- in low- to middle-income countries is significantly correlated with per-capita GDP, real interest rates, and financial sector reform. It suggests that maintaining an upward momentum in monetization can be an important policy objective, particularly for low-income countries, and that monetary and financial sector policies need to be conducive to enhancing monetization.
Keywords:
WP; monetization; monetization ratio; rate; GDP; Financial Sector Reform; Low- and Middle-Income Countries; inflation expectation; central bank financing; monetization experience; influence monetization; monetization outcome; Deposit rates; Financial sector development; Bank deposits; Inflation; Sub-Saharan Africa
Cover IMF Working Papers
Assessing Bank Competition within the East African Community
Sarah Sanya
and
Matthew Gaertner
This paper is an empirical analysis of competitiveness in the banking system of four out of the five East African Community (EAC) countries2. The results show that the degree of competition is low due to a combination of structural and socio-economic factors. By way of preview, the analysis ranks the countries in terms of banking sector competitiveness in the following order: Kenya, Tanzania, Uganda and Rwanda.
Keywords:
WP; return on assets; concentration ratio; EAC country; bank competition; East African Community; Competition; Banking; Financial sector; H-statistic; Lerner Index; bank regulation; bank performance indicator; EAC banking systems; bank freedom; banks output; Commercial banks; Foreign banks; Credit; Africa
Cover IMF Working Papers
Measuring Financial Barriers Among East African Community Countries
Yi David Wang
This paper seeks to quantify existing financial barriers among East African Community (EAC) member countries based on analysis of each member country’s foreign exchange market. The primary contribution of this paper is the generation of an aggregate measure of financial barriers for the three relatively more advanced members (Kenya, Uganda, and Tanzania) using forward foreign exchange and interbank interest rate data. Its empirical results, which are corroborated by other evidence such as the levels of development of the financial markets and restrictions on capital flows, suggest that Kenya is the EAC’s most financially open country, followed by Uganda, and then Tanzania. The fact that the three countries exhibit different degrees of financial openness suggests that financial integration in the EAC region has a way to go.
Keywords:
WP; EAC country; foreign exchange market; exchange rate; dollar; Forward rates; foreign exchange; financial barrier; financial integration; EAC member; EAC currency; spot market; Kenya shilling; Currency markets; Interest rate parity; Currencies; Interbank rates; Global
Cover IMF Working Papers
Financial Liberalization, Money Demand, and Inflation in Uganda
Mr. Jean-Claude Nachega
This paper uses cointegration analysis to investigate the empirical relationship among money, prices, income, and a vector of interest rates in Uganda from 1982 to 1998. Despite the substantial financial market liberalization that has taken place in the early 1990s, quarterly time-series data confirm that a stable relationship prevailed among real broad money, income, and domestic and foreign interest rates. The empirical results indicate income homogeneity, a strong own-rate-of-return effect, a high degree of international capital mobility and asset substitutability, and demonstrate that both domestic and foreign factors are important determinants of inflation in Uganda.
Keywords:
WP; money demand; exchange rate; treasury bill; Uganda; inflation; financial liberalization; cointegration; broad money velocity; demand function; exchange rate depreciation; velocity equation; depreciation rate; inflation process; Monetary base; Demand for money; Velocity of money; Interbank rates; Sub-Saharan Africa