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Africa > Uganda

You are looking at 1 - 10 of 17 items for :

  • Type: Journal Issue x
  • Financial services x
  • Financial Economics x
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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 Departmental Papers
Macro-Financial Linkages in Shallow Markets: Experience from the African Department’s Pilot Countries
International Monetary Fund. African Dept.
This paper assesses and disseminates experiences and lessons from low-income countries (LICs) in Sub-Saharan Africa that were selected by the Africa Department in 2015-16 as pilots for enhanced analysis of macro-financial linkages in Article IV staff reports. The paper focuses on the common characteristics across the pilot countries and highlights the tools used in the analysis, the challenges encountered, and the solutions deployed in overcoming them.
Keywords:
DPPP; DP; interest rate; credit risk; central bank; banking sector; bank competition; cost of funds; composite index; lending condition; Malawian bank; economic value; bank information cost; financial system assets; banking system assets; bank level; banks in Benin; bank agent; Financial sector development; Financial sector; Stress testing; Credit; Sub-Saharan Africa; East Africa; Middle East; East Asia
Cover Departmental Papers
Financial Development in Sub-Saharan Africa: Promoting Inclusive and Sustainable Growth
Mr. Montfort Mlachila
,
Ahmat Jidoud
,
Ms. Monique Newiak
,
Bozena Radzewicz-Bak
, and
Ms. Misa Takebe
This paper discusses how sub-Saharan Africa’s financial sector developed in the past few decades, compared with other regions. Sub-Saharan African countries have made substantial progress in financial development over the past decade, but there is still considerable scope for further development, especially compared with other regions. Indeed, until a decade or so ago, the level of financial development in a large number of sub-Saharan African countries had actually regressed relative to the early 1980s. With the exception of the region’s middle-income countries, both financial market depth and institutional development are lower than in other developing regions. The region has led the world in innovative financial services based on mobile telephony, but there remains scope to increase financial inclusion further. The development of mobile telephone-based systems has helped to incorporate a large share of the population into the financial system, especially in East Africa. Pan-African banks have been a driver for homegrown financial development, but they also bring a number of challenges.
Keywords:
DPPP; DP; financial system; monetary union; market index; banking sector; return on assets; financial institution index; commodity price; return on equity; Financial sector development; Financial inclusion; Basel II; Financial sector; Sub-Saharan Africa; Africa; East Africa; Global; Asia and Pacific
Cover IMF Staff Country Reports
United Republic of Tanzania: Selected Issues-Macrofinancial Issues
International Monetary Fund. African Dept.
This Selected Issues paper analyzes the financial sector in Tanzania. The Tanzanian financial system has a number of characteristics commonly seen in other low-income countries. The system is relatively small, dominated by banks, and has not been particularly inclusive. Costs related to basic financial services have come down. However, in other areas, progress remains limited. Firms’ access to credit remains a problem, access to the financial infrastructure continues to lag, and market development remains at a low level. The banking system overall is well-capitalized and reasonably profitable, but there is considerable variation among bank categories.
Keywords:
ISCR; CR; excess reserves; interest rate; transmission mechanism; Community bank; deposits-to-GDP ratio; mobile money; market participant; reserve money target; Mobile banking; Financial sector development; Commercial banks; Credit; Global
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 Policy Papers
Evolving Monetary Policy Frameworks in Low-Income and Other Developing Countries
International Monetary Fund
Over the past two decades, many low- and lower-middle income countries (LLMICs) have improved control over fiscal policy, liberalized and deepened financial markets, and stabilized inflation at moderate levels. Monetary policy frameworks that have helped achieve these ends are being challenged by continued financial development and increased exposure to global capital markets. Many policymakers aspire to move beyond the basics of stability to implement monetary policy frameworks that better anchor inflation and promote macroeconomic stability and growth. Many of these LLMICs are thus considering and implementing improvements to their monetary policy frameworks. The recent successes of some LLMICs and the experiences of emerging and advanced economies, both early in their policy modernization process and following the global financial crisis, are valuable in identifying desirable features of such frameworks. This paper draws on those lessons to provide guidance on key elements of effective monetary policy frameworks for LLMICs.
Keywords:
PP; inflation objective; consultation clause; monetary policy strategy; transmission mechanism; analysis framework; central bank official; headline inflation; inflation expectation; inflation outlook; monetary policy action; monetary policy operations; monetary policy strategy-how; monetary policy framework; fiscal policy; broad money; foreign exchange; Inflation; Monetary policy frameworks; Price stabilization; Exchange rates; Central bank policy rate; Global
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
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 Policy Papers
Enhancing Financial Sector Surveillance in Low-Income Countries - Financial Deepening and Macro-Stability
International Monetary Fund
This paper aims to widen the lens through which surveillance is conducted in LICs, to better account for the interplay between financial deepening and macro-financial stability as called for in the 2011 Triennial Surveillance Review. Reflecting the inherent risk-return tradeoffs associated with financial deepening, the paper seeks to shed light on the policy and institutional impediments in LICs that have a bearing on the effectiveness of macroeconomic policies, macro-financial stability, and growth. The paper focuses attention on the role of enabling policies in facilitating sustainable financial deepening. In framing the discussion, the paper draws on a range of conceptual and analytical tools, empirical analyses, and case studies.
Keywords:
PP; LIC bank; LIC financial systems; LIC government; financial activity; government securities market; underdeveloped financial systems; market friction; debt management; market player; market stability; price discovery; interest rate; market development; Financial sector; Credit; Securities markets; Global