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High Real Interest Rates Under Financial Liberalization: Is there a Problem?
Author:
Vicente Galbis null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1993: Issue 007
Language:
English
Publication Date:
01 Jan 1993
DOI:
https://doi.org/10.5089/9781451842364.001
ISBN:
9781451842364
ISSN:
1018-5941
Pages:
94
Keywords:
WP; exchange rate depreciation; interest rate liberalization; inflation rate; real rate of interest; gross investment; rate of return; interest rate factor; uncovered interest rate diff.; real deposit rate; liberalization of interest rates; minimum lending rate; Real interest rates; Deposit rates; Exchange rates; Inflation; Depreciation; West Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Concerns were raised beginning in the 1980s about the possible detrimental effects of high positive real interest rates under financial liberalization. Using a sample of 28 countries that underwent financial liberalization since the 1970s, the paper examines the evidence about the emergence of high real interest rates and discusses the possible causes and likely effects. Some remedies--preferably preventive--are considered including macroeconormic stabilization, fiscal consolidation, improvements in prudential regulation and supervision of the financial sector, and introduction of an efficient management of indirect monetary policy instruments.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund