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Financial Structure, Bank Lending Rates, and the Transmission Mechanism of Monetary Policy
Author:
Ms. Angeliki Kourelis
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and
Mr. Carlo Cottarelli
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Series:
IMF Working Papers
Volume/Issue:
Volume 1994: Issue 039
Language:
English
Publication Date:
01 Mar 1994
DOI:
https://doi.org/10.5089/9781451845761.001
ISBN:
9781451845761
ISSN:
1018-5941
Pages:
66
Keywords:
WP; lending rate; money market rate; rate stickiness; prime rate; transmission mechanism; Treasury bill rate; Money markets; Discount rates; Bank credit; Commercial banks; Competition; Africa
Legal-disclaimer:
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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The stickiness of bank lending rates with respect to money market rates is often regarded as an obstacle to the smooth transmission of monetary policy impulses. Yet, no systematic measure of the different degree of lending rate stickiness across countries has been attempted. This paper provides such a measure. It also relates the different degree of lending rate stickiness to structural features of the financial system, such as the existence of barriers to competition, the degree of development of financial markets, and the ownership structure of the banking system. Thus, the paper provides further evidence on the relationship between structural financial policies and monetary policy, as well as on the relevance of credit markets for the monetary policy transmission mechanism. The role of administered discount rates in speeding up the. adjustment of lending rates is also discussed.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1994: Issue 039