How Interest Rates Changed under Financial Liberalization A Cross-Country Review
How Interest Rates Changed under Financial Liberalization: A Cross-Country Review

April 2000 - As financial liberalization progressed, the general level of real interest rates increased more in developing countries than it did in industrial countries. Volatility in wholesale interest rates also jumped, often markedly, in most liberalizing countries. Treasury bill rates and bank s...

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Bibliographische Detailangaben
1. Verfasser: Honohan, Patrick (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C The World Bank 1999
Schlagworte:
Asset Prices
Bank Interest Rates
Bank Lending
Bank Spreads
Borrowers
Currencies and Exchange Rates
Debt Markets
Depos Developing Countries
Developing Country
Economic Theory and Research
Emerging Markets
Finance and Financial Sector Development
Financial Liberalization
Financial Literacy
Insurance and Risk Mitigation
Interest
Interest Rate
Interest Rates
Lending
Macroeconomic Management
Macroeconomics and Economic Growth
Market Interest Rates
Money Market
Private Sector Development
Real Interest
Real Interest Rates
Treasury
Treasury Bill
Treasury Bill Rates
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Zusammenfassung:April 2000 - As financial liberalization progressed, the general level of real interest rates increased more in developing countries than it did in industrial countries. Volatility in wholesale interest rates also jumped, often markedly, in most liberalizing countries. Treasury bill rates and bank spreads showed the greatest increase in developing countries, shifting substantial rents from the public sector and from favored borrowers. Financial liberalization was expected to make interest rates and asset prices more volatile, with distributional consequences such as reduced or relocated rents and increased competition in financial services. Honohan examines available data on money market and bank interest rates for evidence of whether these things happened. He shows that as more and more countries liberalized, the level and dynamic behavior of developing-country interest rates converged to industrial-country norms. In the short term, volatility increased in both real and nominal money market interest rates. Treasury bill rates and bank spreads, evidently the most repressed, showed the greatest increase as liberalization progressed - shifting substantial rents from the public sector and from favored borrowers. Whereas quoted bank spreads in industrial countries contracted somewhat in the late 1990s, spreads in developing countries remained much higher, presumably reflecting both market power and the higher risks of lending in the developing world. There was no clear-cut change in mean rates of inflation, monetary depth, or GDP growth. If anything, there was a small average improvement in inflation, but a decline in monetary depth and economic growth, relative to trends in industrial countries. This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to explore optimal policy under financial liberalization. The author may be contacted atphonohan@worldbank.org
Beschreibung:Weitere Ausgabe: Honohan, Patrick: How Interest Rates Changed under Financial Liberalization
Beschreibung:1 Online-Ressource (1 online resource (56 p.))
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