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Mr. Sohrab Rafiq
This paper explores how monetary policy affects the real economy and its efficacy in promoting financial stability in a large low income country. This paper shows that monetary policy modestly impacts real economic activity and inflation via the bank lending and financial accelerator channels. Second, money market and treasury rates signal changes in the policy stance, while altering banks’ intermediation cost curves due to shifting risk premia. At the same time, evidence points to monetary policy inducing an overshooting in asset prices. These findings suggest that financial stability could be undermined if the calibration of monetary policy is based solely on output and inflation without accounting for the stage of the financial cycle. Finally, the paper discusses policy measures that would enhance the transmission of monetary policy and promote financial stability in Bangladesh.
Mr. Sohrab Rafiq

: Easier monetary policy reduces financial market frictions by altering the shape of banksintermediation cost curve via the risk-taking channel, while lowering the effective amount of financial risk agents face through reduced risk premiums. Lower discount factors help boost asset prices by increasing present value returns. Taken together, the findings for Bangladesh imply that the calibration of monetary policy for output and inflation objectives should account for the stage of the financial cycle. Monetary policy and policies toward financial stability should be

International Monetary Fund. African Dept.
This Selected Issues paper discusses growth strategy for Ghana. Ghana has achieved impressive development gains over the last decades, with rising incomes, lower poverty, and better health, education, and gender outcomes. However, growth has recently become less inclusive, with high inequality and slower poverty reduction. In order to address these challenges, the authorities are pursuing a “Ghana beyond Aid” development strategy centered around agricultural modernization and export-led industrialization. Accelerating productivity growth calls for fostering competition, improving the business environment, strengthening human capital, taking advantage of growing regional markets and industrial policies that prioritize sectors that can export and innovate and where Ghana could achieve economies of scale. Consistent and predictable government policies can help increase long-term investment and improve public spending effectiveness. A key lesson from growth accelerations in other countries is that it is crucial to achieve economies of scale. In most cases, rapid economic growth required achieving export success in specific sectors.
International Monetary Fund. African Dept.

Central African Economic and Monetary Community (CEMAC) Selected Issues

Ms. Petya Koeva Brooks

Liberalization Reforms (1990/91–2000/1) II. Variable Definitions, Model Specification, and Estimation Tables 1. Market Share by Bank Category in 2000/01 2a. Panel Regressions with Time Dummies Only 2b. Panel Regressions with Time and Category Dummies 2c. Panel Regressions with Time and Category Dummies and Their Interactions 3a. Determinants of Bank Intermediation Cost and Profitability: Specification 1 3b. Determinants of Bank Intermediation Cost and Profitability: Specification 2 3c. Determinants of Bank Intermediation Cost and Profitability: Specification

Ms. Petya Koeva Brooks
This paper provides new empirical evidence on the impact of financial liberalization on the performance of Indian commercial banks. The analysis focuses on examining the behavior and determinants of bank intermediation costs and profitability during the liberalization period. The empirical results suggest that ownership type has a significant effect on some performance indicators and that the observed increase in competition during financial liberalization has been associated with lower intermediation costs and profitability of the Indian banks.
Ms. Petya Koeva Brooks

, banks with a higher share of current deposits (as a proportion of total deposits) have significantly lower bank spreads and higher profitability. 16 Table 3a. Determinants of Bank Intermediation Cost and Profitability: Specification 1 ( Herf ) 1 , 2 Spread1 Spread2 Spread3 Spread4 Profit1 Profit2 OLS FE OLS FE OLS FE OLS FE OLS FE OLS FE Oexp 0.10 (0.09) 0.10 (0.04)*** 1.21 (0.92) 0.58 (0.39) 0.88 (0.68) 0.47 (0.34) 0.16 (0.23) 0.26 (0.10)*** -0.32 (0

International Monetary Fund

) have significantly lower bank spreads and higher profitability. 17 Table V.3a. Determinants of Bank Intermediation Cost and Profitability: Specification 1 ( Herf ) 1 , 2 Spread1 Spread2 Spread3 Spread4 Profit1 Profit2 OLS FE OLS FE OLS FF OLS FE OLS FE OLS FF Oexp 0.10 0.10 1.21 0.58 0.88 0.47 0.16 0.26 −0.32 −0.20 −0.69 −0.79 (0.09) (0.04)*** (0.92) (0.39) (0.68) (0.34) (0.23) (0.10)*** (0.16)** (0.06)*** (0

International Monetary Fund

implemented. 4 Bank supervision has been strengthened since the coming into effect of the Financial Institutions Act of 1993 which, among other things, provides for the enhanced scrutiny of banks’ loan portfolio and larger set-asides for substandard loans (see Section IV. C). 5 Banksintermediation cost, in particular the interest rate spread, is more fully discussed in Section IV.A. 6 Until mid-October 1996, reserve requirements applied to nonbank institutions remained at 5 percent of deposits while for commercial banks this was steadily increased, as

International Monetary Fund
This Selected Issues paper presents an analysis of trends in growth and investment in India in the 1990s, with a focus on the slowdown in growth during the second half of the 1990s. The paper discusses the fiscal situation, outlining the key reasons for the deterioration in fiscal balances, how the fiscal situation compares with other developing countries, and the key lessons from countries that managed successful fiscal consolidation. The paper also contains an assessment of India’s opening to global trade and factors that may be affecting India’s export performance.