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Monetary Transmission in Low Income Countries, Peter Montiel, Antonio Spilimbergo, Prachi Mishra

This paper reviews monetary transmission mechanisms in low-income countries (LICs) to identify aspects of the channels that may operate differently in LICs relative to advanced and emerging economies. Given the weak institutional frameworks, reduced role of securities markets, imperfect competition in the banking sector and the resulting high cost of bank lending to private firms, the traditional channels (interest rate, bank lending, and asset price) are impaired in LICs. The exchange rate channel is also undermined by central bank intervention in the foreign exchange market. These conclusions are supported by review of the institutional frameworks, statistical analysis, and previous literature
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Monetary transmission in advanced economies; A. The formulation of monetary policy; B. The policy instrument; C. The transmission mechanism; D. Underlying assumptions; III. The monetary policy environment in LICs; A. Size of the formal financial sector; Table 1. Financial Environment Across Countries, 2005; B. Central bank independence; C. Quality of the institutional and regulatory environment; D. Money and interbank market development; E. Secondary market for government securities; F. Competition in the banking sector
Literary Form
non fiction
"October 2010."
Physical Description
1 online resource (68 p.)
Specific Material Designation
Form Of Item

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