Macroeconomic instability and interest rate spreads in Ghana

2020 ◽  
Author(s):  
Emmanuel Owusu‐Ankamah ◽  
Daniel Sakyi
Keyword(s):  
Interest Rate ◽  
Macroeconomic Instability ◽  
Interest Rate Spreads

scholarly journals Macroeconomic determinants of interest rate spreads in Ghana

2017 ◽  
Vol 8 (1) ◽  
pp. 76-88 ◽  
Author(s):  
Samuel Kwabena Obeng ◽  
Daniel Sakyi
Keyword(s):  
Interest Rate ◽  
Exchange Rate Volatility ◽  
Institutional Quality ◽  
Fiscal Discipline ◽  
Content Type ◽  
Distributed Lag ◽  
Short Run ◽  
Interest Rate Spreads ◽  
Macroeconomic Determinants ◽  
The Impact

Purpose The purpose of this paper is to examine macroeconomic determinants of interest rate spreads in Ghana for the period 1980-2013. Design/methodology/approach The autoregressive distributed lag bounds test approach to cointegration and the error correction model were used for the estimation. Findings The results indicate that exchange rate volatility, fiscal deficit, economic growth, and public sector borrowing from commercial banks, increase interest rate spreads in Ghana in both the long and short run. Institutional quality reduces interest rate spreads in the long run while lending interest rate volatility and monetary policy rate reduce interest rate spreads in the short run. Research limitations/implications The depreciation of the Ghana cedi must be controlled since its volatility increases spreads. There is a need for fiscal discipline since fiscal deficits increase interest rate spreads. Government must reduce its domestic borrowing because the associated crowding-out effect increases interest rate spreads. The central bank must improve its monitoring and regulation of the financial sector in order to reduce spreads. Originality/value The main novelty of the paper (compared to other studies on Ghana) lies on the one hand; analysing macroeconomic determinants of interest rate spreads and, on the other hand, controlling for the impact of institutional quality on interest rate spreads in Ghana.

Interest rate spreads implicit in options: Spain and Italy against Germany

2000 ◽  
Vol 10 (2) ◽  
pp. 155-161 ◽  
Author(s):  
Bernardino Adao ◽  
Jorge Barros Luis
Keyword(s):  
Interest Rate ◽  
Interest Rate Spreads

scholarly journals Can Interest Rate Spreads Stabilize the Euro Area?

2014 ◽  
Author(s):  
Michal Brzoza-Brzezina ◽  
Jacek Kotlowski ◽  
Kamil Wierus
Keyword(s):  
Interest Rate ◽  
Euro Area ◽  
Interest Rate Spreads

scholarly journals Safe Assets, Liquidity, and Monetary Policy

2017 ◽  
Vol 9 (2) ◽  
pp. 182-227 ◽  
Author(s):  
Pierpaolo Benigno ◽  
Salvatore Nisticò
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Risk Sharing ◽  
Balance Sheet ◽  
Multiple Assets ◽  
Interest Rate Spreads ◽  
The Interest Rate ◽  
Liquidity Shock ◽  
Deep Recession

This paper studies monetary policy in models where multiple assets have different liquidity properties: safe and “pseudo-safe” assets coexist. A shock worsening the liquidity properties of the pseudo-safe assets raises interest rate spreads and can cause a deep recession-cum-deflation. Expanding the central bank’s balance sheet fills the shortage of safe assets and counteracts the recession. Lowering the interest rate on reserves insulates market interest rates from the liquidity shock and improves risk sharing between borrowers and savers. (JEL E31, E32, E43, E44, E52)

scholarly journals Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability

2003 ◽  
Vol 35 (6b) ◽  
pp. 1379-1412 ◽  
Author(s):  
Jess Benhabib ◽  
Stephanie Schmitt-Grohe ◽  
Martin Uribe
Keyword(s):  
Interest Rate ◽  
Interest Rate Rules ◽  
Macroeconomic Instability

The effects of bond ratings on income inequality in the developing world

2020 ◽  
pp. 1-31
Author(s):  
Glen Biglaiser ◽  
Ronald McGauvran
Keyword(s):  
Developing Countries ◽  
Interest Rate ◽  
Income Inequality ◽  
Credit Rating ◽  
Developing World ◽  
Bond Ratings ◽  
Monetary Policies ◽  
Neoliberal Reforms ◽  
Interest Rate Spreads ◽  
The Rich

Abstract Although the effects of globalization on income inequality has received much attention, missing from the discussion is the role played by credit rating agencies (CRAs) on income inequality. Using a sample of seventy developing countries from 1990–2015, we find that bond ratings have significant, yet indirect, effects on income inequality. We see that interest rate spreads, and to a lesser degree tax, labor, and monetary policies, mediate the relationship between ratings and income inequality. Specifically, developing countries receiving bond downgrades observe a rise in interest rate spreads. Countries with higher interest rate spreads tend to have less available credit, which reduces output and production, promoting surplus labor and its consequences for those at the bottom of the income distribution. Bond downgrades also compel developing countries to pursue neoliberal reforms, endorsed by the CRAs, in an attempt to lift their ratings. The effects of tax, labor, and monetary policies, in particular, appear to enlarge disparities between the rich and the poor. Our research helps to identify the mechanism by which CRAs and globalization, more generally, impact wealth disparities in the developing world.

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