The Determinants of Interest Rate Spreads in Developing Countries: Evidence on Tanzania, 1991-2009

2011 ◽  
Author(s):  
Jehovaness Aikaeli ◽  
Francisco M. P. Mugizi ◽  
Michael O.A. Ndanshau
Keyword(s):  
Developing Countries ◽  
Interest Rate ◽  
Interest Rate Spreads

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.

Natural disasters and monetary policy: evidence from an augmented Taylor rule

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nicholas Apergis ◽  
James E. Payne
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Interest Rate ◽  
Natural Disasters ◽  
Natural Disaster ◽  
Taylor Rule ◽  
Nominal Interest Rate ◽  
Policy Response ◽  
Content Type ◽  
Short Run

Purpose The purpose of this paper is to examine the short-run monetary policy response to five different types of natural disasters (geophysical, meteorological, hydrological, climatological and biological) with respect to developed and developing countries, respectively. Design/methodology/approach An augmented Taylor rule monetary policy model is estimated using systems generalized method of moments panel estimation over the period 2000–2018 for a panel of 40 developed and 77 developing countries, respectively. Findings In the case of developed countries, the greatest nominal interest rate response originates from geophysical, meteorological, hydrological and climatological disasters, whereas for developing countries the nominal interest rate response is the greatest for geophysical and meteorological disasters. For both developed and developing countries, the results suggest the monetary authorities will pursue expansionary monetary policies in the short-run to lower nominal interest rates; however, the magnitude of the monetary response varies across the type of natural disaster. Originality/value First, unlike previous studies, which focused on a specific type of natural disaster, this study examines whether the short-run monetary policy response differs across the type of natural disaster. Second, in relation to previous studies, the analysis encompasses a much larger panel data set to include 117 countries differentiated between developed and developing countries.

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 SOLAR 1.1: DEVELOPMENT OF SOFTWARE FOR SELECTING COMMERCIALLY AVAILABLE PHOTOVOLTAIC PANELS, INCLUDING THE ECONOMIC ANALYSIS

2009 ◽  
Vol 8 (2) ◽  
pp. 21
Author(s):  
P. Laranci ◽  
J. L. Silveira ◽  
W. Q. Lamas
Keyword(s):  
Developing Countries ◽  
Interest Rate ◽  
Economic Analysis ◽  
Electric Energy ◽  
Photovoltaic System ◽  
Photovoltaic Panels ◽  
Subsidy Rate ◽  
Electricity Cost ◽  
Electricity Grids ◽  
The Interest Rate

Photovoltaic energy represents an opportunity to produce electricity in a clean manner. It can be applied in all world places, in particular in the developing countries, where there are places where electricity grids are unreliable or non-existent and is inconvenient to make investments in a grids expansion. In remote locations photovoltaic power supplies often the most economic and cleaner option to produce electric energy. In addition, many developing countries have high radiation levels year round because of their latitude. The software SOLAR 1.1 was developed with purpose of helping the choice of photovoltaic panels available commercially including electric needs calculation for the installation. This new version of program also help to conduce the economic analysis for grid connected or stand alone photovoltaic systems for the choice of convenient values of interest rate and payback period. In this version of the software is possible to select the language among English, Italian and Portuguese. The software choices the panels in its archive that contains more of 250 types of photovoltaic modules made by 35 producers. The selection provides as output three modules, the cheapest for each cell type: monocrystalline, multicrystalline and amorphous. The software archive can be updated adding new item or editing the inserted items. The economic analysis can be operated by SOLAR 1.1 in each of the chosen panels. This analysis gives as output all the values of the costs in the photovoltaic system and the diagrams with the electricity cost and the expected annual saving trend with variation of the amortisation period and for different values of the interest rate and the governmental subsidy rate.

Central bank transparency, inflation targeting and monetary policy: a panel data approach

2018 ◽  
Vol 45 (6) ◽  
pp. 1159-1174 ◽  
Author(s):  
Gabriel Caldas Montes ◽  
Cristiane Gea
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Panel Data ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Content Type ◽  
Central Bank Transparency ◽  
Policy Interest

Purpose The evidence concerning the effects of the inflation targeting (IT) regime as well as greater central bank transparency on monetary policy interest rates is not conclusive, and the following questions remain open. What is the effect of adopting IT on both the level and volatility of monetary policy interest rate? Does central bank transparency affect the level of the monetary policy interest rate and its volatility? Are these effects greater in developing countries? The purpose of this paper is to contribute to the literature by answering these questions. Hence, the paper analyzes the effects of IT and central bank transparency on monetary policy. Design/methodology/approach The analysis uses a sample of 48 countries (31 developing) comprising the period between 1998 and 2014. Based on panel data methodology, estimates are made for the full sample, and then for the sample of developing countries. Findings Countries that adopt the IT regime tend to have lower levels of monetary policy interest rates, as well as lower interest rate volatility. The effect of adopting IT on both the level and volatility of the basic interest rate is smaller in developing countries. Besides, countries with more transparent central banks have lower levels of monetary policy interest rates, as well as lower interest rate volatility. In turn, the effect of central bank transparency on both the level and volatility of the basic interest rate is greater in developing countries. Practical implications The study brings important practical implications regarding the influence of both the IT regime and central bank transparency on monetary policy. Originality/value Studies have sought to analyze whether IT and central bank transparency are effective to control inflation. However, few studies analyze the influence of IT and central bank transparency on interest rates. This study differs from the few existing studies since: the analysis is done not only for the effect of transparency on the level of the monetary policy interest rate, but also on its volatility; the central bank transparency index that is used has never been utilized in this sort of analysis; and the study uses panel data methodology, and compares the results between different samples.

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