How Interest Rates Changed under Financial Liberalization : A Cross-Country Review
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. The author examines available data...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/04/437851/interest-rates-changed-under-financial-liberalization-cross-country-review http://hdl.handle.net/10986/18833 |
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okr-10986-188332021-04-23T14:03:46Z How Interest Rates Changed under Financial Liberalization : A Cross-Country Review Honohan, Patrick ANNUAL OBSERVATIONS BANK LENDING CAPITAL ACCOUNT CAPITAL CONTROLS CENTRAL BANKS CREDIT RISK CURRENCY UNIONS DEFLATION DEPOSITORS DEREGULATION DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC GROWTH ECONOMIC PERFORMANCE EQUILIBRIUM EXCHANGE RATE EXCHANGE RATES EXPORTS FINANCIAL INTEGRATION FINANCIAL MARKETS FINANCIAL SYSTEM FORECASTS FOREIGN EXCHANGE GDP GLOBAL INTEREST HIGH INFLATION HIGH VOLATILITY INCOME INDUSTRIAL COUNTRIES INFLATION INTEREST RATE INTEREST RATE LIBERALIZATION INTEREST RATES LENDING RATES LIBERALIZATION LIQUIDITY MARGINAL EFFICIENCY OF CAPITAL MARKET FORCES MARKET POWER MONETARY POLICY MONEY SUPPLY NOMINAL INTEREST RATES POLICY INSTRUMENTS POLICY RESEARCH PRODUCTIVITY PUBLIC SECTOR RATIONAL EXPECTATIONS REAL EXCHANGE REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES RISK AVERSION SECURITIES SECURITIES MARKETS STANDARD DEVIATION STRUCTURAL CHANGE 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. The author 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. 2014-06-30T17:24:17Z 2014-06-30T17:24:17Z 2000-04 http://documents.worldbank.org/curated/en/2000/04/437851/interest-rates-changed-under-financial-liberalization-cross-country-review http://hdl.handle.net/10986/18833 English en_US Policy Research Working Paper;No. 2313 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ANNUAL OBSERVATIONS BANK LENDING CAPITAL ACCOUNT CAPITAL CONTROLS CENTRAL BANKS CREDIT RISK CURRENCY UNIONS DEFLATION DEPOSITORS DEREGULATION DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC GROWTH ECONOMIC PERFORMANCE EQUILIBRIUM EXCHANGE RATE EXCHANGE RATES EXPORTS FINANCIAL INTEGRATION FINANCIAL MARKETS FINANCIAL SYSTEM FORECASTS FOREIGN EXCHANGE GDP GLOBAL INTEREST HIGH INFLATION HIGH VOLATILITY INCOME INDUSTRIAL COUNTRIES INFLATION INTEREST RATE INTEREST RATE LIBERALIZATION INTEREST RATES LENDING RATES LIBERALIZATION LIQUIDITY MARGINAL EFFICIENCY OF CAPITAL MARKET FORCES MARKET POWER MONETARY POLICY MONEY SUPPLY NOMINAL INTEREST RATES POLICY INSTRUMENTS POLICY RESEARCH PRODUCTIVITY PUBLIC SECTOR RATIONAL EXPECTATIONS REAL EXCHANGE REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES RISK AVERSION SECURITIES SECURITIES MARKETS STANDARD DEVIATION STRUCTURAL CHANGE |
| spellingShingle |
ANNUAL OBSERVATIONS BANK LENDING CAPITAL ACCOUNT CAPITAL CONTROLS CENTRAL BANKS CREDIT RISK CURRENCY UNIONS DEFLATION DEPOSITORS DEREGULATION DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC GROWTH ECONOMIC PERFORMANCE EQUILIBRIUM EXCHANGE RATE EXCHANGE RATES EXPORTS FINANCIAL INTEGRATION FINANCIAL MARKETS FINANCIAL SYSTEM FORECASTS FOREIGN EXCHANGE GDP GLOBAL INTEREST HIGH INFLATION HIGH VOLATILITY INCOME INDUSTRIAL COUNTRIES INFLATION INTEREST RATE INTEREST RATE LIBERALIZATION INTEREST RATES LENDING RATES LIBERALIZATION LIQUIDITY MARGINAL EFFICIENCY OF CAPITAL MARKET FORCES MARKET POWER MONETARY POLICY MONEY SUPPLY NOMINAL INTEREST RATES POLICY INSTRUMENTS POLICY RESEARCH PRODUCTIVITY PUBLIC SECTOR RATIONAL EXPECTATIONS REAL EXCHANGE REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES RISK AVERSION SECURITIES SECURITIES MARKETS STANDARD DEVIATION STRUCTURAL CHANGE Honohan, Patrick How Interest Rates Changed under Financial Liberalization : A Cross-Country Review |
| relation |
Policy Research Working Paper;No. 2313 |
| description |
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. The
author 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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Honohan, Patrick |
| author_facet |
Honohan, Patrick |
| author_sort |
Honohan, Patrick |
| title |
How Interest Rates Changed under Financial Liberalization : A Cross-Country Review |
| title_short |
How Interest Rates Changed under Financial Liberalization : A Cross-Country Review |
| title_full |
How Interest Rates Changed under Financial Liberalization : A Cross-Country Review |
| title_fullStr |
How Interest Rates Changed under Financial Liberalization : A Cross-Country Review |
| title_full_unstemmed |
How Interest Rates Changed under Financial Liberalization : A Cross-Country Review |
| title_sort |
how interest rates changed under financial liberalization : a cross-country review |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/04/437851/interest-rates-changed-under-financial-liberalization-cross-country-review http://hdl.handle.net/10986/18833 |
| _version_ |
1764441574405570560 |