Monetary policy effectiveness in Africa: the role of financial development and institutional quality

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dc.contributor.authorFiador, V.
dc.contributor.authorSarpong-Kumankoma, E.
dc.contributor.authorKarikari, N.K.
dc.date.accessioned2024-05-27T11:24:50Z
dc.date.available2024-05-27T11:24:50Z
dc.date.issued2021
dc.descriptionResearch Articleen_US
dc.description.abstractPurpose: This study aims to provide empirical evidence of the pass-through effect of monetary policy on bank lending rates vis-à-vis the potential moderating effects of financial sector development and institutional quality in Africa. Design, methodology, and approach: The study uses robust fixed effects panel data estimation techniques and data from 1990 to 2017 across 37 countries in Africa. Findings: The results show that financial development aids in the effectiveness of monetary policy transmission. A decomposition of financial development into financial institution development and financial market development shows that financial institutional development is more influential with regard to effectiveness of the interest rate pass-through compared to financial market development. This study again shows that improvements in the quality of institutions reduced lending rates in African economies. Practical implications: The findings present relevant policy implications regarding effective transmission of monetary policy by linking the pursuit of institutional quality, characterized by the control of corruption, political stability, regulatory quality, rule of law and the voice of accountability and development of financial institutions with lending rates and ultimately the demand for growth capital. Originality/value: This study contributes to the literature on the factors influencing the effectiveness of monetary policy. This study considers financial sector development and institutional quality as conduits to monetary policy effectiveness in developing African countries.en_US
dc.identifier.otherDOI 10.1108/JFRC-03-2021-0024
dc.identifier.urihttp://ugspace.ug.edu.gh:8080/handle/123456789/41991
dc.language.isoenen_US
dc.publisherJournal of Financial Regulation and Complianceen_US
dc.subjectFinancial developmenten_US
dc.subjectLending ratesen_US
dc.subjectMonetary policyen_US
dc.titleMonetary policy effectiveness in Africa: the role of financial development and institutional qualityen_US
dc.typeArticleen_US

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