This book analyzes evolution of monetary policy in Rwanda since it was first implemented by the National Bank of Rwanda in 1964 when the bank was established. It contributes to the understanding of monetary policy which is formulation and implementation in different stages of development of a financial system that comprises the financial market (money market and capital market), financial intermediaries such as commercial banks, and the financial sector infrastructures such as payment systems and the credit reference bureau. The book breaks down applied empirical research on the assessment of key assumptions of a monetary targeting framework, namely the stability of money multiplier and money demand using econometrics of time series, through a number of case studies. Presenting a detailed empirical analysis of the monetary transmission mechanism, one of the most analyzed topics in central banks in advanced economies, this book is a valuable read for central bankers and other researchers of monetary policy, particularly in developing economies.
We examine the impact of a large-scale microcredit expansion program on access to finance and the transition of first-time borrowers from microfinance institutions to the formal banking sector. Using administrative micro-data covering the universe of loans to individuals from a developing country, we show that the program significantly increased access to credit, particularly in less developed areas. This effect is driven by the newly set-up credit cooperatives (U-SACCOs), which grant loans to previously unbanked individuals. About 10\% of first-time U-SACCO borrowers that need a second loan switch to the formal banking sector, with commercial banks cream-skimming less risky borrowers from U-SACCOs and granting them larger, cheaper, and longer-term loans. These borrowers are not riskier than similar individuals already in the formal banking sector and only initially receive smaller loans. Our results suggest that the microfinance sector, together with a well functioning credit reference bureau, help mitigate information frictions in credit markets.
We examine the impact of a large-scale microcredit expansion program on access to finance and the transition of first-time borrowers from microfinance institutions to the formal banking sector. Using administrative micro-data covering the universe of loans to individuals from a developing country, we show that the program significantly increased access to credit, particularly in less developed areas. This effect is driven by the newly set-up credit cooperatives (U-SACCOs), which grant loans to previously unbanked individuals. About 10\% of first-time U-SACCO borrowers that need a second loan switch to the formal banking sector, with commercial banks cream-skimming less risky borrowers from U-SACCOs and granting them larger, cheaper, and longer-term loans. These borrowers are not riskier than similar individuals already in the formal banking sector and only initially receive smaller loans. Our results suggest that the microfinance sector, together with a well functioning credit reference bureau, help mitigate information frictions in credit markets.
This book analyzes evolution of monetary policy in Rwanda since it was first implemented by the National Bank of Rwanda in 1964 when the bank was established. It contributes to the understanding of monetary policy which is formulation and implementation in different stages of development of a financial system that comprises the financial market (money market and capital market), financial intermediaries such as commercial banks, and the financial sector infrastructures such as payment systems and the credit reference bureau. The book breaks down applied empirical research on the assessment of key assumptions of a monetary targeting framework, namely the stability of money multiplier and money demand using econometrics of time series, through a number of case studies. Presenting a detailed empirical analysis of the monetary transmission mechanism, one of the most analyzed topics in central banks in advanced economies, this book is a valuable read for central bankers and other researchers of monetary policy, particularly in developing economies.
Thank you for visiting our website. Would you like to provide feedback on how we could improve your experience?
This site does not use any third party cookies with one exception — it uses cookies from Google to deliver its services and to analyze traffic.Learn More.