Measuring and Mending Monetary Policy Effectiveness Under Capital Account Restrictions: Lessons from Mauritania

March 27, 2013

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Robert Blotevogel. Measuring and Mending Monetary Policy Effectiveness Under Capital Account Restrictions: Lessons from Mauritania, (USA: International Monetary Fund, 2013) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

I propose a new approach to identifying exogenous monetary policy shocks in low-income countries with capital account restrictions. In the case of Mauritania, a domestic repatriation requirement is the key institutional characteristic that allows me to establish exogeneity. Unlike in advanced countries, I find no evidence for a statistically significant impact of exogenous monetary policy shocks on bank lending. Using a unique bank-level dataset on monthly balance sheets of six Mauritanian banks over the period 2006–11, I estimate structural vector autoregressions and two-stage least square panel models to demonstrate the ineffectiveness of monetary policy. Finally, I discuss how a reduction in banks’ loan concentration ratios and improvements in the liquidity management framework could make monetary stimuli more effective.

Subject: Agroindustries, Bank credit, Banking, Credit, Economic sectors, Exports, Financial institutions, International trade, Loans, Money

Keywords: Agroindustries, Balance sheet equity, Bank credit, Bank lending, Bank reserves, Banks' holding, Capital account restrictions, Central bank, Credit, Excess reserves, Exogenous monetary policy shocks, Exports, Fish export, Global, Liquidity management, Liquidity position, Loan concentration, Loan portfolio, Loans, Low-income countries, Monetary policy effectiveness, Monetary policy shock, Private-sector credit, Refinancing possibility, Risk management capability, Transmission mechanism, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/077
Stock No:

WPIEA2013077
ISBN:

9781484328682
ISSN:

1018-5941

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