Financial Reforms and Interest Rate Spreads in the Commercial Banking System in Malawi
By E. Chirwa, Montfort Mlachila. Social Science Research Network, 2004
236 citations recorded by the source corpus.
This study investigates the impact of financial sector reforms on interest rate spreads in the commercial banking system in Malawi. The financial reform program commenced in 1989 when both the Reserve Bank Act and the Banking Act were revised with the easing of entry requirements into the banking system, and indirect monetary policy instruments were subsequently introduced in 1990. The adoption of a floating exchange rate in 1994 marked the end of major policy reforms in the Malawian financial sector. Using alternative definitions of spreads, our analysis shows that spreads increased significantly following liberalization, and panel regression results suggest that the observed high spreads can be attributed to high monopoly power, high reserve requirements, high central bank discount rates, and high inflation.
Subfields: Accounting, Finance, Information Systems
View Paper: https://www.semanticscholar.org/paper/b6043671e905b21e03d14d4282cbe145e9d16c25
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Citations in the corpus
- Bank Efficiency, Ownership, and Market Structure: Why are Interest Spreads so High in Uganda? (2006, unknown): “There is a variety of country-level studies on the effect of financial liberalization on margins or spreads, among them, Chirwa and Mlachila (2004) who study the effect of financial liberalization on spreads in Malawi.”
- The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets (2007, unknown): “• Share of securities in total DD stock (SDD2DD) [range 0-100] • Share of DD held by banking system (shBANK) [range 0-100] • a period dummy (ERA) taking the value of 0 for pre-1990 observations (corresponding roughly to financial repression years) and 1 for 1990 onwards (corresponding to the financi”
- The Determinants of Commercial Bank Profitability in Sub-Saharan Africa (2009, result): “This evidence is consistent with the results of other country-specific studies (see for example Chirwa and Mlachila (2004) for Malawi, and Beck and Hesse (2006) for Uganda) .”