Abstract/Details

The effect of bank reserve requirements on lending volume and interest rates faced by borrowers


2011 2011

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Abstract (summary)

In the aftermath of the 2008 Financial Crisis, policymakers have been forced to consider options that strengthen the financial system and safeguard the assets of depositors. However, policymakers have also been charged with promoting economic recovery. Reserve requirements impact both in that raising such requirements would promote stability, but would come at a cost in terms of shrinking the monetary aggregate, specifically M1 and M2. This paper studies the relationship that raising or lowering the reserve requirement has on aggregate lending volume and interest rates faced by borrowers in the marketplace. It concludes that raising the reserve requirement is associated with a significant decrease in aggregate lending volume and a significant increase in market interest rates. These results are useful to policymakers seeking to strike a balance between promoting policies that strengthen the financial system and also promote an expedient economic recovery.

Indexing (details)


Subject
Economics;
Finance;
Banking;
Studies;
Bank reserves;
Interest rates
Classification
0501: Economics
0508: Finance
0770: Banking
Identifier / keyword
Social sciences; Fractional reserve banking; Lending; Lending volume; Reserve banking; Reserve ratio; Reserve requirement
Title
The effect of bank reserve requirements on lending volume and interest rates faced by borrowers
Author
Okamoto, Geoffrey W. S.
Number of pages
37
Publication year
2011
Degree date
2011
School code
0076
Source
MAI 49/05M, Masters Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
ISBN
9781124601908
Advisor
Yehoue, Etienne B.
University/institution
Georgetown University
Department
Public Policy & Policy Management
University location
United States -- District of Columbia
Degree
M.P.P.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
1491501
ProQuest document ID
865341611
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/865341611
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