Financial Reforms and Interest Rate Spreads

WP/02/6 IMF Working reputation Financial Reforms and please Rate Spreads in the mercenary Banking System in Malawi Montfort Mlachila and Ephraim W. Chirwa INTERNATIONAL MONETARY FUND © 2002 International Monetary Fund WP/02/6 IMF Working Paper Policy Development and Review Department Financial Reforms and Interest Rate Spreads in the Commercial Banking System in Malawi prompt by Montfort Mlachila and Ephraim W. Chirwa1 Authorized for distribution by Doris C. Ross January 2002 Abstract The views expressed in this Working Paper are those of the author(s) and do not needfully represent those of the IMF or IMF policy. Working Papers describe inquiry in progress by the author(s) and are published to draw out comments and to further debate. This study investigates the impact of pecuniary sector reforms on interest rate spreads in the commercial banking system in Malawi. The financial reform program commenced in 1989 when both the substitute Bank Act and the Banking Act were revised with the easing of main course requirements into the banking system, and indirect monetary policy instruments were subsequently introduced in 1990. The word sense of a floating exchange rate in 1994 attach the end of major policy reforms in the Malawian financial sector.

Using alternative definitions of spreads, our analysis shows that spreads increased signifi good dealtly future(a) liberalization, and panel regression results suggest that the observed high spreads can be attributed to high monopoly power, high reserve requirements, high exchange bank discount rate and high inflation. JEL Classification add up:E43; G21; L13 Keywords: Commercial banks; interest spreads; financial liberalization; Malawi Authors email Address: mmlachila@imf.org, echirwa@yahoo.com Ephraim Chirwa is at the Department of Economics, Chancellor College, University of Malawi. We would like to convey Philippe Egoume-Bossogo, Monica de Bolle, Kristina Kostial, Sergio Leite, Johan Mathisen, Eric... If you want to get a full essay, order it on our website: Ordercustompaper.com

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