Low interest rate policy and the use of reserve requirements in emerging markets

Andreas Hoffmann and Axel Loeffler

No 120, Working Papers from University of Leipzig, Faculty of Economics and Management Science

Abstract: The paper attempts to shed light on the link between monetary policy in large economies with international currencies (the United States and the euro area) and the use of reserve requirements in emerging markets. Using reserve requirement data for 28 emerging markets from 1998 to 2012 we provide evidence that emerging markets tend to raise reserve requirements and repress financial markets to curb speculative capital inflows when interest rates in the major economies decline. Our finding suggests that the current low interest rate policies of the major economies may have collateral effects on emerging markets by triggering financially repressive policies.

Keywords: Reserve Requirements; Financial Repression; Emerging Markets (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Low interest rate policy and the use of reserve requirements in emerging markets (2014)
Working Paper: Low Interest Rate Policy and the Use of Reserve Requirements in Emerging Markets (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:leiwps:120

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