Excess Liquidity in Guyana: Theoretical and Policy Implications

Tarron Khemraj

The IUP Journal of Financial Economics, 2007, vol. V, issue 3, 42-58

Abstract: The paper argues that banks demand non-remunerative excess reserves because of: (i) markup interest rates in the loan market and the government Treasury bill market; and (ii) a foreign currency constraint in the market of foreign exchange. The minimum markup interest rates are consistent with an oligopolistic banking sector. The non-competitive nature of the government security market implies (i) there is no exogenous domestic interest rate to pin down the domestic term structure; and (ii) the theory of the banking firm when applied to underdeveloped economies has to be implemented in an open economy context. An indirect monetary policy which aims at managing excess bank reserves have very limited influence on the loan market.

Date: 2007
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjfe:v:05:y:2007:i:3:p:42-58

Access Statistics for this article

More articles in The IUP Journal of Financial Economics from IUP Publications
Bibliographic data for series maintained by G R K Murty ().