The impact of financial development on the effectiveness of monetary policy
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The impact of financial development on the effectiveness of monetary policy
By Nguyen Phan Truc Phuong (VNP 25)
Supervisor: Dr. Nguyen Trong Hoai
Abstract:
There have been many theoretical and empirical studies on financial development's impact on promoting economic growth and stability. This study aims to determine the monetary policy's effectiveness on economic growth and stability affecting the development of financial institutions and financial markets as measured across three aspects of depth, access, and efficiency. In this paper, that relationship is analyzed based on panel data for 144 countries from 1990 to 2017. The results show that the monetary policy's effectiveness on output and inflation negatively affects financial development indicators. In particular, the paper finds large differences between the three levels of income regarding financial development's impact on the monetary policy results' effectiveness on output and inflation. This paper provides an evidence-based approach to the influence of different aspects of financial effects on the monetary policy's effectiveness on growth and inflation between income levels and regions.
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Nguyen Phan Truc Phuong_VNP25_2020.pdf |