Monetary Policy Transmission in Ghana : Does the Interest Rate Channel Work?

Author/Editor: Arto Kovanen
Publication Date: November 01, 2011
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: This paper analyzes interest rate pass-through in Ghana. Time series and bank-specific data are utilized to highlight linkages between policy, wholesale market, and retail market interest rates. Our analysis shows that responses to changes in the policy interest rate are gradual in the wholesale market. Prolonged deviation in the interbank interest rate from the prime rate illustrate the challenges the Bank of Ghana faces when targeting a short-term money market interest rate. Asymmetries in the wholesale market adjustment possibly relate to monetary policy signaling, weak policy credibility, and liquidity management. In the retail market, pass-through to deposit and lending interest rates is protracted and incomplete.1
Series: Working Paper No. 11/275
Subject(s): Banks | Central bank policy | Financial systems | Interest rates

Author's Keyword(s): Interest rate determination | monetary policy transmission
Publication Date: November 01, 2011
ISBN/ISSN: 9781463925314/1018-5941 Format: Paper
Stock No: WPIEA2011275 Pages: 32
US$18.00 (Academic Rate:
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