Monetization in Low- and Middle-Income Countries
IMF Working Papers, June 1, 2012
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Bibliographic details
- Authors: Noriaki Kinoshita, Cameron McLoughlin
- Published: June 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475504651.001
Overview and research question
- Examines the degree of an economy’s monetization and its implications for economic growth.
- Defines monetization as the ratio of broad money to nominal GDP.
- Investigates drivers of monetization in low- to middle-income countries and policy implications.
Key findings
- Monetization (broad money to nominal GDP) in low- to middle-income countries is significantly correlated with:
- per-capita GDP,
- real interest rates,
- financial sector reform.
- Episodes of financial crises, the conduct of monetary policy, and financial sector reform can affect the degree of monetization.
- Maintaining an upward momentum in monetization is identified as an important policy objective, particularly for low-income countries.
Policy implications and recommendations
- Monetary and financial sector policies should be conducive to enhancing monetization.
- Financial sector reform is highlighted as a key channel for increasing monetization.
- Preservation of favorable real interest rate conditions can support monetization progress.
Content in this bundle
- 5. Main Results: Multivariate Regressions