Financial Repression is Knocking at the Door, Again
IMF Working Papers, September 30, 2019
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- Financial Repression is Knocking at the Door, Again
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Bibliographic details
- Authors: Etibar Jafarov, Rodolfo Maino, Marco Pani
- Published: September 30, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513512488.001
Overview and context
- Authors: Etibar Jafarov, Rodolfo Maino, Marco Pani
- Publication: IMF Working Papers, Working Paper No. 2019/211, Issue 211, Volume 2019
- Date: September 30, 2019
- Pages: 66
- DOI: https://doi.org/10.5089/9781513512488.001
- Core definition: Financial repression = legal restrictions on interest rates, credit allocation, capital movements, and other financial operations.
- Historical note: Widely used in the past; largely abandoned during the liberalization wave of the 1990s; resurgence after the Global Financial Crisis as public debt surged and some countries reintroduced administrative ceilings on interest rates.
Research design and data
- Coverage: updated index of interest rate controls covering 90 countries over 45 years.
- Analytical focus: estimating the impact of financial repression (as proxied by interest rate controls) on economic growth.
- Key mechanisms considered: distortion of market incentives and signals; losses from inefficiency and rent-seeking that are not easily quantified.
Key findings
- Quantified growth impact: financial repression poses a significant drag on growth, which could amount to 0.4-0.7 percentage points.
- Qualitative effects: induces losses from inefficiency and rent-seeking by distorting market incentives and signals.
Subject areas and keywords
- Subjects: Banking, Credit, Financial crises, Financial institutions, Interest rate corridor, Interest rate policy, Loans, Monetary policy, Money
- Keywords: alternative investment, Asia and Pacific, bank profitability ratio, Caribbean, Credit, crisis, crisis coefficient, crisis increase, debt, debt crisis coefficient, interest rate, Interest rate corridor, Interest rate policy, interest rate restriction, IRC index, liberalization event, liberalization wave, Loans, Middle East, North Africa, per capita income, probability of a crisis, rate of return, Sub-Saharan Africa, WP
Publication identifiers
- ISBN: 9781513512488
- ISSN: 1018-5941
- Stock No: WPIEA2019211
Source: IMF Working Paper "Financial Repression is Knocking at the Door, Again" by Etibar Jafarov, Rodolfo Maino, and Marco Pani, September 30, 2019.
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- Working Paper