{
  "title": "Do Interest Rate Controls Work? Evidence from Kenya",
  "publication": "IMF Working Papers, May 31, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/05/31/do-interest-rate-controls-work-evidence-from-kenya-46877",
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  "summary": "This paper reviews the impact of interest rate controls in Kenya, introduced in September 2016. The intent of the controls was to reduce the cost of borrowing, expand access to credit, and increase the return on savings.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- This paper reviews the impact of interest rate controls in Kenya, introduced in September 2016.\n- Intent of the controls: to reduce the cost of borrowing, expand access to credit, and increase the return on savings.\n- Conclusion summary: the law on interest rate controls has had the opposite effect of what was intended."
    },
    {
      "heading": "Key findings",
      "content": "- The law led to a collapse of credit to micro, small, and medium enterprises.\n- The law caused shrinking of the loan book of the small banks.\n- The law resulted in reduced financial intermediation.\n- Interest rate caps reduced the signaling effects of monetary policy."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- The paper suggests:\n  - (i) the adverse effects could largely be avoided if the ceiling was high enough to facilitate lending to higher risk borrowers; and\n  - (ii) alternative policies could be preferable to address concerns about the high cost of credit.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/05/31/do-interest-rate-controls-work-evidence-from-kenya-46877"
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    "[Markdown version](/en/publications/wp/issues/2019/05/31/do-interest-rate-controls-work-evidence-from-kenya-46877/index.md)",
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    "Authors: Emre Alper, Benedict J. Clements, Niko A Hobdari, Rafel Moyà Porcel",
    "Published: May 31, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781498313957.001",
    "This paper reviews the impact of interest rate controls in Kenya, introduced in September 2016.",
    "Intent of the controls: to reduce the cost of borrowing, expand access to credit, and increase the return on savings.",
    "Conclusion summary: the law on interest rate controls has had the opposite effect of what was intended.",
    "The law led to a collapse of credit to micro, small, and medium enterprises.",
    "The law caused shrinking of the loan book of the small banks.",
    "The law resulted in reduced financial intermediation.",
    "Interest rate caps reduced the signaling effects of monetary policy.",
    "The paper suggests:",
    "**Working Paper**"
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