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Empirical Evidence On Dynamics Of Credit Growth And Foreign Reserve

Author

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  • Satrugan Sinah

    (University of Science & Technology of China, China)

Abstract

The paper presents a model for looking into the nature of change in foreign reserve from movements in domestic credit. This model is relevant to foreign reserve targeting, small and open economies. The model denotes that measures undertaken by central banks to constraint domestic credit growth with the view of controlling capital outflows will also be detrimental to foreign reserves level. The empirical studies with application of Fourier Transformation technique have been used to build a model, which shows that growth in domestic credit is more biased towards positive swings in foreign reserves, rather than being unfavorable. The small and open economies, particularly, the Pacific Island nations, have the right set up for application of this model to safeguard foreign reserves level.

Suggested Citation

  • Satrugan Sinah, 2017. "Empirical Evidence On Dynamics Of Credit Growth And Foreign Reserve," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(3), pages 17-26.
  • Handle: RePEc:ejn:ejefjr:v:5:y:2017:i:3:p:17-26
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    Cited by:

    1. Satrugan Sinah, 2018. "Empirical Study of Relationship between Money Supply and Inflation Based on Data from New Standardised Reporting Format," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(1), pages 213-219, January.

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