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Bank-By-Bank Credit Ceilings: Issues and Experiences

Author

Listed:
  • Ms. Mitra Farahbaksh
  • Mr. Gabriel Sensenbrenner

Abstract

Many central banks have abandoned credit ceilings in favor of monetary control frameworks based on indirect instruments. In the long run, ceilings limited competition, hampered the development of a money market, and caused disintermediation. Despite the many distortions associated with the use of credit ceilings, some countries continue to employ them, particularly during the transitional period before full reliance on indirect monetary instruments. The paper argues that the careful attention to design can help reduce distortions typically associated with the use of credit ceilings. It identifies a series of principles that may be followed in designing a system that can minimize those distortions.

Suggested Citation

  • Ms. Mitra Farahbaksh & Mr. Gabriel Sensenbrenner, 1996. "Bank-By-Bank Credit Ceilings: Issues and Experiences," IMF Working Papers 1996/063, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1996/063
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=2051
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    Citations

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    Cited by:

    1. Eric Monnet, 2014. "Monetary Policy without Interest Rates: Evidence from France's Golden Age (1948 to 1973) Using a Narrative Approach," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 137-169, October.
    2. D’Orazio, Paola & Popoyan, Lilit, 2019. "Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?," Ecological Economics, Elsevier, vol. 160(C), pages 25-37.
    3. De Melo, Martha & Denizer, Cevdet, 1997. "Monetary policy during transition : an overview," Policy Research Working Paper Series 1706, The World Bank.

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