Why governments may opt for financial repression policies
Selective credits and endogenous growth
Bibliographic Data
| ID | 15068041 |
|---|---|
| Authors | Murat  Yülek (0000-0001-7533-5882, Center for Industrial Policy and Development, Istanbul Ticaret University, Istanbul, Turkey, corresponding author) |
| Year | 2017 |
| Volume | 30 |
| Issue | 1 |
| Pages | 1390-1405 |
| Publication date | 2017-01-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economic Research-Ekonomska Istraživanja (JOURNAL) |
| Journal identifiers | ISSN: 1331-677X • E-ISSN: 1848-9664 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/1331677x.2017.1355252 |
| OpenAlex | W2740075804 |
| Language | EN |
| Citations received | 1 |
| References cited | 31 |
Financial repression policies (lowering real interest rates, selective credits and other restrictions on financial markets, products and institutions) have been widely discussed in the economic literature during the last four decades. A key question is ‘why governments would opt for financial repression policies in the first place’? As an answer, governments’ desire to obtain rents from the financial system or to manage public debt servicing have been suggested as the typical underlying incentives. It has been argued in 1970s and 1980s that especially in developing economies, financial repression would have negative consequences on economic growth and financial development, although more recently financial repression policies are back as governments in the developed economies aim at obtaining low-cost funds from the financial markets in the aftermath of the global financial crises.In this article, a simple two-sector model is set up in order to show that governments may institute financial repression policies to internalise production and investment externalities. It is shown that such a government policy is welfare improving and abolishment of selective credits may cause welfare loss. The model also provides a case where financial policy is designed according to the priorities of industrial policy
Business · Debt · Economic policy · Economic rent · Economics · Externality · Financial intermediary · Financial market · Financial repression · Financial system · Incentive · Indirect finance · Interest rate · Market economy · Banking stability, regulation, efficiency · Economic theories and models · Economic Theory and Policy · Finance
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| Unique citing works | 1 |
|---|---|
| Citations per year | 0,17 |
| Citation span | 2020 - 2020 (1) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 1 |