A Theory of Linkage between Monetary Policy and Banking Failure in Developing Countries

This paper presents a model of the banking sector that maximize profit and an individual bank which is a price taker, in a developing country. The interest rate on treasury bills is included in the model to measure monetary policy. The mathematical expression of the probability of banking failure is calculated; And, I show that, in developing countries, a tightening monetary policy may induce efficient banking failure.

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Year of publication:	2006-12
Authors:	Cadet, Raulin Lincifort
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Banking Failure \| Monetary Policy \| Interest Rate \| Developing Countries

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	G23 - Pension Funds; Other Private Financial Institutions ; G21 - Banks; Other Depository Institutions; Mortgages ; E52 - Monetary Policy (Targets, Instruments, and Effects)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005260080