Kenya’s rate controls caused ‘collapse’ in credit – IMF paper
Caps undermined central bank’s control over signalling policy stance, researchers find
The Kenyan government’s 2016 introduction of interest rate controls reduced private lending – the opposite effect of what was intended, a paper published by the International Monetary Fund finds.
Emre Alper et al. use bank-level and central bank survey data to analyse the impact of the interest rate caps on credit growth, monetary policy transmission and GDP.
In September 2016, the Kenyan government imposed a ceiling for lending rate at four percentage points above the policy target, and a
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