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This paper investigates the transmission of monetary policy to the real economy after the adoption of bank reforms in emerging market economies (EMEs). The Egyptian case is empirically studied to test the efficacy of the banking sector as a transmission agent subsequent to the banking reforms that extended from 1991 to 2009. The structural vector autoregressive methodology is employed to investigate the impact of the interest rate and foreign exchange rate channels on output and inflation. The results of the study reveal several interactions among the two types of channels. Second, interest rate intervention proves to have substantial effects on output, but less on inflation. Third, exchange rate intervention has some effects on inflation, but less on output. Thus, both transmission channels have showed superior effectiveness after the banking reform. This indicates that the Central Bank of Egypt should not continue to depend on the interest rate channel alone, but has to additionally utilize the exchange rate channel in order to successfully achieve inflation targeting that has been its prime goal since 2003 and even more after the global food crisis of 2007/8. This ruling could prove functional when conducting monetary policy in EMEs of similar circumstances to Egypt. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of financial reforms on competitiveness and production efficiency of the banking sector, as well as the short-term and long-term impact on economic growth, in Egypt during 1992-2007. The results suggest that the reforms have a positive and significant effect on competitiveness and production efficiency. Also, the evidence shows that state-owned banks are generally less competitive than private banks and foreign banks are less competitive than domestic banks. The average x-inefficiency of Egyptian banks is around 30 per cent, which is comparable to those reported for other African countries. Finally, there is evidence to suggest a significant relationship between financial bank productive efficiency and economic growth in the short run but not in the long run. Overall, the results support the argument for continuing the financial sector reform programme in Egypt. [ABSTRACT FROM AUTHOR]