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This paper's objective is to examine the asymmetric cointegration and asymmetric effects of financial development and monetary policy on monetary transmission mechanisms in the Nigerian context using annual data spanning the period from 1986 to 2023. This study pushes the frontiers of knowledge by providing information on the nonlinear impacts of monetary policy and financial sector innovations on monetary transmission mechanisms in Nigeria to help policymakers tailor their strategies to local conditions, enhancing the effectiveness of monetary interventions in the economy. To achieve this, this paper adopted nonlinear ARDL models to understand how changes in the direction of monetary policy and developments in the financial system induce changes in the transmission of monetary policy. The findings document the existence of asymmetries in both the short and long run, revealing that the impacts of financial development and monetary policy on the different monetary policy channels are not uniform. These asymmetries indicate that the responses of various economic variables to monetary policy actions differ depending on the level of financial development. These findings underscore the complexity of the monetary transmission mechanism and the necessity for a nuanced understanding of how financial development and monetary policy interact in different contexts. Consequently, this finding is symptomatic of some characteristics of those financial markets on their way toward advanced developments. As the financial system matures, monetary policy may have a greater impact on the cost of short-term funding for banks without having any discernible effect on the rates at which businesses and households access funding. Therefore, this paper recommends focusing on the policies that will foster the financial system across the banking sector, capital market, bond market, and overall financial sector to improve the efficiency of the monetary transmission process. [ABSTRACT FROM AUTHOR]

This editorial discusses the concept of a "polycrisis," which refers to a situation where the world is facing multiple crises simultaneously, resulting in a worse overall situation than the sum of the individual challenges. The editorial highlights various challenges in the banking sector, such as governance issues and ineffective risk management practices. It also addresses macroeconomic challenges, including high interest rates and their impact on mortgage payments and house prices. Additionally, the editorial explores global challenges such as geopolitical fragmentation and climate change, emphasizing the need for financial institutions to incorporate environmental considerations and nature-related risks into their risk management frameworks. The editorial concludes by emphasizing the importance of working together and sharing information to effectively mitigate the risks posed by the polycrisis. [Extracted from the article]

This study investigates the bank risk-taking channel of monetary policy transmission by comprehensively analyzing multiple bank risk measurements amid monetary policy shocks in Vietnam. Using banking data for 2008-2021, a dynamic panel model is estimated to examine the risk exposure of 30 Vietnamese commercial banks. The paper employs the annual M2 money supply growth as a monetary policy variable, besides two policy interest rates established by the central bank. We find that an expansion of monetary policy benefits the quality of loan portfolios; however, reduced interest rates or an extended money supply increase insolvency risk. We also document that heightened economic growth corresponds to a reduced likelihood of credit and insolvency risks, while a surge in the inflation rate leads to an escalation in insolvency risk, manifested by a decline in the Z-score index. Overall, the findings on different risk dimensions in this paper are expected to draw a comprehensive picture of banks' risk appetite and behavior in response to monetary changes. [ABSTRACT FROM AUTHOR]

An editorial is presented on the current state of risk management in financial institutions, discussing recent bank collapses and episodes of market volatility in government bond markets. It also highlights the high debt burdens across major economies and the potential challenges they pose for banks. The issue of the Journal of Risk Management in Financial Institutions includes papers on assessing bank insolvency risk, and analyzing risks in government bond markets.

The aim of the paper is, first of all, to analyze various sources of short-term financing, secondly, to explore procedures to convert different terms and conditions for various types of short-term financing sources into effective interest rates after tax and, thirdly, to establish the relationship between a set of independent variables in order to produce an effective interest rate after tax as a dependent variable. To determine what sources of short-term financing to employ, it is important to take into consideration the cost of all available sources expressed as a comparable effective interest rate after tax and choose the source in accordance with the effective interest rate after tax because that represents the real cost of financing. Finally, the source that has the lowest effective interest rate after tax should be chosen. The results of the work will provide equations for calculating effective interest rates after tax for different short-term financing sources e.g: line of credit, simple interest bank loans, bank loans with discount interest, bank loans with compensating balances, bank loans with discount interest and compensating balances, secured bank loans, instalment loans, factoring accounts receivable and commercial papers. On the basis of the above, it can be determined that an effective interest rate after tax can be accurately calculated using these equations. The results lead to the conclusion that consideration and comparison of all available sources regarding costs are easier as calculation of an effective interest rate is simplified by using the given equations. [ABSTRACT FROM AUTHOR]

The monetary policy of the central bank plays an important role, which is even further increased in times of crises. This paper examines the efficiency of the monetary transmission mechanism through the interest rate channel in the Republic of North Macedonia. The research of the efficiency of the monetary transmission mechanism is carried out with the statistical methods of simple linear correlation and regression. Moreover, this paper examines the impact of the changes in the interest rate of the central bank treasury bills, on the interest rates of the interbank deposit market, and, then the transmission to the interest rates of the loans issued by the commercial banks. The results indicate a slight difficulty in the functioning of the transmission mechanism through the interest rate channel in the country, since the commercial banks do not take immediate actions upon the monetary signals sent by the National Bank through the main instrument of the open market operations. The causes for this situation can be found in certain specific characteristics inherent to the Macedonian banking sector. [ABSTRACT FROM AUTHOR]

The author comments on articles by economics Greenbaum and Haywood (G&H) and Bloch concerning the major factors that must be considered in analyzing changes in the financial sector and their resulting impact on the economy. He states that G&H argue that demand for financial assets is dependent on standard variables, income, interest rates, and more. He suggests that G&H didn't delve far enough into government policy on the financial sector and states his belief that the introduction of large quantities of U.S. Treasury Bills is the most important financial innovation from 1940-70. He states that Bloch's view of the U.S. Federal Reserve's behavior is instructive, and said that while he doesn't question Bloch's analysis, he does question if the reasons are correct.

Purpose: In the backdrop of an increase in market-based banking activities, this paper aims to study operational efficiency of Indian banking sector during 2009–2010 through 2017–2018 considering Capital Gain and Gain from Forex Market (as desirable outputs) and Slippage (as undesirable byproducts) simultaneously, along with Advances – a desirable output considered in the traditional banking performance assessment literature. This enables to have an assessment of performance (as captured by the measured efficiency scores) of Indian Banks following an alternative viewpoint about the banking activities. The authors also explain such efficiency scores in terms of bank-specific factors, banking industry competition scenario and interest rate channel. Design/methodology/approach: Using data envelopment analysis (DEA) method, the authors estimate six alternatives but interlinked operational efficiency scores (TES) of the Indian domestic commercial banks. In the second stage, they explain such TES in terms of bank-specific factors, banking industry competition scenario and interest rate channel. Findings: The authors observe that the private sector banks as a group outperform those under public ownership. Moreover, although the private sector banks could maintain somewhat consistency in their operational efficiency performance over the sample period, public sector banks clearly show a declining tendency. The second stage econometric estimation results show that the priority sector lending has a negative effect on efficiency. Interestingly, the authors get varying results for the relationship between maturity and efficiency score depending on banks' strategies on stressed assets management. Furthermore, the analyses result that banks are not so efficient in managing relatively larger-volume loans. It is also observed that banks' efficiency positively depends on the Credit-to-Deposit (CD) ratio. It is found that the overall operational efficiency of the banks to manage their credit risk portfolio improves with a reduction in the lending rate (LR). However, the interaction of lending activities and capital market shows that with the increase in LR, corporate borrowers may switch to capital market to explore for desired funds, which may induce the banking sector to investment in capital markets and create a positive market sentiment. Originality/value: Literature, although scanty, is there dealing stressed assets of a bank as some undesirable byproducts of its operational and business activities. However, such literature mostly done within the traditional framework of banking business activities and modern market-based business activities are almost absent in the literature. The authors have done it in the present study. [ABSTRACT FROM AUTHOR]

The conventional view suggests that bank profits and interest rates are expected to move together. When interest rates increase, banks make more money on loans and other assets. However, prior studies have often examined this relationship without distinguishing between various types of banks. This misses important nuances in the relationship between interest rates and profits. This paper incorporates local factors to determine if different types of banks are more sensitive to these nuances as they deal with interest rate changes, employing bank-level Call Report data from the Federal Deposit Insurance Corporation covering the 1987–2020 period. The local indicators used in the study came from the Bureau of Labor Statistics and the Bureau of Economic Analysis. Banks are also categorized based on size and whether they are community banks or not to test whether the determinants of profits differ across these categories. The findings reveal that while the conventional view holds true for mid-size banks, higher interest rates negatively affected the profitability of community banks, as well as large banks, for different reasons. Community banks do not have access to tools to isolate themselves from the increased defaults that the local economy may experience because of increasing interest rates. On the other hand, large banks are known to engage in more investment banking activities. High interest rates hurt these banks by killing lucrative investment-bank revenues, which results in lower overall profits. [ABSTRACT FROM AUTHOR]

Copyright of Economic Horizons / Ekonomski Horizonti is the property of Economic Horizons and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Interest rate market risk faced by China's commercial banks is increasing after the announcement that the interest rate marketisation is completed. This paper examines the Value-at-Risk, and statistical properties in the daily price return of Shanghai banks' overnight offered rate. The study applies two-stage approaches, combining GARCH-type models with extreme value theory. Firstly, the Markov regime switching model is used to test the regime states of the series. Secondly, the performance of different VaR models are examined. Results show that the extreme value approach estimates better at the 99% confidence level. The EGARCH-GED model is the most suitable of the employed GARCH-type models. The back-testing results support the idea that the approach used in this study is appropriate for improving commercial banks' daily risk management. This paper applies the GARCH-EVT method for interest rate measurement after China's interest rate marketisation and added regime analysis of interest rate. Suggested policy implications will help formulate policies that guide the activities of commercial banks in China. [ABSTRACT FROM AUTHOR]

Central bank digital currency is a claim on the central bank, which is accessible by a wide range of customers, digital, flexible and potentially interest-bearing. The new asset is being researched in many countries, and widening the accessibility of financial services, creating the digitalized form of cash with monetary policy considerations being among its motivations. An interest-bearing central bank digital currency could make the central bank’s monetary transmission direct, which could improve the efficiency of monetary policy. Furthermore, the asset could help to strengthen competition among banks and could support the spread of financial innovations. Risks related to the instrument, such as disintermediation, can be counterbalanced by the increasing deposit volumes due to higher interest rates after the introduction of the instrument, and by limits set on the maximum holdings of the asset. An interest-bearing central bank digital currency can make targeted monetary policy possible, furthermore, the direct transmission of interest rates could enhance the efficiency of monetary transmission. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to present an empirical analysis of the European Central Bank (ECB) deposit rate dynamics during 2014–2020, attempting to answer how deep could be cut further this rate without causing persistent yield curve inversions (YCI), i.e. lower yields for longer terms. It addresses the sustainability of the traditional banking and shows that inverted yield curves would require changing the banking-as-usual model to the government-guaranteed long-term-borrowing coupled with short-term-lending. This research poses the question of whether the banking sector should become a public utility. Design/methodology/approach: The future scenarios of negative interest rate (NIR) behavior are modeled seeking to increase the understanding of NIR environment. Using an event-study design, empirical analyses of the ECB deposit rate cuts on the Euro Over-Night Index Average rates is performed at different maturities. Findings: This study finds that, starting from the lower limit of 80 basis points below zero, the ECB deposit rate is likely to result in complete YCIs. Social implications: This paper evidences that moving rates into a more negative territory is likely to be completely counterproductive for banking industry, implying that banking at such conditions would become heavily dependent on governmental support. The results shed light on the interdependence of the banking business, financial monetary policy and welfare of the society, providing policymakers with empirically defined milestones for policy implementations. Originality/value: This paper clarifies the impact of the ECB deposit rate on the overall shape of yield curves. The novelty of this research resides in investigation of YCI by simulating NIR dynamics. [ABSTRACT FROM AUTHOR]

The paper discusses issues connected with the use of selected indices (WIBOR, WIBID, WIRON, POLONIA) as benchmarks for bank loans. In the introduction, the author addresses the problem of manipulation of rates, which are characterized by the forecasting of interest rate values. The following part of the paper analyses the differences in benchmarks' construction, describes their operation, methods of setting and use. It also outlines their behavior over time. Subsequently, issues relating to the application of WIBOR, WIBID, POLONIA, WIRON as benchmarks for consumer loans are presented. They have been compared to a sample bank offer based on a fixed interest rate. The final conclusions outline the possible effects of various benchmarks on borrowers, and compare the situation of the Polish banking offer for fixed-rate loans with other countries. The possible effects of new regulations in the context of the share of fixed-rate loans in the credit market are also described. [ABSTRACT FROM AUTHOR]

This paper builds a multivariate Lévy‐driven Ornstein‐Uhlenbeck process for the management of non‐maturing deposits, that are a major source of funding for banks. The contribution of the paper is both theoretical and operational. On the theoretical side, the novelty of this model is to include three independent sources of randomness in a Lévy framework: market interest rates, deposit rates and deposit volumes. The choice of a Lévy background driving process allows us to model rare but severe events. On the operational side, we propose a procedure to include severe volume outflows with positive probability in future scenarios simulation, explaining its implementation with an illustrative example using Italian banking sector data. [ABSTRACT FROM AUTHOR]

This study examines day-of-the-week effects in short term New Zealand bank bills with maturities of 30, 60 and 90 days. The analysis is based on a within-subject design. The spot interest rates within a week are treated as repeated measures on the same subject. These interest rates are transformed into orthogonal contrasts which can be analysed separately as dependent variables. Two analyses are conducted. The full data does not exhibit significant day-of-the-week effects. When the data is trimmed, to ameliorate the presence of fat tails, a Wednesday effect is observed for the three series. The ubiquitous weekend effect is observed for one series of interest rates. However, the reverse of the weekend effect is present for the two other series. The practical importance of the results is discussed. [ABSTRACT FROM AUTHOR]

Purpose: The paper aims to examine whether the daily conventional money market overnight rate influences the monthly investment rate of Islamic deposits in Malaysia. The traditional approach, which averages the high-frequency data to match the low-frequency data, results in information loss for the high-frequency data. Design/methodology/approach: The paper uses the mixed data sampling (MIDAS) model to study the relationship between Islamic banking and conventional banking. The Malaysian data are used for the analysis as Malaysia has one of the most developed Islamic financial industries in the world, and it is well-known for its dual banking system. Findings: The evidence shows that the conventional overnight rate has a positive effect on the Islamic deposit rate. The results are consistent for Islamic deposit rates with different maturities. The positive aggregate effect holds when the lag length of the daily conventional overnight rate goes up to 90 days. Additional evidence shows that the daily conventional overnight rate has a similar effect on the conventional deposit rate. Originality/value: This paper documents that the relationship between Islamic banking and conventional banking is not monotonous. When high-frequency data is averaged with low-frequency data, the non-linear relationship will be masked. It highlights the importance of using high-frequency data to get a detailed picture. [ABSTRACT FROM AUTHOR]

This article is a panel discussion on the consequences of weak monetary policy. The first speaker, Ricardo Reis, questioned the use of the term "indeterminacy" in the paper and its implications for stability. He also raised concerns about the violation of the Taylor principle and its impact on inflation. The second speaker, Moritz Schularick, discussed the concept of the effective upper bound and its potential influence on inflation globally. He also suggested considering the endogeneity of the natural interest rate. Nicola Limodio expressed interest in understanding the banking system's reaction to high inflation and low-interest rates. Refet Gürkaynak, the author, responded to the discussants and explained the paper's focus on the effective upper bound and the challenges of obtaining impulse responses in a model with indeterminacy. He also addressed the limited transmission of monetary policy in Turkey and the effects on the natural interest rate. [Extracted from the article]

In August 2019, People's Bank of China launched the reform of Loan Prime Rate (LPR) quotation formation mechanism and then made continuous progress in the order of "new loans first, followed by exiting loans," dredging the interest rate transmission channel of "policy interest rate, LPR, loan interest rate." In 2020, Chinese financial institutions have mainly referred to LPR pricing for loans, and the marketization level of loan pricing has significantly improved. This paper analyzed the policy effects transmitted by LPR through constructing a Dynamic Stochastic General Equilibrium (DSGE) decision model, and it was found that the financial market structure, pricing ability of commercial banks, and the degree of LPR application all affected the policy rate transmission effect and had an impulse impact on macroeconomic growth. Based on the above analysis, this paper proposed policy suggestions on the path of interest rate market-oriented reform and coping measures of commercial banks in China. [ABSTRACT FROM AUTHOR]

Copyright of Revista Direito GV is the property of Fundacao Getulio Vargas and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In India, the non-accessibility of credit and banking facilities to poor and vulnerable segments of society has always been a major concern. Several steps have been taken from time to time by the Government and the Reserve Bank such as nationalization of banks, prescription of priority sector lending criteria and concessional interest rate for the weaker segment of society. It was, however, realized that further direct efforts were required to address the credit needs of poor people. In response to this requirement, the Micro finance movement started in India. The aim of this paper is to inspect the current status, challenges and potential of Microfinance in India. Descriptive research methodology is followed and analysis is done based on data available from secondary sources. This paper illustrates present challenges and potentials in Microfinance in India considering data of last ten years. This paper concludes with the finding that South Region of India is doing great and North Region of India is lacking in SHGs -- Bank Linkage Programme. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to investigate the relationship between financial development (FD) and monetary policy effectiveness (MPE) on output and inflation in ASEAN-3 countries (Singapore, Malaysia and the Philippines). Design/methodology/approach: This study uses an open economy structural vector autoregressive model to generate MPE. Then, an autoregressive distributed lagged (ARDL) model is used to analyze the effect of FD on MPE across countries. Findings: The findings revealed that FD plays a different role in MPE across countries. In Malaysia, a more developed financial system tends to reduce the MPE on output, whereas in Singapore, results show that the more developed financial system (stock market capitalization) tends to increase MPE on output. However, in the Philippines, the main results show that the effect of FD (liquid liabilities) upon MPE on output is depending on the policy variable (interest rates or money supply). Originality/value: This paper fills this gap by providing the first study of ASEAN-3 countries in examining how effective is a monetary policy in response to the development of the financial market across the country. Second, this paper considers two FD indicators, namely, the banking sector and capital market development in investigating its effect on MPE on output and inflation. Third, the authors construct the MPE in each country using a structural (identified) VAR model by aggregating the response of output growth and inflation rate on monetary policy changes (interest rate and money supply) using impulse–response function. Regarding this, the results of this study provide new empirical evidence and insight into the long debate on the relationship between FD and the MPE. [ABSTRACT FROM AUTHOR]

While Euro area interest rates were responding to accommodative monetary policy and decreasing throughout 2015-2019, in stark contrast, Lithuania's bank lending rates increased. Although the rates dropped slightly around the onset of the pandemic, they are still elevated and well above the EA figures. This paper asks the question: what were the drivers of such interest rate dynamics in Lithuania? By analysing the historical events and practical aspects of loan pricing in Lithuania's banking industry, we build an empirical model that exploits lending rate variation across banks, time and lending segments, and maps it to different drivers of pricing. We find that the recent changes in lending rates can be attributed to average bank margins, which moved largely in response to changes in market concentration. [ABSTRACT FROM AUTHOR]

The introduction of interest-bearing Central Bank Digital Currency (CBDC) presents central banks with an additional instrument for implementing monetary policy. This article develops a Heterogeneous Agents New Keynesian model, incorporating financial frictions, to investigate the transmission mechanism and wealth distribution effects of digital currency interest rate from two distinct perspectives: (i) the interaction between the central bank and financial intermediaries and (ii) the substitution dynamics between cash and digital currency. By comparing models that include and exclude financial intermediaries, our research uncovers that in a society where CBDC is fully implemented, the reverse actions of financial intermediaries can hinder the efficacy of the central bank's monetary policy and result in elevated costs associated with policy formulation. Additionally, the leverage effect of financial intermediaries exacerbates wealth inequality and contributes to the expansion of investment, thereby promoting an increase in economic output. Comparing societies where CBDC entirely replaces cash with those where CBDC coexists alongside cash, this paper demonstrates that the presence of cash mitigates significant economic fluctuations triggered by CBDC, while the complete elimination of cash amplifies wealth inequality. Consequently, it is crucial for the central bank to account for the behavior of financial intermediaries when adjusting digital currency interest rate and explore the development of an appropriate interest rate mechanism tailored to digital currency. Simultaneously, maintaining cash circulation for a specific period can act as an economic stabilizer. [ABSTRACT FROM AUTHOR]

This paper seeks to identify the effect of macroeconomic, industry-specific and bank-specific determinants on the profitability of the Brazilian banking sector. Profitability is measured by return on assets (ROA), return on equity (ROE) and economic value added (EVA). We incorporate in the analysis-independent variables of this sector that have not been considered in previous studies. To address profit persistence, we apply a dynamic panel data model and the GMM technique described by Arellano and Bover (1995) over the quarterly period from 2009Q1 to 2019Q4. The main results show that the macroeconomic variables of credit, activity and interest rate contribute to understanding the determining factors of bank profitability in Brazil. Regarding industry-specific and bank-specific determinants, the total operating expenses to total assets ratio and net interest margin are important determinants of the bank profitability, respectively. Thus, these new macroeconomic variables and industry-specific and bank-specific variables are important drivers to understand banking profitability in Brazil, as well as indicators to be monitored by the monetary authority to ensure the financial health of the banking system. [ABSTRACT FROM AUTHOR]

This paper analyzes empirically the existence of the credit channel of monetary policy in Mexico, that is, the relationship between changes in the target interest rate and variations in credit granted by commercial banks. The study combines aggregate information with data from the individual balance sheets of commercial banks and conducts a panel data regression analysis. The analysis is performed for total credit and its components (business, consumer, and mortgage). Additionally, by using banks' accounting information, it explores whether the transmission mechanism occurs on the supply side. It is found that there is a negative and economically significant relationship between interest rate and credit, and such a relationship is established for different types of credit. Furthermore, evidence suggests that the transmission mechanism operates on the supply side, as banks with more robust balance sheets exhibit greater resilience to changes in the interest rate. [ABSTRACT FROM AUTHOR]

In emerging countries, deposits play an important role in banks' total funding; hence, depositor discipline may significantly impact banking performance and financial system stability. This paper investigates depositor discipline before and after Vietnam's 2008–2011 banking crisis when depositors had little experience regarding bank bailouts and the amount of deposit insurance was limited to a low cap. The study points out that before the crisis, the level of deposit financing in banks depended on both the interest rates offered and on measures of banks' risk‐taking. After the crisis, given that the Vietnamese government prevented all bank failures to ensure economic, political, and social stability, depositors still react to interest rate changes, but substantially less to risk. This suggests that they have learned that their deposits are safe regardless of the risk the bank is taking. [ABSTRACT FROM AUTHOR]

In this paper, we contribute to the literature by examining the determinants of net interest margin (NIM) of European and US banks in a zero lower bound situation while controlling for important institutional design factors. We analyse a large sample of annual data on 629 European banks and 526 US during the 2011–2016 period, which also covers periods of zero and negative rates in many of the observed countries. We test three hypotheses and come to three main conclusions. First, NIM is significantly influenced by the different institutional designs of capital‐based (the UK and the US) and bank‐based financial markets (continental Europe). Second, there are differences in NIM caused by bank size. Finally, we show significant differences by bank type: savings banks, real estate and mortgage banks, and cooperative banks report consistently lower NIMs than commercial banks and bank holdings. Contrary to other researchers, we observe a negative relationship between NIM and the yield curve slope. [ABSTRACT FROM AUTHOR]

Purpose: The agricultural sector remains the backbone of several emerging economies, including Kenya, where it contributes 34% to its gross domestic product (GDP). However, access to financing for agricultural activities appears to be very low compared to developed economies. Following this, governments in a number of countries have sought to introduce banking sector regulations to facilitate increased funding to the agricultural sector. Taking motivation of the interest rate capping regulations by the Central Bank of Kenya (CBK) in 2016, this paper examined the effect of these interest rate ceiling regulations on agri-lending in Kenya. Design/methodology/approach: The paper employs random effects technique to estimate a panel data of 26 commercial banks in Kenya from 2014 to 2018 using the ratio of loans to agricultural sector to gross loans and the natural logarithm of loans to agricultural sector as proxies for agri-lending. Bank size, equity, asset quality, liquidity, revenue concentration and bank concentration are employed as control variables. Findings: The results of the panel regression estimations show that the introduction of the interest cap resulted in increases in the proportion and growth in agri-lending compared with the pre-interest cap period. In addition, large banks and highly capitalised banks were found to be associated with lower agri-lending, with differences in the effects across pre-cap and post-cap periods. Practical implications: From a policy perspective, the findings highlight the effectiveness of interest rate capping in meeting this objective and supports the calls for strengthening cooperation between the government and key stakeholders in the financial sector. This will allow for the effective enforcement of policies by the regulatory powers in a manner that guarantees sound and dynamic financial systems, particularly within the agricultural sector. Originality/value: As far as the authors are aware, this the first paper to examine the effect of the interest rate cap regulation on agri-lending in Kenya. [ABSTRACT FROM AUTHOR]

In this paper, we formulate a mean-variance portfolio selection problem of an insurer who manages her underlying risk by purchasing proportional reinsurance and investing in a financial market consisting of a bank account and a risky asset following jump-diffusion dynamics with random parameters. We then obtain a time-consistent equilibrium strategy via a flow of backward stochastic differential equations. Finally, we apply our results to a mean-reverting Lévy-Ornstein-Uhlenbeck process and obtain closed form solutions. [ABSTRACT FROM AUTHOR]