Interest rate caps on loans are unarguably important policy tools in both developed and developing countries. In this project the author attemps to empirically test whether this policy tool is effective in Bangladesh. The author finds significant and persistent increase in credit supply, indicating that the policy helped solving market power of banks and helping to build new borrower-lender relationships.
This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme
Miyauchi, Y. Interest Rate Cap, Relationship Lending and Bank Competition in Bangladesh, (2016), 3p