Interest Rate Cap, Relationship Lending and Bank Competition in Bangladesh

Paper finds significant increase in credit supply indicating interest caps on loans helped in solving the market power of banks

Abstract

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

Citation

Miyauchi, Y. Interest Rate Cap, Relationship Lending and Bank Competition in Bangladesh, (2016), 3p

Interest Rate Cap, Relationship Lending and Bank Competition in Bangladesh

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