Journal Article

The Impact of Financial Liberalization on the Effectiveness of Monetary Policy in Algeria

Benarbia, Rabia, Aiboud, Kada

2023

Overview

The objective of this study is to measure the impact of financial liberalization on the effectiveness of monetary policy in Algeria during the period 1970-2021 using the Autoregressive Distributed Gaps (ARDL) model and analyzing the implications of the financial liberalization policy on the monetary delivery channels as well. In the context of the liberalization of the financial sector, both channels of the exchange rate and financial assets play an effective role in transferring the impact of monetary policy to the real sector compared to the channels of interest rate and bank lending, with central banks relying on the use of indirect tools that depend on market forces to manage their monetary policy. The results of the study also concluded that the policy of financial liberalization represented in loans granted to the private sector as a percentage of GDP positively affects the effectiveness of monetary policy and enhances its ability as a tool to direct the economy towards achieving the goal of economic growth.

• Publisher: Facultatea de Management – Scoala Nationala de Studii Politice si Administrative (SNSPA),Faculty of Management – National University of Political Studies and Public Administration (SNSPA),Sciendo,National University of Political Studies and Public Administration, College of Management,De Gruyter Brill Sp. z o.o., Paradigm Publishing Services
• Subject: ARDL model / Banking industry / Banks / Central banks / Commercial banks / Comparative analysis / Consumption / Economic development / Economic growth / Economic history / Economy / financial liberalization / financial liberalization; monetary policy channels; economic growth; ARDL model / Financial Markets / Financial services / Foreign banks / Foreign exchange rates / GDP / Gross Domestic Product / Inflation / Interest rates / International finance / Knowledge economy / Liberalization / Loans / Monetary policy / monetary policy channels / Post-War period (1950 - 1989) / Present Times (2010 - today) / Prices / Transformation Period (1990 - 2010)