The Impact of Financial Liberalization on the Effectiveness of Monetary Policy in Algeria-Reference-Cited by-同舟云学术

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

Published:2023-03-01 Issue:1 Volume:11 Page:63-83
ISSN:2392-8042
Container-title:Management Dynamics in the Knowledge Economy
language:en
Short-container-title:

Author:

Benarbia Rabia¹,Aiboud Kada²

Affiliation:

1. 1 University of Mascara ; BP 305 Route de Mamounia, 29000 Mascara , DZ

2. 2 University of Mascara ; BP 305 Route de Mamounia, 29000 Mascara , DZ

Abstract

Abstract 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

Walter de Gruyter GmbH

Link

https://www.sciendo.com/pdf/10.2478/mdke-2023-0005

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