Why governments may opt for financial repression policies: Selective credits and endogenous growth

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dc.contributor.authorYülek, Murat Ali
dc.date.accessioned2020-11-21T15:55:30Z
dc.date.available2020-11-21T15:55:30Z
dc.date.issued2017en_US
dc.departmentİstanbul Ticaret Üniversitesien_US
dc.description.abstractFinancial repression policies (lowering real interest rates, selective credits and other restrictions on financial markets, products and institutions) have been widely discussed in the economic literature during the last four decades. A key question is ‘why governments would opt for financial repression policies in the first place’? As an answer, governments’ desire to obtain rents from the financial system or to manage public debt servicing have been suggested as the typical underlying incentives. It has been argued in 1970s and 1980s that especially in developing economies, financial repression would have negative consequences on economic growth and financial development, although more recently financial repression policies are back as governments in the developed economies aim at obtaining low-cost funds from the financial markets in the aftermath of the global financial crises. In this article, a simple two-sector model is set up in order to show that governments may institute financial repression policies to internalise production and investment externalities. It is shown that such a government policy is welfare improving and abolishment of selective credits may cause welfare loss. The model also provides a case where financial policy is designed according to the priorities of industrial policy. © 2017 The Author(s).en_US
dc.identifier.doi10.1080/1331677X.2017.1355252en_US
dc.identifier.endpage1405en_US
dc.identifier.issn1331677X
dc.identifier.issue1en_US
dc.identifier.scopus2-s2.0-85026368775en_US
dc.identifier.scopusqualityN/Aen_US
dc.identifier.startpage1390en_US
dc.identifier.urihttps://doi.org/10.1080/1331677X.2017.1355252
dc.identifier.urihttps://hdl.handle.net/11467/4007
dc.identifier.volume30en_US
dc.identifier.wosWOS:000414173600001en_US
dc.identifier.wosqualityQ2en_US
dc.indekslendigikaynakWeb of Scienceen_US
dc.indekslendigikaynakScopusen_US
dc.language.isoenen_US
dc.publisherTaylor and Francis Ltd.en_US
dc.relation.ispartofEconomic Research-Ekonomska Istrazivanjaen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/openAccessen_US
dc.subjectEconomic developmenten_US
dc.subjectEndogenous growthen_US
dc.subjectFinancial policyen_US
dc.subjectFinancial repressionen_US
dc.subjectIndustrial policyen_US
dc.subjectSelective creditsen_US
dc.titleWhy governments may opt for financial repression policies: Selective credits and endogenous growthen_US
dc.typeArticleen_US

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