The impact of reserve requirements of central banks on macroeconomic indicators

Oxana Afanasyeva () and Dmitriy Korovin
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Oxana Afanasyeva: Institute ITKOR, Russian Federation
Dmitriy Korovin: Financial University under the Government of the Russian Federation, Russian Federation

Entrepreneurship and Sustainability Issues, 2020, vol. 8, issue 1, 413-429

Abstract: This article explores the central banks’ awareness of the potential and application of reserve requirements for stimulating economic growth. The authors examined the differences in the impact of reserve requirements of central banks on the economic indicators in five countries, namely: Japan, Norway, South Africa, Brazil, and China. These countries have different levels of economic development and different banking systems and required reserve systems, which determined their inclusion in the study. The article assesses the possible impact of central banks on GDP and GNI through changes in reserve ratios. Thus, this research contributed to the discussion about the role of reserve requirements of central banks in the development of a country’s economy and industry. The results were obtained with a new mathematical apparatus that analyzed and assessed various aspects of the impact of monetary policy tools on macroeconomic indicators that are not considered in classical econometric models. The authors made an assumption that the reserve requirements of the central banks should not be considered as the controlling factor in the changes in the economic indicators of the countries under study or as a tool that can operate independently of other instruments.

Keywords: monetary policy tool; reserve requirements; obligatory reservation system; required reserve ratio; gross domestic product; gross national product (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:8:y:2020:i:1:p:413-429

DOI: 10.9770/jesi.2020.8.1(29)

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