The Effects of Inflation Targeting for Financial Development

No 2019-21, Staff Analytical Notes from Bank of Canada

Abstract: The adoption of inflation targeting (IT) by central banks leads to an increase of 10 to 20 percent in measures of financial development, with a lag. We also find evidence that the financial sector benefits of IT adoption were higher for early-adopting central banks. Our results suggest that roughly 12 to 14 years after the Reserve Bank of New Zealand adopted inflation targeting in 1989, the benefits for financial development for new adopters of inflation targeting may have been negligible.

Keywords: Financial Institutions; Inflation targets; Transmission of monetary policy (search for similar items in EconPapers)
JEL-codes: E44 E58 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2019-07
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsan:19-21

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