Financial Regulation and Government Revenue : The Effects of a Policy Change in Ethiopia

Limodio, Nicola ; Strobbe, Francesco

World Bank, Washington, DC

关键词: AUCTION;    GOVERNMENT SAVINGS;    BANKING REGULATION;    DEPOSIT;    CAPITAL MARKETS;   

DOI  :  10.1596/1813-9450-7733
RP-ID  :  WPS7733

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Financial regulation affects governmentrevenue whenever it imposes both the mandatory quantity andprice of government bonds. This paper studies a bankingregulation adopted by the National Bank of Ethiopia in April2011, which forces all private banks to purchase a fixednegative-yield government bond in proportion to privatesector lending. Having access to monthly bank balancesheets, a survey of branch costs and public financesdocumentation, the effect of the policy on governmentrevenue can be tracked. This is compared to three plausiblerevenue-generating alternatives: raising funds atcompetitive rates on international markets; distorting theprivate lending of the state-owned bank; and raising newdeposits through additional branches of the state-ownedbank. Three main results emerge: the government revenue gainis moderate (1.5-2.6 percent of the tax revenue); bankscomply with the policy and amass more safe assets;banks' profit growth slows without turning negative(from 10 percent to 2 percent).