Do Banks Generally Lend Too Little or Too Much?

Do depository m championtary institutions generally lend oerly little or too much? This paper bulge out analyse whether banks in Zambia have shown signs of credit ration or oer lending. We shall frontmost analyse the McKinnon and Shaw molding of credit rationing due to pecuniary repression for the period in the earlier 1960s to early 2000. We will also review empirical turn up as to whether the Stiglitz and Weiss model applies to Zambia and whether post liberalization Zambia has experienced over lending in line with De Meza and Webb model. Zambia, a former British colony named as Northern Rhodesia gained independence on twenty-fourth October 1964. The socialist peerless ships company state that took over instituted call for economic policies with nationalization of major privately owned businesses ranging from redress to the Mining companies. Zambia was Africas largest copper producer and mining accounted for over 75% of the porcine Domestic Product. Post independence reforms in the 1960s was aimed at government exerting control over the financial sector that was rule by hostile commercial banks, which were deemed to be serving unconnected businesses and western nations.(Brownbridge, Harvey, Gockel). The Zambian government fall commercial bank deposit interest ranks from the 1960s to the early eighties to range from 3.5% to 8.5% while the lending place were between 7% and 13% (Musokotwane n.d. 33 and 35). This was well at a lower place the inflation rate that averaged 10% during the 1970s and 20% in the early 1980s. The ostracize real interest rates that resulted discouraged savings and and so limited credit in the economy. The landed estate suffered a drouth and economic shocks that resulted in political reforms and replacement of the one party state with a multi party system of governance. The tender MMD government started financial liberalisation in line with the transnational pecuniary Fund Struc tural Adjustment Programmes (SAP). This le! d to the removal of foreign currency controls and interest rate controls in 1992-1993....If you want to shorten a full essay, order it on our website: OrderEssay.net

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