Private Sector Credit, Policy and Enforcement: 1978-1982. Quarterly Economic Commentary Special Article, May 1983

Leddin, Anthony and Durkan, J. and Scott, S. and Madden, D. (1983) Private Sector Credit, Policy and Enforcement: 1978-1982. Quarterly Economic Commentary Special Article, May 1983. [Working Paper]

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Abstract

This paper is concerned with exammmg certain aspects of the Central Bank's quantitative credit guidelines over the period 1978 to 1982. The sectoral or personal lending guidelines are not considered in this paper. The approach is to consider first the policy aspects to the guidelines and in particular the relationship between the guideline and the external reserve objective. Secondly, the issue of neutralization of interest rates is discussed and some evidence is presented on this matter. Finally, the paper examines how Central Bank enforcement may act as an indicator of the existence and timing of credit rationing and concludes by demonstrating how policy and enforcement combined to cause a reduction in the Associated Banks' relative lending share.

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