| Author | Uddin, Mohammad Main |
| Note | A Project submitted in partial fulfillment of the requirements for the
degree of Professional Master in
Banking and Finance, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | The study observed quarterly data on domestic credit growth, external commercial borrowing (ECB) growth, private sector credits growth, inflation, deposit rate and liquidity positions of Bangladesh and found external commercial borrowing growth is negatively correlated with domestic source private credit growth. That means with the increase of ECB, share of domestic credit to total private credits decreased. Ordinary Least Square (OLS) used for estimating model and Granger causality test used for measuring impacts of one on another. ECB growth has 5% positive impact on total private credits growth as the volume of ECB compare with domestic source is still lower. Again, ECB growth has negatively influence on domestic credits source by 6%. ECB plays deterministic role to inflation whereas deposit rate is negatively correlated with ECB growth. Short term ECB deteriorate domestic credit market by curbing demand for domestic private credits. Excessive inflow of ECB will influence local currency to depreciate and foreign loan repayments will be costlier in future. Country’s private sector may face debt-trap and even may lead financial instability. Strong banking sector with transparency, effective monetary policy may absorb more inflows of ECB but sterilization intervention in FX market induces higher domestic interest rate which invite more fund inflows. |
| Year | 2016 |
| Type | Project |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Chairperson(s) | Roy, Shyamal;Venkatesh, Sundar |
| Examination Committee(s) | Wijewardena, Weerakoon A.;Zimmermann, Willi |
| Scholarship Donor(s) | Bangladesh Bank (Central Bank of Bangladesh) |