Monetary Policy Challenges in Bangladesh: A Regulatory and Banking Perspective

Yıl 2024, Sayı: 99, 23 – 41, 30.06.2024

Masud Rana

Öz

The objective of this study is to identify challenges encountered by regulators and commercial banks in implementing monetary policy in Bangladesh. The primary data for the research was gathered through interviews with 207 participants from Bangladesh Bank and 19 listed private conventional commercial banks, using a structured questionnaire. The collected data was then analyzed and interpreted using descriptive statistical measures and advanced multivariate techniques, specifically Varimax Rotated Factor Analysis. The study highlights significant challenges for regulators and commercial banks in implementing monetary policy, with a focus on adjusted mean scores. These challenges are ranked from 1 to 29 based on their respective mean scores. The most prominent issue identified is the liquidity trap in the money market, ranked first, while the least practical concern is the central bank’s inability to predict the impact of monetary policy on the real level of economic activity, ranked 29th. Additionally, the researcher conducted a ranking of factor variables through Varimax Rotated Factor Analysis. The most crucial factors include economic stability and governance, the inadequate shock absorption capacity of MPS, the absence of a connection to the real economy, consistent policy shifts, regulatory constraints, liquidity constraints posing as government control, and insensitivity of monetary policy.

Anahtar Kelimeler

Monetary Policy, Challenges, Central Bank, Bangladesh.

Kaynakça

• Ahmed, S. M. (2021). Monetary policy challenges in developing economies: focus on Asia. In Handbook of Development Policy. Edward Elgar Publishing.
• Aminuzzaman, S. M. (2013). Dynamics of public policy: Determinants of policymaking and implementation in Bangladesh. Public organization review, 13, 443-458.
• Bartlett, M. S. (1951). The effect of standardization on a χ 2 approximation in factor analysis. Biometrika, 38(3/4), 337-344.
• Beck, T., & Rahman, M. H. (2006). Creating a more efficient financial system: challenges for Bangladesh (Vol. 3938). World Bank Publications.
• Blot, C., Creel, J., & Hubert, P. (2019). Challenges ahead for EMU monetary policy. Monetary Dialogue, September.
• Calvo, G. A. (2006). Monetary policy challenges in emerging markets: Sudden stop, liability dollarization, and lender of last resort. NBER Working Paper No. 12788.
• Carney, M. (2019, August). The growing challenges for monetary policy in the current international monetary and financial system. In Remarks at the Jackson Hole Symposium (Vol. 23).
• Carol M. Woods, Michael C (2011). Edwards, 6 – Factor analysis and related methods, Editor(s): C.R. Rao, J.P. Miller, D.C. Rao, Essential Statistical Methods for Medical Statistics, North-Holland, Pages 174-201, ISBN 9780444537379
• Chowdhury, L. S., & Afzal, M. N. I. (2015). The effectiveness of monetary policy and fiscal policy in Bangladesh. The Journal of Applied Business and Economics, 17(1), 78.
• DeCoster, J. (1998). Overview of factor analysis.
• Dillon, W. R., & Goldstein, M. (1984). Multivariate analysis: Methods and applications. New York (NY): Wiley, 1984..
• Fabris, N. (2018). Challenges for modern monetary policy. Journal of Central Banking Theory and Practice, 7(2), 5-24.
• Fagan, G. P. (1998). Implementation problems of monetary policy strategy. In Current Issues in Monetary Economics (pp. 141-161). Physica-Verlag HD.
• Fleming, M. J., & Garbade, K. D. (2007). Dealer behavior in the specials market for US Treasury securities. Journal of Financial Intermediation, 16(2), 204-228.
• García-Santillán, A., Venegas-Martinez, F., & Escalera, M. E. (2013). Attitude toward Statistic in College Students (An Empirical Study in Public University). Journal of Statistical and Econometric Methods, 2(1), 43- 60.
• García-Santillán, A., Venegas-Martínez, F., & Escalera-Chávez, M. (2013). An exploratory factorial analysis to measure attitude toward statistic. Empirical study in undergraduate students. International Journal of Research and Reviews in Applied Sciences, 14(2), 356-366.
• Grauwe, P. D. (2002). Challenges for monetary policy in Euroland. JCMS: Journal of Common Market Studies, 40(4), 693-718.
• Hair, J. R. J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (1995). Multivariate data with readings. US America: Prentice Hall Inc.
• Henson, R. K., & Roberts, J. K. (2006). Use of exploratory factor analysis in published research: Common errors and some comment on improved practice. Educational and Psychological measurement, 66(3), 393-416.
• Hossain, M., & Ibon, M. W. F. (2020). Assessing the effectiveness of monetary policy in Bangladesh. In Bangladesh's Macroeconomic Policy (pp. 135-162). Palgrave Macmillan, Singapore.
• Islam, H., Rana, M., Saha, S., Khatun, T., Ritu, M. R., & Islam, M. R. (2023). Factors influencing the adoption of cryptocurrency in Bangladesh: an investigation using the technology acceptance model (TAM). Technological Sustainability, 2(4), 423-443.
• Jahur, M. S., & Quadir, S. N. (2012). Financial distress in small and medium enterprises (SMES) of Bangladesh: Determinants and remedial measures. Economia. Seria Management, 15(1), 46-61.
• James O. Wheeler (2005). Geography, Editor(s): Kimberly Kempf-Leonard, Encyclopedia of Social Measurement, Elsevier, Pages 115-123, ISBN 9780123693983,
• Kaiser, H. F. (1958). The varimax criterion for analytic rotation in factor analysis. Psychometrika, 23(3), 187-200.
• Kaiser, H. F. (1970). A second-generation little jiffy. Psychometrika, 35(4), 401-415.
• Karim, M. S. (2019). An Empirical Evaluation of Monetary and Fiscal Policy Effects in Bangladesh. Asıan Development Bank (ADB), (66).
• Loewen, S., & Gonulal, T. (2015). Exploratory factor analysis and principal components analysis. In Advancing quantitative methods in second language research (pp. 182-212). Routledge.
• Manik, M. H. (2023). Movement of the Economy of Bangladesh with its Sector-Wise Contribution and Growth Rate. Journal of Production, Operations Management and Economics (JPOME) ISSN 2799-1008, 3(02), 1-8.
• Masud, R. A. N. A., AL MAMUN, A., HOSSAİN, M. K., & ISLAM, H. Exploring the dynamics of Bangladesh bank's monetary policy: A factor analysis approach. Journal of Ekonomi, 6(1), 1-17.
• Mehndiratta, M. (2019). Factors affecting choice of monetary policy frameworks: Evidence from emerging and advanced countries. Research Journal (Arts), 13.
• Meyer, L. H. (1997). The economic outlook: Challenges facing monetary policy. Vital Speeches of the Day, 64(1), 16.
• Mohan, R. (2004). Challenges to monetary policy in a globalising context. Reserve Bank of India Bulletin, 81- 102.
• Mohan, R. (2007). Current challenges to monetary policy making in India. Reserve Bank of India Bulletin, March.
• Oluwole, A. (2018). Challenges of monetary policy and growth prospects of Nigerian economy. Lap Lambert Academic Publishing, 1-138.
• Pinshi, C. (2020). Central Bank of Congo: Four factors affecting monetary policy effectiveness.
• Policy, M. (2011). Challenges for monetary policy in the European Monetary Union. Federal Reserve Bank of St. Louis Review, 93(4), 235-42.
• Prasad, A., Kramer, M. C. F., & Poirson, M. H. (2008). Challenges to monetary policy from financial globalization: The case of India (No. 8-131). International Monetary Fund.
• Rana, D. M., Mamun, D. M. A. A., Hossain, D. M. K., & Rekha, R. S. (2023). Monetary Policy Efficacy for Price Stability: An In-depth Analysis of Bangladesh’s Economic Landscape. AIUB Journal of Business and Economics, 20(2), 44–58. Retrieved from https://ajbe.aiub.edu/index.php/ajbe/article/view/200
• Riet, A. V. (2017). A new era for monetary policy: Challenges for the European Central Bank. The Singapore Economic Review, 62(01), 57-86.
• Sarbabidya, S. (2015). Sustainable development of mobile phone telecommunication industry of Bangladesh: a holistic marketing approach (Doctoral dissertation, University of Dhaka).
• Smaghi, L. (2011). The challenges facing monetary policy. Speech as member of the executive board of the European Central Bank. Prometeia, Bologna.
• Srinivas, Y. (2014). Minsky, monetary policy and Mint Street: Challenges for the art of monetary policymaking in emerging economies. Levy Economics Institute, Working Paper, (820).
• Tabachnick, B. G., Fidell, L. S., & Ullman, J. B. (2007). Using multivariate statistics (Vol. 5, pp. 481-498). Boston, MA: pearson.
• Wahid, A. N. (1993). Monetary policy and stabilization problems in Bangladesh: Some current issues. Economic Analysis and Policy, 23(1), 59-69.
• Williams, B., Onsman, A., & Brown, T. (2010). Exploratory factor analysis: A five-step guide for novices. Australasian journal of paramedicine, 8(3).
• Woolley, J. T. (1983). Political factors in monetary policy. The Political Economy of Monetary Policy: National and International Aspects, edited by DR Hodgman, 177-203..
• Yong, A. G., & Pearce, S. (2013). A beginner’s guide to factor analysis: Focusing on exploratory factor analysis. Tutorials in quantitative methods for psychology, 9(2), 79-94.
• Zeynivandnezhad, F., Rashed, F., & Kanooni, A. (2019). Exploratory factor analysis for tpack among mathematics teachers: why, what and how. Anatolian journal of education, 4(1), 59-76.

Yıl 2024, Sayı: 99, 23 – 41, 30.06.2024

Masud Rana

Öz

Kaynakça

• Ahmed, S. M. (2021). Monetary policy challenges in developing economies: focus on Asia. In Handbook of Development Policy. Edward Elgar Publishing.
• Aminuzzaman, S. M. (2013). Dynamics of public policy: Determinants of policymaking and implementation in Bangladesh. Public organization review, 13, 443-458.
• Bartlett, M. S. (1951). The effect of standardization on a χ 2 approximation in factor analysis. Biometrika, 38(3/4), 337-344.
• Beck, T., & Rahman, M. H. (2006). Creating a more efficient financial system: challenges for Bangladesh (Vol. 3938). World Bank Publications.
• Blot, C., Creel, J., & Hubert, P. (2019). Challenges ahead for EMU monetary policy. Monetary Dialogue, September.
• Calvo, G. A. (2006). Monetary policy challenges in emerging markets: Sudden stop, liability dollarization, and lender of last resort. NBER Working Paper No. 12788.
• Carney, M. (2019, August). The growing challenges for monetary policy in the current international monetary and financial system. In Remarks at the Jackson Hole Symposium (Vol. 23).
• Carol M. Woods, Michael C (2011). Edwards, 6 – Factor analysis and related methods, Editor(s): C.R. Rao, J.P. Miller, D.C. Rao, Essential Statistical Methods for Medical Statistics, North-Holland, Pages 174-201, ISBN 9780444537379
• Chowdhury, L. S., & Afzal, M. N. I. (2015). The effectiveness of monetary policy and fiscal policy in Bangladesh. The Journal of Applied Business and Economics, 17(1), 78.
• DeCoster, J. (1998). Overview of factor analysis.
• Dillon, W. R., & Goldstein, M. (1984). Multivariate analysis: Methods and applications. New York (NY): Wiley, 1984..
• Fabris, N. (2018). Challenges for modern monetary policy. Journal of Central Banking Theory and Practice, 7(2), 5-24.
• Fagan, G. P. (1998). Implementation problems of monetary policy strategy. In Current Issues in Monetary Economics (pp. 141-161). Physica-Verlag HD.
• Fleming, M. J., & Garbade, K. D. (2007). Dealer behavior in the specials market for US Treasury securities. Journal of Financial Intermediation, 16(2), 204-228.
• García-Santillán, A., Venegas-Martinez, F., & Escalera, M. E. (2013). Attitude toward Statistic in College Students (An Empirical Study in Public University). Journal of Statistical and Econometric Methods, 2(1), 43- 60.
• García-Santillán, A., Venegas-Martínez, F., & Escalera-Chávez, M. (2013). An exploratory factorial analysis to measure attitude toward statistic. Empirical study in undergraduate students. International Journal of Research and Reviews in Applied Sciences, 14(2), 356-366.
• Grauwe, P. D. (2002). Challenges for monetary policy in Euroland. JCMS: Journal of Common Market Studies, 40(4), 693-718.
• Hair, J. R. J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (1995). Multivariate data with readings. US America: Prentice Hall Inc.
• Henson, R. K., & Roberts, J. K. (2006). Use of exploratory factor analysis in published research: Common errors and some comment on improved practice. Educational and Psychological measurement, 66(3), 393-416.
• Hossain, M., & Ibon, M. W. F. (2020). Assessing the effectiveness of monetary policy in Bangladesh. In Bangladesh's Macroeconomic Policy (pp. 135-162). Palgrave Macmillan, Singapore.
• Islam, H., Rana, M., Saha, S., Khatun, T., Ritu, M. R., & Islam, M. R. (2023). Factors influencing the adoption of cryptocurrency in Bangladesh: an investigation using the technology acceptance model (TAM). Technological Sustainability, 2(4), 423-443.
• Jahur, M. S., & Quadir, S. N. (2012). Financial distress in small and medium enterprises (SMES) of Bangladesh: Determinants and remedial measures. Economia. Seria Management, 15(1), 46-61.
• James O. Wheeler (2005). Geography, Editor(s): Kimberly Kempf-Leonard, Encyclopedia of Social Measurement, Elsevier, Pages 115-123, ISBN 9780123693983,
• Kaiser, H. F. (1958). The varimax criterion for analytic rotation in factor analysis. Psychometrika, 23(3), 187-200.
• Kaiser, H. F. (1970). A second-generation little jiffy. Psychometrika, 35(4), 401-415.
• Karim, M. S. (2019). An Empirical Evaluation of Monetary and Fiscal Policy Effects in Bangladesh. Asıan Development Bank (ADB), (66).
• Loewen, S., & Gonulal, T. (2015). Exploratory factor analysis and principal components analysis. In Advancing quantitative methods in second language research (pp. 182-212). Routledge.
• Manik, M. H. (2023). Movement of the Economy of Bangladesh with its Sector-Wise Contribution and Growth Rate. Journal of Production, Operations Management and Economics (JPOME) ISSN 2799-1008, 3(02), 1-8.
• Masud, R. A. N. A., AL MAMUN, A., HOSSAİN, M. K., & ISLAM, H. Exploring the dynamics of Bangladesh bank's monetary policy: A factor analysis approach. Journal of Ekonomi, 6(1), 1-17.
• Mehndiratta, M. (2019). Factors affecting choice of monetary policy frameworks: Evidence from emerging and advanced countries. Research Journal (Arts), 13.
• Meyer, L. H. (1997). The economic outlook: Challenges facing monetary policy. Vital Speeches of the Day, 64(1), 16.
• Mohan, R. (2004). Challenges to monetary policy in a globalising context. Reserve Bank of India Bulletin, 81- 102.
• Mohan, R. (2007). Current challenges to monetary policy making in India. Reserve Bank of India Bulletin, March.
• Oluwole, A. (2018). Challenges of monetary policy and growth prospects of Nigerian economy. Lap Lambert Academic Publishing, 1-138.
• Pinshi, C. (2020). Central Bank of Congo: Four factors affecting monetary policy effectiveness.
• Policy, M. (2011). Challenges for monetary policy in the European Monetary Union. Federal Reserve Bank of St. Louis Review, 93(4), 235-42.
• Prasad, A., Kramer, M. C. F., & Poirson, M. H. (2008). Challenges to monetary policy from financial globalization: The case of India (No. 8-131). International Monetary Fund.
• Rana, D. M., Mamun, D. M. A. A., Hossain, D. M. K., & Rekha, R. S. (2023). Monetary Policy Efficacy for Price Stability: An In-depth Analysis of Bangladesh’s Economic Landscape. AIUB Journal of Business and Economics, 20(2), 44–58. Retrieved from https://ajbe.aiub.edu/index.php/ajbe/article/view/200
• Riet, A. V. (2017). A new era for monetary policy: Challenges for the European Central Bank. The Singapore Economic Review, 62(01), 57-86.
• Sarbabidya, S. (2015). Sustainable development of mobile phone telecommunication industry of Bangladesh: a holistic marketing approach (Doctoral dissertation, University of Dhaka).
• Smaghi, L. (2011). The challenges facing monetary policy. Speech as member of the executive board of the European Central Bank. Prometeia, Bologna.
• Srinivas, Y. (2014). Minsky, monetary policy and Mint Street: Challenges for the art of monetary policymaking in emerging economies. Levy Economics Institute, Working Paper, (820).
• Tabachnick, B. G., Fidell, L. S., & Ullman, J. B. (2007). Using multivariate statistics (Vol. 5, pp. 481-498). Boston, MA: pearson.
• Wahid, A. N. (1993). Monetary policy and stabilization problems in Bangladesh: Some current issues. Economic Analysis and Policy, 23(1), 59-69.
• Williams, B., Onsman, A., & Brown, T. (2010). Exploratory factor analysis: A five-step guide for novices. Australasian journal of paramedicine, 8(3).
• Woolley, J. T. (1983). Political factors in monetary policy. The Political Economy of Monetary Policy: National and International Aspects, edited by DR Hodgman, 177-203..
• Yong, A. G., & Pearce, S. (2013). A beginner’s guide to factor analysis: Focusing on exploratory factor analysis. Tutorials in quantitative methods for psychology, 9(2), 79-94.
• Zeynivandnezhad, F., Rashed, F., & Kanooni, A. (2019). Exploratory factor analysis for tpack among mathematics teachers: why, what and how. Anatolian journal of education, 4(1), 59-76.

Toplam 48 adet kaynakça vardır.

Ayrıntılar

Kaynak Göster

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