Published in:BAFFI CAREFIN Centre Research Paper ; No. 2018-80
Extent:
1 Online-Ressource (24 p)
Language:
English
DOI:
10.2139/ssrn.3191931
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 6, 2018 erstellt
Description:
Financial regulation can generate government revenue by imposing the quantity and price of government bonds. We study an unexpected banking regulation introduced in 2011 by the Ethiopian Central Bank, forcing commercial banks to purchase a negative-yield government bond. High-frequency bank data and public finances documentation allow tracking the subsequent government revenue gain. This policy is compared to three alternatives: raising funds competitively on international markets; distorting the state-owned bank lending; and raising deposits through state-owned bank branches. Our results suggest that the revenue gain is moderate (1.5-2.6% of tax revenue); banks amass more bonds; their profitability slows without turning negative (from 10% to 2%)