Interest Rate Caps, Relationship Lending, and Bank Competition: Evidence from Bangladesh

Research Note
Published on 23 January 2020

Abstract

Interest rate caps on loans are unarguably important policy tools in both developed and developing countries. In this project, Miyauchi attempts to empirically test whether this policy tool is effective in Bangladesh. He finds significant and persistent increase in credit supply, indicating that the policy helped solving market power of banks and helping to build new borrower-lender relationships.