Будущее системы директивного кредитования в Беларуси
The Future of the Lending System Policy in Belarus

Author(s): Dzmitry E. Kruk
Subject(s): National Economy, Economic policy, Financial Markets
Published by: BEROC Belarusian Economic Research and Outreach Center
Keywords: directed lending; financial repression; the economic growth; E37; E43; E61; G28; O41; O42;
Summary/Abstract: This analytical note is devoted to the problems of directed lending in Belarus and the search for possible mechanisms for its reform. The paper shows the main features of the directed lending system in Belarus and highlights the channels of its impact on economic growth. Among the problems that cause directed lending from the perspective of long-term growth, there are losses in the efficiency of distribution, a decrease in the productivity of fixed capital, and a loss in the efficiency of financial intermediation. In addition, in the short term, directed lending can cause shocks in the money market and their spread in the national economy. In order to eliminate or at least minimize the negative impact of directed lending, a list of recommendations for reforming the existing system is provided.

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