Prime Rate Research Articles

Microbial carbon use efficiency and priming of soil organic matter mineralization by glucose additions in boreal forest soils with different C:N ratios

During the last decade it has been increasingly acknowledged that carbon (C) contained in root exudates can accelerate decomposition of soil organic matter (SOM), a phenomenon known as rhizosphere priming effect (RPE). However, the controlling factors and the role of different soil microorganisms in RPE are not yet well understood. There are some indications that the response of the soil microbial decomposers to labile C input in the rhizosphere depends on microbial demand of nutrients for growth and maintenance, especially that of C and nitrogen (N). To test this hypothesis, we assessed SOM decomposition induced by 13C-glucose additions during one week in forest soils with different C:N ratios (11.5–22.2). We estimated SOM respiration, the potential activity (concentration) of a range of extracellular enzymes, and incorporation of 13C and deuterium (D) in microbial phospholipid fatty acids (PLFAs).Glucose additions induced positive priming (a 12–52% increase in SOM respiration) in all soil types, but there was no linear relationship between priming and the soil C:N ratio. Instead, priming of SOM respiration was positively linked to the C:N imbalance, where a higher C:N imbalance implies stronger microbial N limitation. The total oxidative enzyme activity and the ratio between the activities of C and N acquiring enzymes were lower in soil with higher C:N ratios, but these findings could not be quantitatively linked to the observed priming rates. It appears as if glucose addition resulted in priming by stimulating the activity rather than the concentration of oxidative enzymes. Microbial incorporation of D and 13C into in PLFAs demonstrated that glucose additions stimulated both fungal and bacterial growth. The increased growth was mainly supported by glucose assimilation in fungi, while the increase in bacterial growth partly was a result of increased availability of C or N released from SOM. Taken together, the findings suggest that the soil C:N ratio is a poor predictor of priming and that priming is more dependent on the C:N imbalance, which reflects both microbial nutrient demand and nutrient provision.

Bank competition, interest rate pass-through and the impact of the global financial crisis: evidence from Hong Kong and Macao

PurposeThe authors examine the interest rate pass-through in Hong Kong (HK) and Macao both in the long term and short term.Design/methodology/approachThe authors use time series methodology, i.e. unit root, cointegration and error correction models.FindingsThe results show that in the post-global financial crisis (GFC) period, both the long-run and short-run interest rate pass-through from policy rates to prime rates have disappeared in Macao and are weakened significantly in Hong Kong. The long-term relationship between deposit rates and policy rates no longer exists in either market while the short-term relationship has been reduced significantly.Research limitations/implicationsThe results indicate that the effectiveness of monetary policy in HK and Macao has been seriously undermined in the post-GFC period. New tools are needed in both regions.Practical implicationsMonetary policy transmission via bank interest rates in both HK and Macao are no longer effective after the outbreak of the GFC.Social implicationsEffort to stimulate the economy and/or control inflation will be hampered.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine the impact of the GFC on the effectiveness of monetary policy transmission in HK and Macao.

A DSGE Decision Model for Investigating the LPR Transmission Effect.

In August 2019, People's Bank of China launched the reform of Loan Prime Rate (LPR) quotation formation mechanism and then made continuous progress in the order of “new loans first, followed by exiting loans,” dredging the interest rate transmission channel of “policy interest rate, LPR, loan interest rate.” In 2020, Chinese financial institutions have mainly referred to LPR pricing for loans, and the marketization level of loan pricing has significantly improved. This paper analyzed the policy effects transmitted by LPR through constructing a Dynamic Stochastic General Equilibrium (DSGE) decision model, and it was found that the financial market structure, pricing ability of commercial banks, and the degree of LPR application all affected the policy rate transmission effect and had an impulse impact on macroeconomic growth. Based on the above analysis, this paper proposed policy suggestions on the path of interest rate market-oriented reform and coping measures of commercial banks in China.

EFFECT OF INSUFFICIENT CURRENCY IN CIRCULATION ON THE RATE OF INFLATION AND UNEMPLOYMENT IN NIGERIA: THE BUHARI’S ADMINISTRATION EXPERIENCE

This study investigated the effect of insufficient currency in circulation on the rate of inflation and unemployment in Nigeria: The Buhari’s Administration Experience; using annual time-series data ranging from 1985 to 2020. In achieving this task, the study was disaggregated into two models: model 1 utilizing Vector Error Correction Model to analyse the relationship between fiscal variables (government total expenditure, government tax revenue, and export) and unemployment rate. It was revealed from the unit root of Augmented Dickey-Fuller test that none of the (fiscal) variables was stationary at level, but they were all stationary after 1st Differencing. This made it necessary for the study to apply Johansen co-integration test which the estimated result indicated 1 co-integration equation as evidenced by Trace statistic. This also, necessitated the application of Vector Error Correction Model (VECM), and it was observed that it took 61.71% annual speed of adjustment towards long-run equilibrium from short-run disequilibrium for unemployment rate to return to equilibrium after a shock to fiscal variables. The results further explained that government total expenditure, and government tax revenue, had negative and insignificant impact on unemployment rate respectively, thereby reducing unemployment rate. Similarly, the estimated result indicated that export had positive impact on unemployment thereby increasing unemployment rate within the period under study. Similarly, in analysing monetary variables (money supply, exchange rate and prime lending rate) in model 2: Phillip-Peron unit root test was conducted and it was confirmed that the variables were of mixed order of integration which necessitated the employment of ARDL technique. The ARDL bounds testing result revealed that a long-run relationship existed between monetary variables, and inflation. It was found, in the long-run, that money supply caused inflation rate to rise. More so, the result further revealed that present level of exchange rate decelerated inflation rate in both long-run and short-run. While, it was further observed that the one-year lag and two-year lag of exchange rate increased rate of inflation in both log-run and short-run respectively. The estimated result further revealed that the present level of prime lending rate minimised the rate of inflation in the long-run and short-run. Whereas, similar results were further confirmed in the one-year lag and two-year lag that prime lending rate reduced inflation rate in both log-run and short-run. As a result of these findings, with respect to model 1; the study recommended that government should maintain the level of its expenditure and tax revenue as this reduced unemployment rate, and it should lower trade costs so that demand for labour would increase in the export industry, this would make aggregate unemployment rate to reduce. With respect to model 2; it recommended the adoption of contractionary monetary policy that would minimise the amount of money supply that caused long-run effect on inflation in the system. Furthermore, there should be proper maintenance of fixed exchange rate policy that will make exchange rate regime overcome non-military forces of demand and supply in exchange rate market, this will help maintain low rate of inflation.

Twin Prime Distribution Problem

The distribution of twin prime numbers is discussed. The research method of corresponding prime number distribution is proposed. The distribution of prime numbers corresponding to integers and composite numbers is discussed. Through the corresponding prime distribution rate of integers and composite numbers, it is found that the corresponding prime distribution rate of composite numbers approaches the corresponding prime distribution rate of integers. The distribution principle of corresponding prime number of composite number is proved. The twin prime distribution theorem is obtained. The number of twin prime numbers is thus obtained. It provides a practical way to study the conjecture of twin prime numbers.

Brazil: Stock Markets and Corporate Credit Now Driving Financialization?

The present article seeks to demonstrate that, despite the steep deterioration in social and economic indicators in the midst of an unprecedented social, political, and economic crisis, Brazil seems to have entered a new stage of the process of financialization, now shaped by the dynamics of the capital market. We briefly recall the different phases of financialization in Brazil from eliticized- to mass-based, underlining how the sharp decline in the prime rate as of late led to a strong valuation of financial assets in the stock market. We test the hypothesis of a new financialization pattern, now driven by the stock market, using in our regression model a sample of 81 different segments (non-financial) from the Economatica platform, from 2010 to 2019. The results indicate a change of command in the finance-dominated accumulation regime in Brazil, that is, corporate financialization is now also determined by the stock market valuation process, due to the fall in return on financial investments (notably government securities). Selic-driven financialization has been substituted by other forces, such as corporate credit and—a relevant new factor—investments in shares.

Procena ekonomske održivosti mašine za mlevenje i prosejavanje Bambara oraha

A novel continuous process milling-sieving machine specially developed recently for processing Bambara nut to flour was assessed for economic viability in this study with multi-criteria cost-benefit analysis measures in order to advance its acceptance and commercialization. This involved determination and assessment of its payback period, accounting rate of return, net present value and benefit cost ratio using the prevailing economic indicators/market prices of materials in Abia State of Nigeria between January and December, 2020. The decision measures applied include that the payback period of this machine must be less than its expected useful life of ten years and its benefit cost ratio must be greater than one. In addition, the investment's rate of return must be greater than the upper limits of Nigerian banks' lending and fixed deposit interest rates in order to justify its possible funding from personal savings and bank credits. Results showed that this innovation is economically viable due to its payback period of 1.5years and benefit cost ratio of 1.69 are as desired. Also the 46.89% accounting rate of return of this machinery outweighed Nigerian banks maximum fixed deposits return of 17% and prime lending rate of 29%. Thus, adoption of this novel milling-sieving machine is recommended for Bambara flour production because of its positive economic potential.

The Impact of Macroeconomic Variables on Stock Prices in Sri Lanka: A Bounds Testing Approach

A vibrant stock market is of critical importance if a developing economy is to attain a high growth trajectory. In Sri Lanka stock market performance has been considered a key indicator of its economic as well as business health. This paper intends to examine the causal relationship between stock prices and macroeconomic variables and investigate the effects of macroeconomic variables on the dynamics of stock price movements in the Sri Lankan stock market. To empirically examine the long-run relationships and short-run dynamic interactions among the variables of interest, this study employs the autoregressive distributed lag bound test approach. The study uses monthly statistical data of macroeconomic and political stability variables such as industrial production, inflation rate, money supply, real exchange rate, trade openness, the average weighted prime lending rate, all share price index and war data from January 2007 to December 2019. The results reveal a significant relationship between stock market returns and macroeconomic and political stability variables except all share price index.

Interest Rate Channel of Monetary Policy Transmission Mechanism and Commercial Banks Earnings in Nigeria

This study examined the interest rates channel of the monetary policy transmission mechanism and the earnings of commercial banks in Nigeria. The objective was to investigate the extent to which the interest rates channel of the monetary policy transmission mechanism affects the earnings capacity of the quoted commercial banks. Time series data were sourced from annual financial reports of the commercial banks and the Central Bank of Nigeria statistical bulletin’s various issues. Earnings measures such as earnings per share and earnings before interest and tax were modeled as the function of Monetary Policy Rate, Prime Lending Rate, Short-term Savings Rate, Long-term Saving Rate and Maximum Lending Rate. The Ordinary Least Square method of Regression Analysis was used to estimate the relationship between the dependent and the independent variables. Augmented Dickey Fuller Test, Johansen Cointegration Test, Granger Causality Test and Vector Error Correction Test were used to determine the dynamic relationship among the variables. Findings showed that short-term and long-term savings rates have negative effects while monetary policy rate, maximum lending rate and prime lending rate have positive effects on the earnings capacity of Nigerian commercial banks. Therefore, we recommend that interest rate policies should be integrated with the earning objectives of the commercial banks.

USED CAR PRICE PREDICTION

Cars have become a necessity in this modern world. Every middle class family needs a vehicle or a mode of transport in order to move from one place to another. Not everyone is able to afford a new vehicle as they are costly and there’s an added cost of taxes and various other expenses by both the provider/company of the car as well as the government. Moreover, not every customer is sure of spending a sum of their wealth on a certain car. The product might not meet their needs. The solution to this problem of having a car despite not being able to afford one is met by buying and selling second hand cars. It has become its own market now. There are already numerous companies and websites and app based services that serve as a mediator or a platform for the dealing of second hand or used cars and other vehicles. Establishment of such places is easy but there is another problem that still remains- How to price the used car appropriately at a price comfortable for both the seller and the buyer? Luckily, the Used Car Price Prediction systems exist and can be developed. Users might think that it’s easy to determine the price of a used car, and whether there is even a need to have such a system. In truth, there are a lot of factors that are important in determining the price of a second hand vehicle. The quality of a vehicle deteriorates with age1 of course but that is not all. Every single vehicle is different even when it is manufactured and sold as a new product and even more so when the same vehicle is used over time. Different people may use their vehicles more or less depending on their everyday activity, making kilometers driven as one of the important factors for the price prediction. It is obvious that a vehicle which is driven for 2000 kilometers in 1 year would be priced less than a vehicle which has been driven for only 500 kilometers in 2 years. This is just one of the factors that determine the price of a used car. In our Car Price Prediction System, we have used the Year of Manufacturing (used to determine the age of the vehicle by subtracting this from the date of selling), the original maximum retail price of the vehicle (the price at which the vehicle was sold at from the manufacturing company/garage), the fuel type of the vehicle (Petrol, Diesel, CNG, Electric ; This affects the pricing severely as different fuel type engines have different prime performance periods and different rates of deterioration), Seller Type (Individual or Dealership), Transmission (Manual or Automatic), Number of past owners of the vehicle. Using all these factors2, we are going to determine which model is best to determine a price for the used vehicle. For the Car Price Prediction System, Regression models3are used since these models give the results as a continuous curve instead of a categorized value as a result. Due to this, we can use the continuous curve to determine an accurate price for each and every scenario which won’t be possible if the results obtained were in the form of a range. The final model of the system will implement the best suited algorithm and have a UI (User Interface) which make it possible for a user to be able to enter the values of these deciding factors and the system will predict the price for them. Keywords: Car price prediction, machine learning, regression analysis, linear regression, correlation analysis

Effects of the financial crisis and low interest rate environment on interest rate pass-through in Czech Republic, Hungary and Romania

Abstract In order for monetary policy’s interest rate channel to operate smoothly and effectively, the relevant retail interest rates of the real economy should react quickly and follow the movements of the prime rate. It has been observed that this connection has weakened since the financial crisis and it was suggested that the so called Weighted Average Cost of Liabilities (WACL) might be a better proxy for the banks’ marginal costs than the prime rate or interbank rate. In this study the WACL for Czech Republic, Hungary and Romania is calculated by applying cointegration tests and ARDL models. I examined whether their long-run relationships with the retail loan rates are more stable. Results: 1. Using the WACL instead of the interbank rate yields slightly more stable long-term relationships with the retail loan rates, and the WACL has been proved to be somewhat more stable than the interbank rate. 2. The interest rate pass-through has been efficient for the household loan rates in all three countries, but only in Romania for the corporate loan rates. 3. The results suggest that the central banks can effectively influence the commercial banks’ financing costs even in a low interest rate environment, although this cost represents only one component of the loan rates, and the movements of other components can offset the changes of the prime rate.

Oil Price Fluctuation, Monetary Policy and Output Growth in Nigeria

This study examines the dynamic relationship among Oil Price Fluctuation, Monetary Policy and Output Growth in Nigeria between the periods of 1986 to 2019. Time series data was used for the analysis and Vector Autoregression Model was also employed in this study. The estimation of the VAR showed that Gross Domestic Product growth rate has a negative response to the shocks of foreign interest rate, prime lending rate, real effective exchange rate and output gap but has a positive response to the shocks of oil price volatility and money supply. The result also showed that foreign interest rate has a positive response to real effective exchange rate and a negative response to Oil Price Volatility, Money Supply, Prime Lending Rate and Output Gap. The shocks to the money supply and real effective exchange rate have a positive effect on oil price volatility, whereas the output gap has a negative effect. The study concluded that output gap has a positive response to the shocks of gross domestic product growth rate and prime lending rate but a negative response to the shock of real effective exchange rate and asymmetric response to the shocks of money supply, foreign interest rate and oil price volatility. Keywords: Oil Price Volatility, Monetary Policy, Output Growth, Vector Autoregressive Model, Unit Root Test DOI: 10.7176/JESD/12-24-06 Publication date: December 31 st 2021

Interest Rate–Economic Growth Nexus Under Currency Board Operations

This paper analyses the effect of the prime interest rate as a monetary policy instrument to stimulate economic growth in Namibia, a small open economy that is constrained by currency board operations. A Vector Autoregressive Model (VAR) was used for the period 1980–2019. The result shows that Namibia’s prime interest rate has no significant effect on economic growth. This finding remains robust and consistent when impulse response function and variance decomposition are employed. The impulse response function indicates a shock on the prime interest rate exhibits an inverse relationship. However, this effect is insignificant in both short and long-run scenarios. The variance decomposition indicates that the prime interest rate has a strongly exogenous impact, implying it has a weak influence on GDP growth. Policy implication indicates that small open economies under currency board operations need to identify different policy responses to circumvent external shocks and addresses their development needs.

A Skellam market model for loan prime rate options

AbstractThis paper documents vanilla interest‐rate options newly introduced in China. The underlying rates are the RMB loan prime rates (LPRs), the foremost interest rates that matter to almost all businesses and households in China. They are digital with a tick size of five basis points, and the changes only occur monthly at predetermined announcement times. We propose a novel continuous‐time discrete‐state market model based on the integer‐valued Skellam distribution, and derive arbitrage‐free pricing formulas in closed forms. We advocate that it is more meaningful to quote LPR option prices in terms of implied intensity rather than implied volatility.

Comparison of inulin clearance with 2-h creatinine clearance in Japanese pediatric patients with renal disease: open-label phase 3 study of inulin

BackgroundThere is no approved dosage and administration of inulin for children. Therefore, we measured inulin clearance (Cin) in pediatric patients with renal disease using the pediatric dosage and administration formulated by the Japanese Society for Pediatric Nephrology, and compared Cin with creatinine clearance (Ccr) measured at the same time. We examined to what degree Ccr overestimates Cin, using the clearance ratio (Ccr/Cin), and confirmed the safety of inulin in pediatric patients.MethodsPediatric renal disease patients aged 18 years or younger were enrolled. Inulin (1.0 g/dL) was administered intravenously at a priming rate of 8 mL/kg/hr (max 300 mL/hr) for 30 min. Next, patients received inulin at a maintenance rate of 0.7 × eGFR mL/min/1.73 m2 × body surface area (max 100 mL/hr) for 120 min. With the time the maintenance rate was initiated as a starting point, blood was collected at 30 and 90 min, while urine was collected twice at 60-min intervals. The primary endpoint was the ratio of Ccr to Cin (Ccr/Cin).ResultsInulin was administered to 60 pediatric patients with renal disease; 1 patient was discontinued and 59 completed. The primary endpoint, Ccr/Cin, was 1.78 ± 0.52 (mean ± standard deviation). Regarding safety, five adverse events were observed in four patients (6.7%); all were non-serious. No adverse reactions were observed in this study.ConclusionsThe results in this study on the dosage and administration of inulin showed that inulin can safely and accurately determine GFR in pediatric patients with renal disease.ClinicalTrials.gov identifierNCT03345316.

Nexus Between Interest Rate Risk and Economic Value of Equity of Banks

This analytical study looks to provide recommendations to the banking sector on different policies and regulations by examining certain aspects of the Basel III accord, which was designed to manage specific operational, capital and market risks of banks. A review of extant literature reveals that only a few papers have been written on simulation-based approaches, using basis and re-pricing risks. We look to connect this as a source while attempting to define and measure the impact of interest rate risk (IRR) on the economic value of equity (EVE) of banks. We propose to use the driver—driven method, wherein interest rate shocks are derived through prime lending rate (PLR) for the period of 2016–2019 in the context of India. Monte Carlo Simulation and OLS regression was performed to predict the IRR; Granger causality was used to examine the cause and effect relationship; the impulse response function (IRF) was used for sensitivity analysis; and the vector error correction model (VECM) technique was used for co-integrating relationships. Notably, the EVE movement caused due to shocks in interest rates had to be traced as it envisages probable EVE losses. Importantly, our study is among the first few to show the relationship between IRR and EVE of banks, especially after the deregulation of Indian banking sector.

Multivariate Garch Analysis of Selected Nigerian Economic Data

Aims: The aim of this study is to examine multivariate GARCH modeling of selected Nigerian economic data.
 Study Design: The study used monthly data of Nigerian crude oil prices (dollar Per Barrel), consumer price Index rural, maximum lending rate and prime lending rate.
 Methodology: This work covers time series data on crude oil prices, consumer price Index rural, maximum lending rate and prime lending rate extracted from Central Bank of Nigeria (CBN) from 2000 to 2019. In attempt to achieve the aim of the study, quadrivariate VECH and DCC model were applied. 
 Results: The results confirmed that returns on economic data were correlated. Also, diagonal multivariate VECH model confirmed one of the properties that it must be ‘positive semi-definite’,
 And the DCC confirmed also the positive-definite conditional-variance.
 Conclusion: From the results obtained, it was confirmed that there exists a strong confirmation of a time-varying conditional covariance and interdependence among Nigeria economic data. As for cross-volatility effects, past innovations in crude oil price have utmost control on future volatility of returns on economic data. It was also confirmed that time varying covariance displays among these economic data and lower degree of persistence and based on Model selection criteria using the Akaike information criteria (AIC) has 17.485 for diagonal VECH while for DCC has 17.509 AIC which makes VECH model better fitted.

Interest Rate Deregulation and Performance of Deposit Money Banks: Time Series Evidence from Nigeria

This work investigated the relationship between interest rate deregulation and performance of Nigerian deposit money banks for the period 1996-2018. Interest rate deregulation was disaggregated into prime lending rate, maximum lending rate, 3-months deposit rate and over 12-months deposit rate while return on assets (ROA) was used as a proxy for deposit money banks’ performance. Data on the above variables were sourced from the Central Bank of Nigeria Statistical Bulletin (2018 edition) and the World Bank data base. The data were tested for stationarity using the Dickey-Fuller (D-F) test, for long-run relationship using Bound’s co-integration test, and for reliability of ARDL results using serial correlation, heteroscedasticity and normality tests. The results of the tests revealed that all the variables were integrated of order zero or one, and that a long-run relationship exists between the variables. Consequently, ARDL model for parameter estimation process revealed that only prime lending rate was positively related to ROA of banks while none of the explanatory variables was statistically significant. The researcher then submitted that there is no significant relationship between interest rate deregulation and the performance of Nigerian deposit money banks for the period considered. Hence, deposit money banks should strive to mobilize adequate savings from surplus spenders by offering them deposit rates that are capable of inducing savers to increase their savings and boost the availability of loanable funds. Also, there is urgent need to restructure the Nigerian financial system whereby policies by the monetary authorities will achieve pre-determined goals. In essence, to make interest rate policies meaningful, there is need to curtail financial transactions that escape the banking system.

The Case against the New "Secular Stagnation Hypothesis"

The new “secular stagnation hypothesis” developed by Lawrence H. Summers attempts to justify why the demand stimulus applied in the aftermath of the global financial crisis failed to revive growth in a satisfactory manner. Building on previous ideas of Keynes, Hansen, and Bernanke, Summers claims that excess savings together with feeble investment drove the natural rate of interest down to zero and advanced economies into stagnation. As the US monetary policy rate is not allowed to fall below the zero bound, Summers calls for “quantitative easing” and more expansionary fiscal policy to spur investment demand. This paper refutes Summers’s hypothesis by revealing its internal inconsistencies and presenting both theoretical arguments and empirical evidence on the long-term evolution of savings, investment, productivity, and capital stock. It also estimates the natural rate of interest following the approach of Salerno (2020), which is further refined based on Rothbard’s “pure interest rate” theory. The calculation shows that the natural interest rate did not drop to zero after the global financial crisis, but has actually remained consistently and significantly above the federal funds rate and the bank loan prime rate. This not only invalidates Summers’s central claim, but confirms once more the explanatory power of the Austrian business cycle theory in relation to the main trigger of the global financial crisis and its subsequent unfinished recovery.

Financial mechanisms of ensuring the development of business under high interest rates

In the given article the problems of choice as for the types and forms of debt and share financing on the developing and “frontier markets” with high interest rates have been considered, the definition of what kind of interest rates can be viewed as high and under which circumstances nominal interest rate and in which ones – the real interest rate is important for business. Also, the classification of debt and sharing financing is given and the comparative analysis of such financing is made. Some close attention has been paid to the calculation of the real interest rate according to the inflation forecast. Recommendations concerning attracting of relatively cheap trade financing including international financial and credit organizations, development of operation factoring, financing from captive financial institutions of the exporters of the materials and equipment from the EU and the US have been grounded. The opportunity of relatively free of charge share financing through the mechanism of placing shares IPO/SPO is emphasized, exemplified by the results of placing shares on stock exchanges and their alternative platforms of issuing banks with businesses in Ukraine in 2005 – 2013. As a result, the conclusion concerning the necessity of thorough analysis of financial conditions on the developing and frontier markets before gaining such financing has been made. High interest rates within the average indicators even on the basis of prime rates do not necessarily mean absence of attractive conditions of financing.