• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Business

In major economic shocks, best response combines all-out, large-scale policies

3 years ago
in Business, Economy, Features, highlights, Home, home-news, latest News
4 min read
0 0
0
53
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

In major economic shocks, best response combines all-out, large-scale policies

Economists will be studying the pandemic for generations to learn from the dramatic global downturn and the ensuing credit crunch, but one important lesson about the scope of action needed to contain the next global crisis is already coming into focus.

During the pandemic, countries often used all-out responses that combined large fiscal, monetary, and prudential policies like grants, credit facilities, and relaxed capital requirements. As we demonstrate in a new working paper, this kind of expansive response may be needed to support corporate borrowing and credit growth in major future crises that combine global supply and demand shocks.

Our findings are based on an analysis using a dataset we made available last year tracking national announcements of economic and financial policy responses to the pandemic. Over the course of 2020, countries most frequently used packages of more than one fiscal, monetary, or prudential policy, while standalone policy announcements were rare.

chart showing countries' support policies

As credit growth tanked early during the pandemic, policymakers in many countries aimed to stabilize bank lending to support their economies. Our analysis indicates that all-out packages boosted credit growth by a sizable 5 percentage points per quarter. Both size and scope were critical: even packages combining all types of policies, but where only some were large, were less effective.

chart showing efficacy of counties' support policies in tackling declining credit growth

Highlighting the importance of broad policy packages, all granular policy tools we tracked were more prevalent in successful packages than in others.

These all-out responses may have been effective because—faced by a large, unexpected, global shock—they pulled all levers relevant for credit growth. They eased binding constraints by shifting regulatory requirements. They incentivized incremental lending by addressing heightened concerns about credit risk. And they supported credit demand by lowering borrowing costs.

Within banks, the impact of policies was greater for those constrained by thin capital buffers.

Packages combining large fiscal, monetary, and prudential measures also translated into additional access to liquidity for bank-dependent firms. This allowed them to cover expenses—like wage bills—for two additional months while health measures limited sales.

RelatedPosts

African Airlines Record 9.4% Growth In Air Cargo Demand In July 2025 – IATA

South African President Ramaphosa Launches G20 Taskforce to Tackle Global Wealth Inequality Amid US Absence

Burkina Faso’s Nationalization Rattles West Africa’s Gold Sector

While COVID-19 economic and financial policy packages were broadly targeted, they do not appear to have disproportionately benefited firms with poor performance prior to the pandemic.

Lessons for future crises

Our results underscore the importance of decisive action in terms of breadth and intensity of pandemic policy responses. In future crises that combine—as the pandemic did—negative supply and demand shocks with significant uncertainty, a similarly concerted, coordinated, all-out approach may have an important role to play in supporting the economy.

While there are benefits of an aggressive approach in response to a global shock like COVID-19, not all countries could respond in such a fashion. In particular, emerging and developing economies will likely continue to be more constrained, as they were in this episode.

To be sure, an all-out approach could also have unintended consequences. Large fiscal and monetary packages could support credit and the economy but also fuel sharp inflationary pressures. In countries with high debt, an increase in discretionary spending could strain debt sustainability. More work is needed to better understand how to calibrate the appropriate all-out response to minimize such costs.

Tags: best response combines all-outEconomic shocksIn major economic shockslarge-scale policies
No Result
View All Result

Highlights

Experts Talk BoG’s New Currency Controls & Crackdown on NPLs on NorvanReports’ X Space Discussions Tonight

Piastri Claims Pole Position in Thrilling Dutch Grand Prix Qualifying

US Open: Osaka, Alcaraz, Djokovic Shine as Gauff Joins Them in Last 16

Morocco Beat Madagascar to Secure Historic Third CHAN Title

$41bn Reserves vs Empty Pockets: When Will Relief Come For Nigerians?

Africa Emerges as Manufacturing Haven Amid US–India Trade Tensions

Trending

Aviation

African Airlines Record 9.4% Growth In Air Cargo Demand In July 2025 – IATA

August 31, 2025

African Airlines Record 9.4% Growth In Air Cargo Demand In July 2025 – IATA African airlines saw...

South African President Ramaphosa Launches G20 Taskforce to Tackle Global Wealth Inequality Amid US Absence

August 31, 2025

Burkina Faso’s Nationalization Rattles West Africa’s Gold Sector

August 31, 2025

Experts Talk BoG’s New Currency Controls & Crackdown on NPLs on NorvanReports’ X Space Discussions Tonight

August 31, 2025

Piastri Claims Pole Position in Thrilling Dutch Grand Prix Qualifying

August 31, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.