Assessment of the Impact of Commercial Banks Mandatory Reserve Policy on Investment Activity
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In a developed economy, commercial banks operate in a constantly growing competitive environment. They compete with each other and with other credit and financial institutions, including foreign banks that provide a variety of services that have recently been offered. One of the main directions of activity of commercial banks in the conditions of strong competition is investment activity. Banks need to have a reliable image in front of their customers in order to fully fulfill their obligations. This confidence stems from the liquidity of the banks. In order to ensure the sustainability of their activities in a market economy, commercial banks are required to pay constant attention to liquidity, solvency, and profitability.
The interbank money market is one of the segments of the financial market, which ensures the placement of bank investments in the real economy through the rapid and efficient redistribution of funds accumulated in the banking system. The functioning of the interbank money market affects their overall size and efficiency in terms of making certain investment decisions for the economy and ultimately plays an important role in achieving economic growth.
Keywords
financial market, monetary policy, investment activity, required reserve policy, monetary base, credit multiplier, competitiveness of commercial banks