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Manual on Monetary Transmission Mechanism Adopted

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A manual on “Application of Advanced Panel Data Analysis with Special Application to the Impact of Financial Structure on Monetary Transmission Mechanism,” has been validated. The manual whose overall objective is to equip users to undertake analysis of all aspects of panel data analysis was endorsed during a five- day workshop in Nairobi from 8th to 12th May, 2017.

The manual demonstrates all steps from data organization to results interpretation applying bank level data using the Eviews software. Ten COMESA Member States including Burundi, DR Congo, Ethiopia, Kenya, Madagascar, Rwanda, Sudan, Swaziland, Zambia, and Zimbabwe were represented in the workshop. It was organized by the COMESA Monetary Institute (CMI).

Prof. Kinandu Muragu, the Executive Director of the Kenya School of Monetary Studies (KSMS) where the workshop was hosted and the Director, COMESA Monetary Institute (CMI) Mr. Ibrahim Zeidy addressed the participants. They observed that Panel Data Analysis combined cross section and time series data allowing analysis across banks, industries, countries or even specific regional blocks or continents.

“The application of Panel Data Analysis to transmission mechanism of monetary policy is important for effective implementation of monetary policy,” Prof Muragu said. He pointed out that a better understanding of the transmission mechanism of monetary policy was an important prerequisite for implementing a sound monetary policy. “It allows a judgment to be formed as to the extent and the timing of monetary policy decisions which are appropriate in order to maintain price stability,” he said.

Following the feedback from the workshop, Mr. Zeidy said the manual will now be published by CMI as a knowledge product that will provide member central banks with an analytical guide on application of advanced Panel Data Analysis. The decision to develop the manual was made during the 22nd Meeting of the COMESA Committee of Governors of Central Banks held in Bujumbura, Burundi in March, 2017.

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