The future of the system of direct lending in Belarus

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This research note focuses on issues with the lending policy in Belarus and considers possible mechanisms for its reform.

The paper describes the main features of the system of direct lending in Belarus and the corresponding channels of impact on economic growth are looked at separately. Among the problems that direct lending causes, in terms of long-term growth, are losses in distributive efficiency, the reduced productivity of fixed capital and losses in the efficiency of financial intermediation. In addition, direct lending could cause shocks in the short-term money market and the reason for the distribution of those shocks within the national economy. To answer the question of what is needed in order to eliminate, or at least minimise, the negative impact of direct lending, the note also gives a list of recommendations for the reform and improvement of the existing system.

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Last updated 27.01.2016
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