Developments in the financial system during the second quarter of 1988.

Abstract

Developments during the quarter were characterized by further growth in monetary aggregates as the impact of the 1988 reflationary package continued to manifest itself in the economy. Thus, the narrow measure of money (M1) rose further by 6.3 per cent due largely to the expansion in bank credit to the economy. The attractive yield on financial savings continued to influence the growth in quasi money which, together with M1, caused the broad money (M2) to rise by 6.9 per cent during the quarter. The numerical expansion of financial houses received a boost during the quarter following the establishment of four banks (two commercial and two merchant) and nine stock brokerage firms. The paper shows that developments in the capital market was mixed, while activities in the new issues market showed moderate growth, the secondary rnarket witnessed a decline.