01746cas a2200241 a 4500 AALejournalIMF002300 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451848441 1018-5941 BD-DhAAL BD-DhAAL Nkusu, Mwanza. Interest Rates, Credit Rationing, and Investment in Developing Countries / Mwanza Nkusu. Washington, D.C. : International Monetary Fund, 2003. 1 online resource (31 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper examines the impact of interest rates and inflation on bank loans and investment within a framework that mimics the financial sectors prevailing in most low-income developing countries. The paper emphasizes the importance of treating the lending and deposit rates of interest as distinct parameters in investment equations. The spread between the two rates is indicative of default risk and has a negative impact on incremental loan amounts associated with higher lending rates, in particular in economies with flawed institutions. The model presented in the paper highlights the importance of promoting macroeconomic stability and upgrading institutions and informational infrastructure. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2003/063 Full text available on IMF http://elibrary.imf.org/view/journals/001/2003/063/001.2003.issue-063-en.xml IMF e-Library