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The Role Of Foreign Banks In The Transmission Of Monetary Policy: Empirical Evidence From Tunisia

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  • Mohamed Sadok Gassouma
  • Kais Ben-Ahmed

Abstract

This paper presents an em-pirical analysis of the effect of monetary policy shocks on credit supply in Tunisia, using a vector autoregressive model and a nonlinear interactive model. The focus is on the magnitude of these shocks in the pres-ence of foreign banks. The variables of in-terest are the concentration index of deposit banks, and monetary policy shocks based on the monthly data of 27 universal and business banks covering the period 1993 to 2016. The results support a positive and significant impact of concentration index on credit supply. However, monetary policy shocks appear to have no significant effect when the market is concentrated with the entry of foreign banks. The findings of this study also reveal that the entry of foreign banks neutralises monetary policy shock transmission in the credit supply, which may be offset by market discipline.

Suggested Citation

  • Mohamed Sadok Gassouma & Kais Ben-Ahmed, 2021. "The Role Of Foreign Banks In The Transmission Of Monetary Policy: Empirical Evidence From Tunisia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 66(228), pages 101-122, January –.
    • Handle: RePEc:beo:journl:v:66:y:2021:i:228:p:101-122
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    More about this item

    Keywords

    policy shocks; competitive-ness; credit supply; banks; Tunisia;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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