Bank Lending Channel For Monetary Policy Transmission In Malaysia: An Ardl Approach
AbstractThe relevance of bank lending channel for the transmission process of monetary policy in Malaysia is investigated using the autoregressive-distributed lag (ARDL) model. The newly developed bounds test (Pesaran, et al. 2001) is employed to determine the specification of this model. Deposits tend to fall following contractionary monetary policy shocks, but banks are able to cushion their loan customers from the reduction in deposits through adjustments in liquid financial instruments. As such, these monetary shocks did not depress growth in loans. Although a shift is witnessed in the country’s interest rate regime as a policy response to the recent East Asian currency crisis, evidence was not found to support the effectiveness of the bank lending channel for the transmission of monetary policy.
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Bibliographic InfoArticle provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.
Volume (Year): 7 (2007)
Issue (Month): 2 ()
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Web page: http://www.usc.es/economet/eaa.htm
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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- Abdul Karim, Zulkefly & Wan Ngah, Wan Azman Saini & Abdul Karim, Bakri, 2010. "Bank lending channel of monetary policy: dynamic panel data evidence from Malaysia," MPRA Paper 26157, University Library of Munich, Germany.
- Le Viet, H. & Pfau, W.D., 2009. "VAR Analysis of the Monetary Transmission Mechanism in Vietnam," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 9(1).
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