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The Role of Bank Loans in Monetary Policy Transmission in Malaysia

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  • Yu Hsing

Abstract

This study examines whether the bank lending channel holds for Malaysia based on a simultaneous-equation model consisting of the demand for and supply of bank loans. The three-stage least squares method to employed to estimate regression parameters. There is evidence of the bank lending channel for Malaysia because bank loan supply reacts negatively to the interbank rate and because monetary easing to purchase government bonds leads to more bank deposits and bank loan supply. In addition, depreciation of the Malaysian ringgit or a higher world interest rate results in a decrease in bank loan supply.

Suggested Citation

  • Yu Hsing, 2014. "The Role of Bank Loans in Monetary Policy Transmission in Malaysia," The Economics and Finance Letters, Conscientia Beam, vol. 1(4), pages 70-75.
    • Handle: RePEc:pkp:teafle:v:1:y:2014:i:4:p:70-75:id:1590
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    File URL: https://archive.conscientiabeam.com/index.php/29/article/view/1590/2205
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    Cited by:

    1. Dina Hosam Gabr & Mona A. ElBannan, 2018. "Consequences of Basel Accords on Bank Risk-Taking and Profitability: Evidence from Asian Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(12), pages 1506-1531, December.
    2. Moses K. Tule & Oloruntoba S. Ogundele & Martins O. Apinran, 2018. "Efficacy of Monetary Policy Instruments on Economic Growth: Evidence from Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(10), pages 1239-1256, October.
    3. Amjad Qwader, 2019. "Relationship between Macroeconomic Variables and their Impact on Non-Performing Loans in Jordanian Banks," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(2), pages 166-175, February.

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