Bank lending channel for monetary policy transmission in Malaysia: An ARDL approach

Goh, K.L. and Chong, C.S. and Yong, S.L. (2007) Bank lending channel for monetary policy transmission in Malaysia: An ARDL approach. Applied Econometrics and International Development, 7 (2). pp. 221-234. ISSN 1578-4487

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Official URL: http://www.usc.es/economet/journals1/aeid/aeid7219...

Abstract

The 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.

Item Type: Article
Uncontrolled Keywords: Bank deposits; Bank loans; Bounds test; Generalised Impulses; Interest rates
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 26 Jan 2015 13:17
Last Modified: 26 Jan 2015 13:17
URI: http://eprints.um.edu.my/id/eprint/12390

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