The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence

This study attempts to provide empirical evidence on the importance of bank loan in channelling monetary policy effects to the real economy. Based on the Malaysian data, the study focuses on a sample period spanning from January 1989 to December 2006. It explores the causal relationships between ba...

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Main Authors:	Kassim, Salina, Abd. Majid, M. Shabri
Format:	Article
Language:	English
Published:	2008
Subjects:	H Social Sciences (General) HG3691 Credit
Online Access:	http://irep.iium.edu.my/3590/ http://irep.iium.edu.my/3590/1/06_kassim.pdf

id	iium-3590
recordtype	eprints
spelling	iium-35902015-04-14T00:57:12Z http://irep.iium.edu.my/3590/ The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence Kassim, Salina Abd. Majid, M. Shabri H Social Sciences (General) HG3691 Credit This study attempts to provide empirical evidence on the importance of bank loan in channelling monetary policy effects to the real economy. Based on the Malaysian data, the study focuses on a sample period spanning from January 1989 to December 2006. It explores the causal relationships between bank loan and monetary policy variable using two major tests; first, the auto-regressive distributed lag (ARDL) model which is used to examine the long-run relationship among the variables and second, the vector error-correction model (VECM) which is adopted to explore the short- and long-run dynamics between the variables. To further enrich the discussion, the study includes bank deposit so as to compare the importance of bank asset (loan) and liability (deposit) in the monetary transmission process. The results of the study show that both bank loan and deposit play crucial role in the monetary transmission process in the Malaysian case. In particular, bank loan is shown to provide an important nexus from monetary policy to output in the short run, while bank deposit is an important channel of monetary policy in the long run. The relevance of bank loan and deposit in the monetary transmission process implies the importance of ensuring the stability of the banking system as a pre-requisite to effective monetary policy implementation, thus the economic stability in the country. 2008 Article PeerReviewed application/pdf en http://irep.iium.edu.my/3590/1/06_kassim.pdf Kassim, Salina and Abd. Majid, M. Shabri (2008) The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence. Savings and Development, 32 (3). pp. 301-319.
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	H Social Sciences (General) HG3691 Credit
spellingShingle	H Social Sciences (General) HG3691 Credit Kassim, Salina Abd. Majid, M. Shabri The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence
description	This study attempts to provide empirical evidence on the importance of bank loan in channelling monetary policy effects to the real economy. Based on the Malaysian data, the study focuses on a sample period spanning from January 1989 to December 2006. It explores the causal relationships between bank loan and monetary policy variable using two major tests; first, the auto-regressive distributed lag (ARDL) model which is used to examine the long-run relationship among the variables and second, the vector error-correction model (VECM) which is adopted to explore the short- and long-run dynamics between the variables. To further enrich the discussion, the study includes bank deposit so as to compare the importance of bank asset (loan) and liability (deposit) in the monetary transmission process. The results of the study show that both bank loan and deposit play crucial role in the monetary transmission process in the Malaysian case. In particular, bank loan is shown to provide an important nexus from monetary policy to output in the short run, while bank deposit is an important channel of monetary policy in the long run. The relevance of bank loan and deposit in the monetary transmission process implies the importance of ensuring the stability of the banking system as a pre-requisite to effective monetary policy implementation, thus the economic stability in the country.
format	Article
author	Kassim, Salina Abd. Majid, M. Shabri
author_facet	Kassim, Salina Abd. Majid, M. Shabri
author_sort	Kassim, Salina
title	The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence
title_short	The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence
title_full	The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence
title_fullStr	The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence
title_full_unstemmed	The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence
title_sort	role of bank lending in the monetary transmission process of a developing economy: the malaysian evidence
publishDate	2008
url	http://irep.iium.edu.my/3590/ http://irep.iium.edu.my/3590/1/06_kassim.pdf
first_indexed	2023-09-18T20:11:28Z
last_indexed	2023-09-18T20:11:28Z
_version_	1777407506452054016

The role of bank lending in the monetary transmission process of a developing economy: the Malaysian evidence

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