Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data

Monetary policy in Malaysia has been designed to be accommodative and supportive of economic growth with balancing the risk of inflation. As the cost of borrowing remains low, the transmission of monetary policy through the traditional interest rate channel might be diminished. Moreover, the infl...

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Main Authors:	Asbeig, Hussam I., Kassim, Salina
Format:	Conference or Workshop Item
Language:	English
Published:	2013
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/42726/ http://irep.iium.edu.my/42726/1/low_interest_rate_regime_-_salina.pdf

id	iium-42726
recordtype	eprints
spelling	iium-427262015-04-20T07:52:12Z http://irep.iium.edu.my/42726/ Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data Asbeig, Hussam I. Kassim, Salina HG1501 Banking Monetary policy in Malaysia has been designed to be accommodative and supportive of economic growth with balancing the risk of inflation. As the cost of borrowing remains low, the transmission of monetary policy through the traditional interest rate channel might be diminished. Moreover, the influential presence of the Islamic banks has further compounded the transmission process of monetary policy via interest rate channel. This study investigates the impact of monetary policy actions on the supply of loan/financing based on bank specific characteristics namely, size, liquidity and capitalization. The study adopts a multiplicative model based on panel data approach. We utilise balanced annual panel data that covers the period from 2000 to 2011. The study finds that bank specific factors, specifically, size and liquidity play an important role for the lending behaviour of the Islamic and conventional banks, whereas capitalization is significant only for the Islamic banks. Additionally, the study finds that the annual changes in the monetary policy have no significant impact on the level of financings of both the Islamic and conventional banks in Malaysia. We also find that monetary policy has no distributional effect on bank financings across capitalization, liquidity, size, and type during the study period, which does not help identify the financing/lending channel in Malaysia. 2013 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/42726/1/low_interest_rate_regime_-_salina.pdf Asbeig, Hussam I. and Kassim, Salina (2013) Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data. In: 2nd Applied International Business Conference 2013 (AIBC 2013), 7th-8th Dec. 2013, Labuan School of International Business and Finance, Universiti Malaysia Sabah.
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Asbeig, Hussam I. Kassim, Salina Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data
description	Monetary policy in Malaysia has been designed to be accommodative and supportive of economic growth with balancing the risk of inflation. As the cost of borrowing remains low, the transmission of monetary policy through the traditional interest rate channel might be diminished. Moreover, the influential presence of the Islamic banks has further compounded the transmission process of monetary policy via interest rate channel. This study investigates the impact of monetary policy actions on the supply of loan/financing based on bank specific characteristics namely, size, liquidity and capitalization. The study adopts a multiplicative model based on panel data approach. We utilise balanced annual panel data that covers the period from 2000 to 2011. The study finds that bank specific factors, specifically, size and liquidity play an important role for the lending behaviour of the Islamic and conventional banks, whereas capitalization is significant only for the Islamic banks. Additionally, the study finds that the annual changes in the monetary policy have no significant impact on the level of financings of both the Islamic and conventional banks in Malaysia. We also find that monetary policy has no distributional effect on bank financings across capitalization, liquidity, size, and type during the study period, which does not help identify the financing/lending channel in Malaysia.
format	Conference or Workshop Item
author	Asbeig, Hussam I. Kassim, Salina
author_facet	Asbeig, Hussam I. Kassim, Salina
author_sort	Asbeig, Hussam I.
title	Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data
title_short	Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data
title_full	Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data
title_fullStr	Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data
title_full_unstemmed	Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data
title_sort	low interest rate regime and the transmission of monetary policy through the lending channel in malaysia: evidence from bank-level data
publishDate	2013
url	http://irep.iium.edu.my/42726/ http://irep.iium.edu.my/42726/1/low_interest_rate_regime_-_salina.pdf
first_indexed	2023-09-18T21:00:53Z
last_indexed	2023-09-18T21:00:53Z
_version_	1777410615521837056

Low interest rate regime and the transmission of monetary policy through the lending channel in Malaysia: evidence from bank-level data

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