Bank Lending Channel of Monetary Policy: Dynamic Panel Data Study of Malaysia

Karim, Zulkefly Abdul; Azman-Saini, W.N.W.; Karim, Bakri Abdul

doi:10.1080/10599231.2011.570618

Cited by 28 publications

(34 citation statements)

References 31 publications

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“…However, small banks are more sensitive to monetary policy shocks than large banks, because of asymmetric information, agency cost and the banks' financial position. Many previous studies have considered both macro and firm level variables in modeling the determinants of the bank loan supply, for example Ehrmann et al (2002), Hosono (2006) and Abdul Karim et al (2011). These studies believed that the macroeconomic environment and bank specific variables are important factors in influencing the behaviour of the bank loan supply.…”

Section: Theoretical Modelmentioning

confidence: 99%

“…However, Windmeijer (2005) argued that the two-step GMM is better than the one-step GMM in determining coefficients with low bias and standard error. This is because the two-step GMM uses finite sample corrected standard errors (Abdul Karim et al 2011;Roodman 2009;Windmeijer 2006). The system GMM generates many instruments that over-fit the endogenous variables and weaken the Hansen Test.…”

Section: Gmm Modelmentioning

confidence: 99%

“…In Malaysia, Abdul Karim et al (2011) examined the effects of interest rates on bank loans, using disaggregated data and the GMM model. They found that interest rate shocks have a significant influence on bank loans.…”

Section: Evidence Of the Bank Lending Channel: Bank-level Studymentioning

confidence: 99%

“…The first method is using a certain lag of instruments instead of all the lags. The second method is combining instruments into smaller sets by collapsing the block of instruments (Abdul Karim et al 2011;Roodman 2009). …”

Section: Gmm Modelmentioning

confidence: 99%

“…Some macro-level studies, such as Romer et al (1990), Ramey (1993), fail to find a significant relationship between monetary policy and loans due to the problems of simultaneity and heterogeneity of banks, which generate biased estimations (Chatelain et al 2003;Chirinko et al 1999). The bank lend-2 Studies by Kashyap and Stein (1995), Abdul Karim et al (2011) andKandra (2012) have supported the bank lending channel and the heterogeneity effect of monetary policy. 3 The Egyptian banking sector consists of the Central Bank and 40 banks.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

The Bank Lending Channel of Monetary Policy? The Panel Evidence from Egypt

Shokr

Karim

Jusoh

et al. 2014

GADJAH MADA INT. J. BUS.

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This paper examines the relevance of the bank lending channel of monetary policy in Egypt using bank-level data. Previous empirical studies in Egypt that used macro-level data have not supported the relevance of the bank lending channel. However, using a sample of 32 commercial banks for the period from 1998 until 2011 and a dynamic panel GMM technique, the empirical findings revealed the relevance of the bank lending channel of monetary policy in Egypt. Moreover, there is a heterogeneity effect of monetary policy on bank loans according to bank size, in which the small banks are more affected during a monetary contraction than larger banks. This finding signals that the monetary authorities in Egypt should take cognizance of the stability of interest rates in order to stabilize the bank loan supply.Abstrak: Makalah ini membahas relevansi bank penyalur pinjaman kebijakan moneter/bank sentral di Mesir dengan menggunakan data bank bertingkat. Beberapa studi empiris sebelumnya yang menggunakan data tingkat makro belum mendukung relevansi penyaluran pinjaman bank. Namun, dengan menggunakan sampel dari 32 bank umum dari periode 1998 hingga 2011 dan dengan memakai teknik panel GMM dinamis, kami menemukan bukti empiris yang menunjukkan adanya relevansi saluran peminjaman bank kebijakan moneter di Mesir. Selain itu, ada efek heterogenitas kebijakan moneter pinjaman bank sesuai dengan ukuran bank, di mana pada umumnya bank yang kecil lebih terpengaruh selama kontraksi moneter dibandingkan dengan bank yang lebih besar. Temuan ini menunjukan bahwa pihak otoritas moneter di Mesir harus bertanggung jawab atas kestabilan suku bunga agar terjaga kestabilan pasokan pinjaman bank.

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Section: Theoretical Modelmentioning

confidence: 99%

Section: Gmm Modelmentioning

confidence: 99%

Section: Evidence Of the Bank Lending Channel: Bank-level Studymentioning

confidence: 99%

Section: Gmm Modelmentioning

confidence: 99%