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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/42726/1/low_interest_rate_regime_-_salina.pdf
http://irep.iium.edu.my/42726/
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spelling my.iium.irep.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 REM 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.
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
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/42726/1/low_interest_rate_regime_-_salina.pdf
http://irep.iium.edu.my/42726/
_version_ 1643612245947580416
score 13.211869

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