The role of the bank lending channel of the monetary policy on bank behavior

Fathin Faizah Said, Mahmoud Ali Bashir

Research output: Contribution to journalArticle

Abstract

The pass-through policy rates to bank lending channel is an essential topic. This study intends to analyze the role of the bank lending channel of the monetary policy on its behavior. We will also examine the impact of monetary policy, market interest rates, and risk weighted asset on the average rates using 20 commercial banks between 2008 and 2015 in Malaysia. The General Method of Moment (GMM) proposed by Arellano and Bond (1991), Arellano and Bover (1995), and Blundell and Bond (1998) have been used in this study. Our main finding is that credit risk on loans and time deposit are important influences on the decision rate, average interest rate on loans, and time deposit. We found that market rates on time deposit, and policy rate are statistically significant influence the average interest rate on time deposit. We have also proved that higher risk loans are negatively correlated to the average rate on loans.

Original languageEnglish
Pages (from-to)443-453
Number of pages11
JournalInternational Journal of Economics and Management
Volume12
Issue number2
Publication statusPublished - 1 Jan 2018

Fingerprint

Monetary policy
Bank lending channel
Deposits
Loans
Interest rates
Method of moments
Credit risk
Malaysia
Commercial banks
Assets
Pass-through

Keywords

  • Bank behavior
  • Bank lending channel
  • Basel II
  • Monetary policy

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Strategy and Management

Cite this

The role of the bank lending channel of the monetary policy on bank behavior. / Said, Fathin Faizah; Bashir, Mahmoud Ali.

In: International Journal of Economics and Management, Vol. 12, No. 2, 01.01.2018, p. 443-453.

Research output: Contribution to journalArticle

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