The role of bank loans and deposits in the monetary transmission mechanism in Malaysia

This study attempts to determine the importance of the banking sector in the monetary transmission process in a developing economy. The study analyzes the Malaysian data focusing on three sample periods: the entire sample period (1989:01-2006:12); the pre-crisis period (1989:01-1996:12); and the po...

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Main Authors:	Kassim, Salina, Abdul Majid, M. Shabri
Format:	Article
Language:	English
Published:	The Berkeley Electronic Press 2009
Subjects:	HG Finance HG3691 Credit
Online Access:	http://irep.iium.edu.my/11771/ http://irep.iium.edu.my/11771/ http://irep.iium.edu.my/11771/1/salina_Kassim_1.pdf

id	iium-11771
recordtype	eprints
spelling	iium-117712012-01-04T08:12:09Z http://irep.iium.edu.my/11771/ The role of bank loans and deposits in the monetary transmission mechanism in Malaysia Kassim, Salina Abdul Majid, M. Shabri HG Finance HG3691 Credit This study attempts to determine the importance of the banking sector in the monetary transmission process in a developing economy. The study analyzes the Malaysian data focusing on three sample periods: the entire sample period (1989:01-2006:12); the pre-crisis period (1989:01-1996:12); and the post-crisis period (1999:01-2006:12). To achieve this objective, the study relies on two tests: fi rst, the auto-regressive distributed lag (ARDL) model for the long-run relationship among the variables and second, the impulse response functions and variance decomposition analysis for the short-run relationship among the variables. The fi nding shows that both bank deposits and loans play crucial roles in the monetary transmission process in the economy, suggesting evidence for the money endogeneity theory of post-Keynesian economists. In particular, bank deposits and loans are shown to provide an important link from monetary policy to output. This underscores the importance of ensuring the soundness of banking system as a pre-requisite to economic stability in the absence of such market based tools as market-based actions on exchange rate or interest rates as monetary stabilisation tools. The Berkeley Electronic Press 2009-01-03 Article PeerReviewed application/pdf en http://irep.iium.edu.my/11771/1/salina_Kassim_1.pdf Kassim, Salina and Abdul Majid, M. Shabri (2009) The role of bank loans and deposits in the monetary transmission mechanism in Malaysia. The International Journal of Banking and Finance, 6 (2). pp. 39-57. ISSN 1675-7227 http://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1056&context=ijbf
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG Finance HG3691 Credit
spellingShingle	HG Finance HG3691 Credit Kassim, Salina Abdul Majid, M. Shabri The role of bank loans and deposits in the monetary transmission mechanism in Malaysia
description	This study attempts to determine the importance of the banking sector in the monetary transmission process in a developing economy. The study analyzes the Malaysian data focusing on three sample periods: the entire sample period (1989:01-2006:12); the pre-crisis period (1989:01-1996:12); and the post-crisis period (1999:01-2006:12). To achieve this objective, the study relies on two tests: fi rst, the auto-regressive distributed lag (ARDL) model for the long-run relationship among the variables and second, the impulse response functions and variance decomposition analysis for the short-run relationship among the variables. The fi nding shows that both bank deposits and loans play crucial roles in the monetary transmission process in the economy, suggesting evidence for the money endogeneity theory of post-Keynesian economists. In particular, bank deposits and loans are shown to provide an important link from monetary policy to output. This underscores the importance of ensuring the soundness of banking system as a pre-requisite to economic stability in the absence of such market based tools as market-based actions on exchange rate or interest rates as monetary stabilisation tools.
format	Article
author	Kassim, Salina Abdul Majid, M. Shabri
author_facet	Kassim, Salina Abdul Majid, M. Shabri
author_sort	Kassim, Salina
title	The role of bank loans and deposits in the monetary transmission mechanism in Malaysia
title_short	The role of bank loans and deposits in the monetary transmission mechanism in Malaysia
title_full	The role of bank loans and deposits in the monetary transmission mechanism in Malaysia
title_fullStr	The role of bank loans and deposits in the monetary transmission mechanism in Malaysia
title_full_unstemmed	The role of bank loans and deposits in the monetary transmission mechanism in Malaysia
title_sort	role of bank loans and deposits in the monetary transmission mechanism in malaysia
publisher	The Berkeley Electronic Press
publishDate	2009
url	http://irep.iium.edu.my/11771/ http://irep.iium.edu.my/11771/ http://irep.iium.edu.my/11771/1/salina_Kassim_1.pdf
first_indexed	2023-09-18T20:21:03Z
last_indexed	2023-09-18T20:21:03Z
_version_	1777408108731039744

The role of bank loans and deposits in the monetary transmission mechanism in Malaysia

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