Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia

This study aims to analyse the impact of interest rate changes on the domestic and foreign banks and determine its monetary policy implications. The study employed the impulse response functions and variance decomposition analysis based on the Vector Autoregression model to study the responses of ma...

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Main Authors:	Kassim, Salina, Abdul Manap, Turkhan Ali
Format:	Article
Language:	English
Published:	Faculty of Economics and Administration, University of Malaya 2012
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/13044/ http://irep.iium.edu.my/13044/ http://irep.iium.edu.my/13044/1/Responses_to_Interest_Rate_Changes.pdf

id	iium-13044
recordtype	eprints
spelling	iium-130442013-03-06T06:08:58Z http://irep.iium.edu.my/13044/ Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia Kassim, Salina Abdul Manap, Turkhan Ali HG1501 Banking This study aims to analyse the impact of interest rate changes on the domestic and foreign banks and determine its monetary policy implications. The study employed the impulse response functions and variance decomposition analysis based on the Vector Autoregression model to study the responses of major balance sheet items, namely deposit and loan to interest rate shocks based on Malaysian data from the period January 1997 to December 2006. The study found that domestic banks responded differently to interest rate shocks compared to the foreign banks. The different responses of the balance sheet items of the domestic and foreign banks show that the impact of tight monetary policy is uneven across the banking institutions. It also implies that the domestic banks could learn from the prudent risk management practices of the foreign banks that enable them to resume lending after a shorter lapse compared to domestic banks. Faculty of Economics and Administration, University of Malaya 2012-06 Article PeerReviewed application/pdf en http://irep.iium.edu.my/13044/1/Responses_to_Interest_Rate_Changes.pdf Kassim, Salina and Abdul Manap, Turkhan Ali (2012) Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia. Malaysian Journal of Economic Studies , 49 (1). pp. 21-35. ISSN 1511-4554 http://www.myjurnal.my/filebank/published_article/16260/Paper_2.pdf
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 Kassim, Salina Abdul Manap, Turkhan Ali Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia
description	This study aims to analyse the impact of interest rate changes on the domestic and foreign banks and determine its monetary policy implications. The study employed the impulse response functions and variance decomposition analysis based on the Vector Autoregression model to study the responses of major balance sheet items, namely deposit and loan to interest rate shocks based on Malaysian data from the period January 1997 to December 2006. The study found that domestic banks responded differently to interest rate shocks compared to the foreign banks. The different responses of the balance sheet items of the domestic and foreign banks show that the impact of tight monetary policy is uneven across the banking institutions. It also implies that the domestic banks could learn from the prudent risk management practices of the foreign banks that enable them to resume lending after a shorter lapse compared to domestic banks.
format	Article
author	Kassim, Salina Abdul Manap, Turkhan Ali
author_facet	Kassim, Salina Abdul Manap, Turkhan Ali
author_sort	Kassim, Salina
title	Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia
title_short	Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia
title_full	Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia
title_fullStr	Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia
title_full_unstemmed	Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia
title_sort	responses to interest rate changes: a comparison between domestic and foreign commercial banks in malaysia
publisher	Faculty of Economics and Administration, University of Malaya
publishDate	2012
url	http://irep.iium.edu.my/13044/ http://irep.iium.edu.my/13044/ http://irep.iium.edu.my/13044/1/Responses_to_Interest_Rate_Changes.pdf
first_indexed	2023-09-18T20:22:12Z
last_indexed	2023-09-18T20:22:12Z
_version_	1777408181807349760

Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia

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