The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan

This study empirically analyzes the MPTM through bank’ balance sheet in Pakistan for the period of 2008-2018. The data set consists of 22 conventional banks and 18 Islamic banks (5 full-fledged and 13 Islamic windows of conventional banks) of Pakistan. The study employs the robust two-step system-Ge...

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Main Authors: Kabir, Anis, Abdul Rehman Shah, Syed Muhammad, Hassan, M. Kabir, Akmal, Muhammad
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2022
Online Access:http://journalarticle.ukm.my/21356/1/The%20Transmission%20Mechanism%20of%20Monetary%20Policy%20via%20Bank%E2%80%99%20Balance%20Sheet%20An.pdf
http://journalarticle.ukm.my/21356/
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Institution: Universiti Kebangsaan Malaysia
Language: English
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spelling my-ukm.journal.213562023-03-17T08:15:25Z http://journalarticle.ukm.my/21356/ The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan Kabir, Anis Abdul Rehman Shah, Syed Muhammad Hassan, M. Kabir Akmal, Muhammad This study empirically analyzes the MPTM through bank’ balance sheet in Pakistan for the period of 2008-2018. The data set consists of 22 conventional banks and 18 Islamic banks (5 full-fledged and 13 Islamic windows of conventional banks) of Pakistan. The study employs the robust two-step system-Generalized Method of Moments is applied for estimation and confirms the presence of balance sheet channel in Pakistan. The study also finds that responses of Islamic banking operations to monetary policy shocks are not different from their conventional peers because both banking systems use Karachi Interbank offered rate (KIBOR) as a benchmark for their products. The results also highlight the sensitivity of banking operations (conventional vs Islamic) to monetary policy shocks are quite different, mainly due to the difference in their nature of contracts. This study is equally beneficial for academicians and practitioners to consider the nature of both banking systems in same economy. Our findings indicate that, policy makers need to consider the nature of both banking system (conventional vs Islamic) to maintain deposits and credit supply in an economy. Penerbit Universiti Kebangsaan Malaysia 2022 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/21356/1/The%20Transmission%20Mechanism%20of%20Monetary%20Policy%20via%20Bank%E2%80%99%20Balance%20Sheet%20An.pdf Kabir, Anis and Abdul Rehman Shah, Syed Muhammad and Hassan, M. Kabir and Akmal, Muhammad (2022) The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan. Jurnal Ekonomi Malaysia, 56 (2). pp. 129-140. ISSN 0127-1962 https://ejournals.ukm.my/jem/
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description This study empirically analyzes the MPTM through bank’ balance sheet in Pakistan for the period of 2008-2018. The data set consists of 22 conventional banks and 18 Islamic banks (5 full-fledged and 13 Islamic windows of conventional banks) of Pakistan. The study employs the robust two-step system-Generalized Method of Moments is applied for estimation and confirms the presence of balance sheet channel in Pakistan. The study also finds that responses of Islamic banking operations to monetary policy shocks are not different from their conventional peers because both banking systems use Karachi Interbank offered rate (KIBOR) as a benchmark for their products. The results also highlight the sensitivity of banking operations (conventional vs Islamic) to monetary policy shocks are quite different, mainly due to the difference in their nature of contracts. This study is equally beneficial for academicians and practitioners to consider the nature of both banking systems in same economy. Our findings indicate that, policy makers need to consider the nature of both banking system (conventional vs Islamic) to maintain deposits and credit supply in an economy.
format Article
author Kabir, Anis
Abdul Rehman Shah, Syed Muhammad
Hassan, M. Kabir
Akmal, Muhammad
spellingShingle Kabir, Anis
Abdul Rehman Shah, Syed Muhammad
Hassan, M. Kabir
Akmal, Muhammad
The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan
author_facet Kabir, Anis
Abdul Rehman Shah, Syed Muhammad
Hassan, M. Kabir
Akmal, Muhammad
author_sort Kabir, Anis
title The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan
title_short The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan
title_full The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan
title_fullStr The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan
title_full_unstemmed The transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in Pakistan
title_sort transmission mechanism of monetary policy via bank’ balance sheet: an empirical study of dual banking system in pakistan
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2022
url http://journalarticle.ukm.my/21356/1/The%20Transmission%20Mechanism%20of%20Monetary%20Policy%20via%20Bank%E2%80%99%20Balance%20Sheet%20An.pdf
http://journalarticle.ukm.my/21356/
https://ejournals.ukm.my/jem/
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