Impact of central bank policy on bank lending rate: developing nations evidence

The pass-through of the policy rate to the bank lending rate gauges the effectiveness of monetary policy in stabilizing the economy. This paper investigates how effectively the policy rates pass through to the bank lending rates, and whether the policy rate pass-through is symmetric or asymmetric in...

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Main Authors: Tunde, Matemilola Bolaji, Amin Noordin, Bany Ariffin, Kamarudin, Fakarudin
Format: Article
Language:English
Published: Faculty of Economics and Management, Universiti Putra Malaysia 2018
Online Access:http://psasir.upm.edu.my/id/eprint/22655/1/29%29%20Impact%20of%20Central%20Bank%20Policy.pdf
http://psasir.upm.edu.my/id/eprint/22655/
http://www.ijem.upm.edu.my/vol12_noS2/29)%20Impact%20of%20Central%20Bank%20Policy.pdf
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Institution: Universiti Putra Malaysia
Language: English
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spelling my.upm.eprints.226552019-11-12T07:29:23Z http://psasir.upm.edu.my/id/eprint/22655/ Impact of central bank policy on bank lending rate: developing nations evidence Tunde, Matemilola Bolaji Amin Noordin, Bany Ariffin Kamarudin, Fakarudin The pass-through of the policy rate to the bank lending rate gauges the effectiveness of monetary policy in stabilizing the economy. This paper investigates how effectively the policy rates pass through to the bank lending rates, and whether the policy rate pass-through is symmetric or asymmetric in two developing nations. The paper applies the momentum threshold auto-regressive and asymmetric error correction models. The results of the latter indicate that the Malaysian and South African commercial banks adjust their lending rates downward but the lending rates seem rigid upward supporting the customer reaction theory. The paper suggests that the speed of monetary transmission is unequal across the banking sectors and that a contractionary monetary policy takes a longer time to impact the economy than an expansionary monetary policy. Faculty of Economics and Management, Universiti Putra Malaysia 2018 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/22655/1/29%29%20Impact%20of%20Central%20Bank%20Policy.pdf Tunde, Matemilola Bolaji and Amin Noordin, Bany Ariffin and Kamarudin, Fakarudin (2018) Impact of central bank policy on bank lending rate: developing nations evidence. International Journal of Economics and Management, 12 (spec. 2). pp. 697-709. ISSN 1823-836X; ESSN: 2600-9390 http://www.ijem.upm.edu.my/vol12_noS2/29)%20Impact%20of%20Central%20Bank%20Policy.pdf
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description The pass-through of the policy rate to the bank lending rate gauges the effectiveness of monetary policy in stabilizing the economy. This paper investigates how effectively the policy rates pass through to the bank lending rates, and whether the policy rate pass-through is symmetric or asymmetric in two developing nations. The paper applies the momentum threshold auto-regressive and asymmetric error correction models. The results of the latter indicate that the Malaysian and South African commercial banks adjust their lending rates downward but the lending rates seem rigid upward supporting the customer reaction theory. The paper suggests that the speed of monetary transmission is unequal across the banking sectors and that a contractionary monetary policy takes a longer time to impact the economy than an expansionary monetary policy.
format Article
author Tunde, Matemilola Bolaji
Amin Noordin, Bany Ariffin
Kamarudin, Fakarudin
spellingShingle Tunde, Matemilola Bolaji
Amin Noordin, Bany Ariffin
Kamarudin, Fakarudin
Impact of central bank policy on bank lending rate: developing nations evidence
author_facet Tunde, Matemilola Bolaji
Amin Noordin, Bany Ariffin
Kamarudin, Fakarudin
author_sort Tunde, Matemilola Bolaji
title Impact of central bank policy on bank lending rate: developing nations evidence
title_short Impact of central bank policy on bank lending rate: developing nations evidence
title_full Impact of central bank policy on bank lending rate: developing nations evidence
title_fullStr Impact of central bank policy on bank lending rate: developing nations evidence
title_full_unstemmed Impact of central bank policy on bank lending rate: developing nations evidence
title_sort impact of central bank policy on bank lending rate: developing nations evidence
publisher Faculty of Economics and Management, Universiti Putra Malaysia
publishDate 2018
url http://psasir.upm.edu.my/id/eprint/22655/1/29%29%20Impact%20of%20Central%20Bank%20Policy.pdf
http://psasir.upm.edu.my/id/eprint/22655/
http://www.ijem.upm.edu.my/vol12_noS2/29)%20Impact%20of%20Central%20Bank%20Policy.pdf
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