Comparing Bank Lending Channel in India and Pakistan

Gupta, Abhay

doi:10.2139/ssrn.1150239

Cited by 2 publications

(1 citation statement)

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“…Altunbaş, Fazylov, and Molyneux (2002) and Matousek and Sarantis (2009) categorised banks according to asset size and capital power to capture the impact of monetary shocks on the banks' balance sheets, and found that asset size and liquidity constituted the most crucial role in determining the response of a bank to monetary policy implications. Gupta (2008) investigated the impact of monetary policy decisions on the real economy in Pakistan and India. He argued that contractionary monetary policy had an impact on bank lending that consequently affected economic activity in the economies.…”

Section: Mechanism Of Monetary Transmissionmentioning

confidence: 99%

Islamic banking system: a credit channel of monetary policy – evidence from an emerging economy

Rafay

Farid

2019

Economic Research-Ekonomska Istraživanja

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Since its inception, Islamic banking in Pakistan has shown remarkable growth and development. Most recent statistics reveal that industry has captured around 13% of the total banking market in Pakistan. This outstanding growth of the industry highlights the crucial role of Islamic banks for monetary policy considerations. This study aimed to evaluate the role of Islamic banks in the monetary transmission process in Pakistan. The study examined the role of two most crucial balance sheet items of Islamic banks in the monetary transmission process: (1) Islamic deposits and (2) Islamic financing. The paper employed time series techniques such as the J.J. co-integration test, Vector Auto Regression, Variance Decomposition Analysis and Impulse Response Function to investigate the role of Islamic banks in the monetary transmission process. The study sample covered the time period 2007-2017. The results revealed the significant role of Islamic banks in transmitting monetary decisions to the real economy. Moreover, the evidence demonstrated the active bank lending channel of Islamic banking in Pakistan. The findings also corroborated the functional role of Islamic banks along with their conventional counterparts for effective formulation of monetary policy in Pakistan.

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Section: Mechanism Of Monetary Transmissionmentioning

confidence: 99%