Lost in Transmission? The Effectiveness of Monetary Policy Transmission Channels in the GCC Countries

Cevik, Serhan; Teksoz, Katerina

doi:10.2139/ssrn.2169737

Cited by 3 publications

(2 citation statements)

References 10 publications

(7 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In addition, a large strand of literature also highlighted the challenges faced by banking authorities in conducting their monetary policy in presence of both Islamic and conventional banks. The problem of monetary policy transmission through interest rates (cost of capital) channel or the bank lending channel was indeed largely debated (Cevik and Teksoz, 2012; Basu et al , 2015; Hamza and Saadaoui, 2018). When Islamic and conventional banks show different cyclical behaviour, this will further complicate the conduct of monetary policy when Central banks are also dealing with macroprudential issues.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Lending cyclicality in dual banking system: empirical evidence from GCC countries

Saadaoui

Hamza

2020

JIABR

View full text Add to dashboard Cite

Purpose The purpose of this paper is to check if there is a procyclical lending behaviour in dual banking systems of the Golf Cooperation Council (GCC) countries. The study also tries to control for the role of Islamic banks in amplifying or mitigating the procyclicality of dual banking systems. Design/methodology/approach Estimation of a dynamic panel model using annual observations on a sample of 81 banks based in the GCC countries between 2005 and 2018. The study uses two business cycle indicators as dependent variables, namely, output gap and oil price gap. Findings The system generalilzed method of moments (GMM) estimator and robustness checks confirm the procyclical lending pattern of dual banking systems in the GCC. Estimation outputs also indicate that this procyclicality is more pronounced during economic slowdowns. However, it is found that Islamic banks’ lending is less procyclical, giving support for the stability view of Islamic banking systems. The authors think that the implementation and conduct of macroprudential policies are very challenging for banking authorities when Islamic banks and conventional banks operate under the same regulatory framework. Research limitations/implications The research paper may suffer from some limitations. Indeed, exploring panel data instead of country-case data may lead to a problem of heterogeneity that may underpin the credibility of the econometrical estimations. To deal with this problem by introducing a set of bank-specific and time-specific dummies. Furthermore, small N samples (N = number of individuals) may affect the reliability of the tests for the validity of instruments and autocorrelation used under the GMM estimator, leading to inefficient results. Consequently, the number of selected banks is extended as much as possible (81 banks), becoming important comparing to the time dimension of the panel. Practical implications Policymakers and regulators are incited to embed the perspectives of Islamic finance regarding lending cyclicality in dual banking systems, which promote the efficiency of resource allocation to the financing of assets and by consequence enabling financial stability. The stability view of the Islamic banking system could prompt policymakers and regulators to encourage the implementation and development of Islamic banks. Originality/value The present paper tries to overcome the lack of empirical studies on the procyclicality of dual banking. The study contributes to this novel literature in two ways. First, it focuses exclusively on GCC banking systems. In fact, compared to other emerging markets, business cycles characterizing GCC are specific because of the role played by the oil and gas revenues in the economic growth and financial system is crucial. Second, this paper brings into evidence the procyclicality of GCC banking systems also when the oil price is taken as a business cycle indicator.

show abstract

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Lending cyclicality in dual banking system: empirical evidence from GCC countries

Saadaoui

Hamza

2020

JIABR

View full text Add to dashboard Cite

show abstract

“… Romer and Romer (1990),Lattemae (2003),Sinclair (2004),Vymyatnina (2005),Dabla-Norris and Floerkemeier (2006),Aslanidi (2007), Tuano-Amado, Glindro and Claveria (2009),Ogun and Akinlo (2010),Cevik and Teksoz (2012),,Montiel (2015),Olteanu (2015), andWilliams and Robinson (2016).…”

mentioning

confidence: 99%

Further insights on monetary transmission mechanism in Nigeria

Oyadeyi¹,

Akinbobola²

2022

J. Econ. Int. Finance

View full text Add to dashboard Cite

This study investigated the response of the different monetary policy channels to several macroeconomic variables in Nigeria and established the dominant channel on output from the period of 1986 to 2017 using quarterly data. Variables such as private sector credit, inflation rate, monetary policy rate, exchange rate, all share index and real output were used to carry out this investigation. The study adopted the structural break and structural VAR methods in achieving the objectives and found a significant standard deviation real effect on each monetary policy channel in the short term, while it also found that innovations arising from a channel itself caused the greatest shock on its future values. The findings further demonstrated that each monetary policy channel had a weak influence on output, with interest rate channel being the dominant channel of monetary policy on output. Finally, the paper suggested that the monetary authority should keep using interest rate as the major policy anchor through which monetary impulses are transmitted into the economy.

show abstract

Simulating the Shareholders’ Behavior pattern in capital market considering the changing monetary policies of the central bank of Iran

Zoghi,

Pedram

2023

J. Mon. Ec.

View full text Add to dashboard Cite

Lost in Transmission? The Effectiveness of Monetary Policy Transmission Channels in the GCC Countries

Cited by 3 publications

References 10 publications

Lending cyclicality in dual banking system: empirical evidence from GCC countries

Lending cyclicality in dual banking system: empirical evidence from GCC countries

Further insights on monetary transmission mechanism in Nigeria

Simulating the Shareholders’ Behavior pattern in capital market considering the changing monetary policies of the central bank of Iran

Contact Info

Product

Resources

About