Monetary Policy Transmission in Emerging Asia: The Role of Banks and the Effects of Financial Globalization

Ananchotikul, Nasha; Seneviratne, Dulani

doi:10.5089/9781513516233.001

Cited by 9 publications

(13 citation statements)

References 16 publications

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“…This suggests that commercial banks in the ASEAN countries are more vulnerable to changes in monetary policy compared to other banks. Similar findings have been observed by Ananchotikul and Dulani (2015) in the case of nine Asian countries which include ASEAN-5 countries, Hong Kong, India, Korea and Taiwan. Greater vulnerability of commercial banks to monetary policy changes may be due to their higher reliance on lending activities.…”

Section: Discussionsupporting

confidence: 86%

“…However, more focus should be given to the objective of the research (Wooldridge, 2010). Similar model used by Bhaumik, Dang and Kutan (2011), Ananchotikul and Dulani (2015) and Zulkhibri and Sukmana (2017) in identifying the effectiveness of monetary policy also obtained low R-square. 2.…”

Section: Declaration Of Conflicting Interestsmentioning

confidence: 69%

“…where Bank Type i,j,t represents the dummy variable for the type of banks which include commercial banks, investment banks, special purpose banks and Islamic banks. The inclusion of the interaction terms allows us to isolate the indirect effect of monetary policy on loan growth that varies with bank types from the direct impact that is common across all banks (Ananchotikul & Dulani, 2015). Finally, we examine the effectiveness of bank lending in ASEAN by taking into account the differences that exist in the governance structure of the economies.…”

Section: Methodsmentioning

confidence: 99%

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Bank-Lending Channel of Monetary Policy Transmission: Evidence from ASEAN

Hamid

Yunus

2019

Global Business Review

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This article examines the existence of a bank-lending channel in Association of Southeast Asian Nations (ASEAN) using a sample of 328 banks from 2009 to 2015. The findings confirm that a bank-lending channel is effective. In particular, we find that consumer loans and commercial loans are sensitive to changes in monetary policy, but mortgage and corporate loans are not. We also find that commercial banks are vulnerable to monetary policy changes, but both investment and Islamic banks are not. On the contrary, special purpose banks are able to overcome the effect of monetary policy tightening by supplying more loans. The effectiveness of a bank-lending channel in ASEAN also holds when we control for the differences in governance structure of the countries. Policymakers need to take these into consideration in designing an effective monetary policy.

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Section: Discussionsupporting

confidence: 86%

Section: Declaration Of Conflicting Interestsmentioning

confidence: 69%

Section: Methodsmentioning

confidence: 99%

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Bank-Lending Channel of Monetary Policy Transmission: Evidence from ASEAN

Hamid

Yunus

2019

Global Business Review

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“…On the other hand, when Ananchotikul and Seneviratne (2015) also tried to tackle the question of "How do banks' characteristics affect the effectiveness of monetary policy transmission? ", they came up with a contradicting conclusion.…”

Section: Literature Reviewmentioning

confidence: 99%

Size of Banks as a Factor Which Impacts the Efficiency of the Bank Lending Channel

2020

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JEL classification: E44, E51, E52, E58, G21In most economies the banking sector plays the major role in the financial system. Therefore, it is of great importance to analyse and understand the mechanism of transmission of monetary policy and its impact on the banking sector. One of the possible repercussions of changing the level of official interest rates is the ability to influence the size of bank lending, by means of the bank lending channel. The key aspect our research is a thorough understanding of the functioning of the bank lending channel, with the main goal of this study being an examination of the efficiency of monetary policy transmission through the bank lending channel depending on the size of banks in the sector. This paper examines the abovementioned relation using annual data from 1995-2015 by 1709 commercial and cooperative banks from 27 EU countries and analyzing them in various econometric models. The results indicate that there is a positive impact of a bank's size on loan growth (defined as the bank size increases, the impact of changes in interest rates in the bank's lending policy is getting smaller), however, interaction between the variables of size and the interest rate, was proved to be insignificant (in the group of all analysed banks, as well as in commercial and cooperative banks separately).

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“…According to Bank of International Settlements (BIS) data, the lower funding cost increased global bank lending to Asian emerging economies from 100 percent of the region's GDP in the first quarter of 2007 to 140 percent by the second quarter of 2017. 1 Moreover, the easy global financial conditions have contributed to a shift in funding of the domestic banks of these Asian economies from domestic to external sources (Ananchotikul and Seneviratne, 2015;Azis and Shin, 2015).…”

Section: Introductionmentioning

confidence: 99%

Non-Core Liabilities and Monetary Policy Transmission in Indonesia During the Post-2007 Global Financial Crisis

Pontines

Siregar²

2017

SSRN Journal

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The policy importance of non-core liabilities has risen to prominence in recent years with the studies of Shin and Shin (2010), Hahm, et al., (2010) and Hahm, et al., (2013) highlighting it as a useful indicator of financial procyclicality and vulnerability. In this paper, we look at noncore liabilities in relation to its role in the transmission of monetary policy, particularly by examining how the interest rate channel of monetary policy is affected by non-deposit liabilities. We analyse this issue in the context of an emerging economy experience of Indonesia, which in recent years, has seen an increased reliance of its banking sector on non-core funding. Our investigation employs available bank-level data on non-core liabilities and lending rates in Indonesia over the period October 2011 to July 2016. We find that including non-core liabilities in the estimation has an effect, relative to the baseline, of stronger overall and immediate pass-through, albeit with a more sluggish adjustment towards correction of disequilibrium in the next period. The overall effect is that non-core liabilities make the duration lengthier for the monetary policy rate to transmit to bank lending rates in Indonesia.

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Monetary Policy Transmission in Emerging Asia: The Role of Banks and the Effects of Financial Globalization

Cited by 9 publications

References 16 publications

Bank-Lending Channel of Monetary Policy Transmission: Evidence from ASEAN

Bank-Lending Channel of Monetary Policy Transmission: Evidence from ASEAN

Size of Banks as a Factor Which Impacts the Efficiency of the Bank Lending Channel

Non-Core Liabilities and Monetary Policy Transmission in Indonesia During the Post-2007 Global Financial Crisis

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