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

2015 ◽  
Author(s):  
Nasha Ananchotikul ◽  
Dulani Seneviratne
Keyword(s):  
Monetary Policy ◽  
Financial Globalization ◽  
Monetary Policy Transmission ◽  
Policy Transmission

Sukuk and monetary policy transmission in Indonesia: the role of asset price and exchange rate channels

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suriani Suriani ◽  
M. Shabri Abd. Majid ◽  
Raja Masbar ◽  
Nazaruddin A. Wahid ◽  
Abdul Ghafar Ismail
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Asset Price ◽  
Transmission Mechanism ◽  
Monetary Policy Transmission ◽  
Content Type ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism

Purpose The purpose of this study is to empirically analyze the role of sukuk in the monetary policy transmission mechanism through the asset price and exchange rate channels in the Indonesian economy. Design/methodology/approach Using the monthly data from January 2003 to November 2017, this study uses a multivariate vector error correction model causality framework. To examine the role of sukuk in the monetary policy transmission mechanism through the asset price channel, this study uses the variables of consumption, inflation, interest rates, economic growth and the composite stock price index. Meanwhile, to examine the role of sukuk in the monetary policy transmission mechanism through the exchange rate channel, this study used variables of inflation, interest rates, economic growth, foreign investment and exchange rate. Findings This study documented that sukuk has no causal relationship with inflation through asset price and exchange rate channels. Nevertheless, sukuk has a bidirectional causal relationship with economic growth through asset price and exchange rate channels. Sukuk is also documented to have a causal relationship with monetary policy variables of interest rate and stock prices through asset price and exchange rate channels. Finally, a unidirectional causality is recorded running from the exchange rate to sukuk in the exchange rate channel. Research limitations/implications The finding of independence of the sukuk market from interest rates provides evidence that the trading of the sukuk in Indonesia has been in harmony with the Islamic tenets. Practical implications The relevant Indonesian authorities need to enhance both domestic and global sukuk markets as part of efforts to promote the sustainability of Islamic capital market development in Indonesia. Originality/value To the best of the authors’ knowledge, this study is among the first attempts to empirically investigate the role of sukuk in monetary policy transmission through asset price and exchange rate channels in the context of the Indonesian economy.

The SOE Channel of Monetary Policy Transmission: Evidence from China's Economic Stimulus Package

2021 ◽  
pp. 1-21
Author(s):  
Wenbin Chen ◽  
Shi-Zhuan Han ◽  
Jie Li ◽  
Tianhang Zhou
Keyword(s):  
Monetary Policy ◽  
Propensity Score ◽  
Propensity Score Matching ◽  
Bank Loans ◽  
Monetary Policy Transmission ◽  
Difference In Difference ◽  
Policy Transmission ◽  
High Level ◽  
Stimulus Package

Abstract We examine the state-owned enterprises (SOEs) channel in monetary policy transmission in the context of China's 2008 stimulus package. Using a difference-in-difference approach, we show that the higher SOE share in the cities after the stimulus package, the more bank loans issued in the cities. Furthermore, we find that the role of SOEs in monetary policy transmission is more significant in underdeveloped cities and cities with a high level of government intervention. We adopt propensity score matching difference-in-difference to deal with potential endogeneity problem. The baseline results also survive a series of robustness tests.

scholarly journals Financial Systems and the Role of Banks in Monetary Policy Transmission in the Euro Area

2001 ◽  
Author(s):  
Michael Ehrmann ◽  
Leonardo Gambacorta ◽  
Jorge Martínez Pagés ◽  
Patrick Sevestre ◽  
Andreas Worms
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Monetary Policy Transmission ◽  
Financial Systems ◽  
Policy Transmission

Effect of monetary policy on bank risk: does market structure matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muntazir Hussain ◽  
Usman Bashir ◽  
Ahmad Raza Bilal
Keyword(s):  
Monetary Policy ◽  
Market Structure ◽  
Risk Taking ◽  
Bank Risk ◽  
Monetary Policy Transmission ◽  
Content Type ◽  
Bank Of China ◽  
Policy Transmission ◽  
Chinese Banking Industry

PurposeThe purpose of this paper is to investigate the risk-taking channel of monetary policy transmission in the Chinese banking industry. This study also investigates the role of various other factors in the risk-taking channel.Design/methodology/approachThis study used panel data from 2000 to 2012, and a dynamic panel model (Difference GMM) was applied.FindingsThe empirical findings of this paper suggest that loose monetary policy rates increase bank risk-taking. Unlike previous studies, the results of this paper suggest that the bank-specific factors (size, liquidity and capitalization) do not significantly affect the risk-taking channel. However, the market structure does have a stabilizing effect on monetary policy transmission and the risk-taking channel. Higher market power weakens the risk-taking channel of monetary policy transmission.Practical implicationsOf significance to the policymakers' point of view is that loose monetary policy induces banks to take excessive risks. However, such effects can be mitigated by encouraging a proper level of market power in banking markets.Originality/valueThis study investigated the risk-taking channel of monetary policy transmission for the Chinese banking industry. Due to the unique features of the People's Bank of China (PBC, Central Bank of China) policy, this study also contributes to the literature by comparing price-based and quantity-based monetary policy tools and their effectiveness in financial stability and monetary policy transmission. Furthermore, the role of market structure is also investigated in the risk-taking channel.

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