The Transmission of Monetary Policy Through Conventional and Islamic Banks
University of Amsterdam
Tilburg University - CentER, European Banking Center (EBC); Centre for Economic Policy Research (CEPR)
Sweder Van Wijnbergen
Universiteit van Amsterdam; Tinbergen Institute; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)
February 1, 2013
European Banking Center Discussion Paper No. 2011-018
CentER Working Paper Series No. 2011-078
We investigate the differences in banks’ responses to monetary policy shocks across bank size, liquidity, and type, i.e., conventional versus Islamic, in Pakistan between 2002:II to 2010:I. We find that following a monetary contraction, small banks with liquid balance sheets cut their lending less than other small banks. In contrast large banks maintain their lending irrespective of their liquidity positions. Islamic banks, though similar in size to small banks, respond to monetary policy shocks as large banks. Hence ceteris paribus the credit channel of monetary policy may weaken when Islamic banking grows in relative importance.
Number of Pages in PDF File: 56
Keywords: Monetary policy, Islamic Banking, Pakistan
JEL Classification: E5, G2working papers series
Date posted: July 19, 2011 ; Last revised: February 5, 2013
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.485 seconds