UPM Institutional Repository

Impact of central bank policy on bank lending rate: developing nations evidence


Tunde, Matemilola Bolaji and Amin Noordin, Bany Ariffin and Kamarudin, Fakarudin (2018) Impact of central bank policy on bank lending rate: developing nations evidence. International Journal of Economics and Management, 12 (spec. 2). pp. 697-709. ISSN 1823-836X; ESSN: 2600-9390


The pass-through of the policy rate to the bank lending rate gauges the effectiveness of monetary policy in stabilizing the economy. This paper investigates how effectively the policy rates pass through to the bank lending rates, and whether the policy rate pass-through is symmetric or asymmetric in two developing nations. The paper applies the momentum threshold auto-regressive and asymmetric error correction models. The results of the latter indicate that the Malaysian and South African commercial banks adjust their lending rates downward but the lending rates seem rigid upward supporting the customer reaction theory. The paper suggests that the speed of monetary transmission is unequal across the banking sectors and that a contractionary monetary policy takes a longer time to impact the economy than an expansionary monetary policy.

Download File

29) Impact of Central Bank Policy.pdf

Download (353kB) | Preview

Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Faculty of Economics and Management, Universiti Putra Malaysia
Keywords: Monetary policy; Policy rate pass-through; Asymmetric co-integration; Asymmetric error-correction modeling; Developing nations
Depositing User: Nabilah Mustapa
Date Deposited: 12 Nov 2019 07:29
Last Modified: 12 Nov 2019 07:29
URI: http://psasir.upm.edu.my/id/eprint/22655
Statistic Details: View Download Statistic

Actions (login required)

View Item View Item