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Global Finance Journal_April_2019_rev -FINAL_27_04_2019.pdf (1.34 MB)

The bank lending channel in the Malaysian Islamic and conventional banking system

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posted on 2023-06-09, 17:55 authored by Guglielmo Maria Caporale, Abdurrahman Nazif Catik, Mohamad Husam Helmi, Faek Menla AliFaek Menla Ali, Mohammad Tajik
This paper examines the bank lending channel of monetary transmission in Malaysia, a country with a dual banking system including both Islamic and conventional banks, over the period 1994:01-2015:06. A two-regime threshold vector autoregression (TVAR) model is estimated to take into account possible nonlinearities in the relationship between bank lending and monetary policy under different economic conditions. The results indicate that Islamic credit is less responsive than conventional credit to interest rate shocks in both the high and low growth regimes; however, the sub-sample estimation shows that its response has increased in more recent years becoming quite similar to that of conventional credit. Moreover, the relative importance of Islamic credit shocks in driving output growth is notable in the low growth regime, their effects being positive. These findings can be interpreted in terms of the distinctive features of Islamic banks.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Global Finance Journal

ISSN

1044-0283

Publisher

Elsevier

Department affiliated with

  • Accounting and Finance Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2019-05-28

First Open Access (FOA) Date

2019-06-10

First Compliant Deposit (FCD) Date

2019-05-26

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