TRANSMISSION CHANNEL AND EFFECTIVENESS OF DUAL MONETARY POLICY IN INDONESIA

Ascarya ()
Additional contact information
Ascarya: Bank Indonesia

Bulletin of Monetary Economics and Banking, 2012, vol. 14, issue 3, 269-298

Abstract: This paper investigates the transmission mechanism of dual monetary system from conventional and Islamic policy rates to inflation and output. We apply Granger Causality and VAR methods on monthly data of Indonesian banking, during the period of January 2003 to December 2009. The result shows that conventional policy rate is transmitted to output and inflation, while Islamic policy rate are not. In addition, the shock of conventional interest rate, credit and interbank rate give a negative and permanent impacts on inflation and output, except for SBI(Certificate of Bank Indonesia) with positive impact to inflation though negatively affect the output. On the other hand, the shock of PLS, financing and Islamic interbank PLS, as well as SBIS (Central Bank Shariah Certificate) give positive and permanent impacts on inflation and output.

Keywords: Monetary transmission mechanism; Interest rate pass through; Conventional Banking; Islamic Banking (search for similar items in EconPapers)
JEL-codes: E43 E52 G21 G28 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://bulletin.bmeb-bi.org/cgi/viewcontent.cgi?article=1298&context=bmeb (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:14:y:2012:i:3g:p:269-298

DOI: 10.21098/bemp.v14i3.405

Access Statistics for this article

Bulletin of Monetary Economics and Banking is currently edited by Paresh Narayan

More articles in Bulletin of Monetary Economics and Banking from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Lutzardo Tobing ( this e-mail address is bad, please contact ) and Jimmy Kathon ().