Impact of Inflation, Exchange Rate and Interest Rate on the Private Sector Credit of Pakistan

Muhammad Umair Ali, Saliha Gul Abbasi, Mazhar Abbas and Ghulam Dastgeer

Journal of Accounting and Finance in Emerging Economies, 2020, vol. 6, issue 4, 1133-1138

Abstract: The paper analyzed the long-term and short-term impact of interest rate, exchange rate and inflation on the private sector credit of Pakistan during the period from 1975 to 2018. To test the stationarity of data Augmented Dick Fuller (ADF) Test was applied. While the main model to explore the long-term and short-term dependence was based on Auto Regressive Distribution Lag (ARDL) Model. The results suggested no effect of exchange rate on private sector credit, while inflation has significant as well as positive impact on Private Sector Credit (PSC) in long as well as short run. Lastly, the most important dependence i.e. interest effect on PSC; depicted negative impact in both short and long term.

Keywords: Exchange rate; inflation; interest rate; private sector credit. (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:src:jafeec:v:6:y:2020:i:4:p:1133-1138

DOI: 10.26710/jafee.v6i4.1477

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