Bank-characteristics, lending channel and monetary policy in emerging markets: bank-level evidence from Malaysia

Muhamed Zulkhibri

Applied Financial Economics, 2013, vol. 23, issue 5, 347-362

Abstract: This article analyses the effects of bank-specific characteristics, bank specialization and portfolio concentrations on the transmission of monetary policy via the bank-lending channel in Malaysia, a fairly well-developed financial system, using the dynamic panel regression estimation. The results provide evidence in favour of the bank-lending channel theory that the bank-lending channel operating via small- and low-liquidity banking entities. Furthermore, the evidence suggests that the dividing lines between different categories of financial institutions distinguished by differences in both market and regulatory structures, influence the way the financial institutions react to a monetary policy shock, of which finance companies react stronger than commercial banks. The results also suggest that banks with a higher level of corporate loan concentration experience greater financial constraint and limited access to other source finance.

Date: 2013
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DOI: 10.1080/09603107.2012.725927

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