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Impact of Interbank Liquidity on Monetary Transmission Mechanism: A Case Study of Pakistan

Muhammed Omar, Jakob de Hann and Bert Scholtens

Working Papers from eSocialSciences

Abstract: The transmission mechanism of policy-induced changes are is analysed in the discount rate and required reserves in Pakistan. The results suggest that the pass through to the lending rate is complete for the discount rate but incomplete for required reserves. However, only shocks to required reserves have an effect on the deposit rate and the exchange rate in the long run. The observation that the discount rate is not a very effective monetary policy tool is attributed to excess liquidity present in the interbank market of Pakistan.

Keywords: Pakistan; policy; discount rate; reserves; monetary policy; liquidity; interbank market (search for similar items in EconPapers)
Date: 2015-06
Note: Institutional Papers
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Working Paper: Impact of Interbank Liquidity on Monetary Transmission Mechanism: A Case Study of Pakistan (2014) Downloads
Working Paper: Impact of Interbank Liquidity on Monetary Transmission Mechanism: A Case Study of Pakistan (2014) Downloads
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