Monetary Transmission in Pakistan: The Balance Sheet Channel

Safia Shabbir ()
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Safia Shabbir: State Bank of Pakistan

No 49, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: Using data of non-financial listed firms over a period of 1999-2010, this paper investigates the effectiveness of balance sheet channel in monetary transmission mechanism in Pakistan. By classifying firms as SME and large, this paper finds a strong evidence for the existence of net worth channel in Pakistan. A tight monetary policy worsens the net worth of both the SME and large firms, with SME getting more hit thereby further affecting their cash flows, short-term borrowing, and revenues.

Keywords: Monetary policy; monetary transmission; firm; models with panel data (search for similar items in EconPapers)
JEL-codes: C33 E50 E52 H32 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2012-04
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Citations: View citations in EconPapers (8)

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