Shabbir, Safia (2012): Monetary Transmission in Pakistan: The Balance Sheet Channel.
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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.
| Item Type: | MPRA Paper |
|---|---|
| Original Title: | Monetary Transmission in Pakistan: The Balance Sheet Channel |
| Language: | English |
| Keywords: | Monetary Policy, Monetary Transmission, Firm, Models with Panel Data |
| Subjects: | E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H32 - Firm |
| Item ID: | 37862 |
| Depositing User: | Safia Shabbir |
| Date Deposited: | 07 Apr 2012 12:27 |
| Last Modified: | 27 Sep 2019 11:06 |
| References: | Agha, Asif Idrees., Noor Ahmed, Yasir Ali Mubarik, and Hastam Shah. (2005). “Transmission Mechanism of Monetary Policy in Pakistan”, SBP- Research Bulletin, Vol 1, No. 1, 2005 Alam, Tasneem and Muhammad Waheed. (2006). “Sectoral Effects of Monetary Policy: Evidence from Pakistan”, The Pakistan Development Review, 2006, vol. 45, issue 4, pages 1103 - 1115 Bernanke, Ben., and Mark Gertler. (1995). “Inside the black box: The credit channel of Monetary Policy” The Journal of Economic Perspectives, Vol 9, No. 4 (Autumn, 1995), pp. 27-48 Black, K. Lamont., and Richard J. Rosen. (2007). “How the Credit Channel Works: Differentiating the Bank Lending Channel and the Balance Sheet Channel” Federal Reserve Bank of Chicago. WP 2007-13 Blundell, R., and S. Bond. (1998). “Initial conditions and moment restrictions in dynamic panel data models” Journal of Econometrics, 87, 115-143 Hussain, Karrar. (2009). “Monetary Policy Channels of Pakistan and Their Impact on Real GDP and Inflation”, CID Graduate Student Working Paper Series No 40, Center for International Development at Harvard University, October 2009 Hussein, Shah., Amna Saeed and Amer Hassan. (2011). “The Financial Accelerator: An Emerging Market Story”, SBP Working Paper Series No. 41, July 2011 Gertler, Mark., and Simon Gilchrist. (1994). “Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms” The Quarterly Journal of Economics, Vol. 109, No 2 (May, 1994), pp. 309-340 Guariglia, Alessandra., and Simona Mateut. (2006). “Credit Channel, Trade Credit Channel, and Inventory Investment: Evidence from a Panel of UK Firms” University of Nottingham Karim, Abdul., and Zulkefly. (2010). “Monetary Policy and Firms’ Investment: Dynamic Panel Data Evidence from Malaysia” MPRA Paper No. 23962, university of Southampton, UK Oliner, D. Stephen., and Glenn D. Rudebusch, (1996). “Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance: Comment” The American Economic Review, Vol. 86, No.1 (Mar, 1996), pp. 300-309 Özlü, Pinar., and Cihan Yalçin. (2010). “The Trade Credit Channel of Monetary Policy Transmission: Evidence from Non-Financial Firms in Turkey” Central Bank of the Republic of Turkey Wesche, Katrin. (2000). “Is there a Credit Channel in Austria? The Impact of Monetary Policy on Firm’s Investment Decisions” working paper 41. Oesterreichische Nationalbank Zaderey, Natalia. (2003). “Monetary Transmission in Ukraine: Is There a Broad Credit Channel?” National university of Kyiv-Mohyla Academy |
| URI: | https://mpra.ub.uni-muenchen.de/id/eprint/37862 |
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