Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia
This study aims to analyse the impact of interest rate changes on the domestic and foreign banks and determine its monetary policy implications. The study employed the impulse response functions and variance decomposition analysis based on the Vector Autoregression model to study the responses of ma...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Faculty of Economics and Administration, University of Malaya
2012
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| Online Access: | http://irep.iium.edu.my/13044/1/Responses_to_Interest_Rate_Changes.pdf |
| _version_ | 1825645370542129152 |
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| author | Kassim, Salina Abdul Manap, Turkhan Ali |
| author_facet | Kassim, Salina Abdul Manap, Turkhan Ali |
| author_sort | Kassim, Salina |
| collection | IIUM |
| description | This study aims to analyse the impact of interest rate changes on the domestic and foreign banks and determine its monetary policy implications. The study employed the impulse response functions and variance decomposition analysis based on the Vector Autoregression model to study the responses of major balance sheet items, namely deposit and loan to interest rate shocks based on Malaysian data from the period January 1997 to December 2006. The study found that domestic banks responded differently to interest rate shocks compared to the foreign banks. The different responses of the balance sheet items of the domestic and foreign banks show that the impact of tight monetary policy is uneven across the banking institutions. It also implies that the domestic banks could learn from the prudent risk management practices of the foreign banks that enable them to resume lending after a shorter lapse compared to domestic banks. |
| first_indexed | 2024-03-05T22:46:43Z |
| format | Article |
| id | oai:generic.eprints.org:13044 |
| institution | International Islamic University Malaysia |
| language | English |
| last_indexed | 2024-03-05T22:46:43Z |
| publishDate | 2012 |
| publisher | Faculty of Economics and Administration, University of Malaya |
| record_format | dspace |
| spelling | oai:generic.eprints.org:130442013-03-06T06:08:58Z http://irep.iium.edu.my/13044/ Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia Kassim, Salina Abdul Manap, Turkhan Ali HG1501 Banking This study aims to analyse the impact of interest rate changes on the domestic and foreign banks and determine its monetary policy implications. The study employed the impulse response functions and variance decomposition analysis based on the Vector Autoregression model to study the responses of major balance sheet items, namely deposit and loan to interest rate shocks based on Malaysian data from the period January 1997 to December 2006. The study found that domestic banks responded differently to interest rate shocks compared to the foreign banks. The different responses of the balance sheet items of the domestic and foreign banks show that the impact of tight monetary policy is uneven across the banking institutions. It also implies that the domestic banks could learn from the prudent risk management practices of the foreign banks that enable them to resume lending after a shorter lapse compared to domestic banks. Faculty of Economics and Administration, University of Malaya 2012-06 Article PeerReviewed application/pdf en http://irep.iium.edu.my/13044/1/Responses_to_Interest_Rate_Changes.pdf Kassim, Salina and Abdul Manap, Turkhan Ali (2012) Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia. Malaysian Journal of Economic Studies , 49 (1). pp. 21-35. ISSN 1511-4554 http://www.myjurnal.my/filebank/published_article/16260/Paper_2.pdf |
| spellingShingle | HG1501 Banking Kassim, Salina Abdul Manap, Turkhan Ali Responses to Interest Rate Changes: A Comparison between Domestic and Foreign Commercial Banks in Malaysia |
| title | Responses to Interest Rate Changes: A Comparison between
Domestic and Foreign Commercial Banks in Malaysia |
| title_full | Responses to Interest Rate Changes: A Comparison between
Domestic and Foreign Commercial Banks in Malaysia |
| title_fullStr | Responses to Interest Rate Changes: A Comparison between
Domestic and Foreign Commercial Banks in Malaysia |
| title_full_unstemmed | Responses to Interest Rate Changes: A Comparison between
Domestic and Foreign Commercial Banks in Malaysia |
| title_short | Responses to Interest Rate Changes: A Comparison between
Domestic and Foreign Commercial Banks in Malaysia |
| title_sort | responses to interest rate changes a comparison between domestic and foreign commercial banks in malaysia |
| topic | HG1501 Banking |
| url | http://irep.iium.edu.my/13044/1/Responses_to_Interest_Rate_Changes.pdf |
| work_keys_str_mv | AT kassimsalina responsestointerestratechangesacomparisonbetweendomesticandforeigncommercialbanksinmalaysia AT abdulmanapturkhanali responsestointerestratechangesacomparisonbetweendomesticandforeigncommercialbanksinmalaysia |