TY - UNPB
T1 - The Transmission of Monetary Policy through Conventional and Islamic Banks
AU - Zaheer, S.
AU - Ongena, S.
AU - van Wijnbergen, S.J.G.
N1 - This is also EBC Discussion Paper 2011-018
PY - 2011
Y1 - 2011
N2 - We investigate the differences in banks’ responses to monetary policy shocks across bank size, liquidity, and type, i.e., conventional versus Islamic, in Pakistan between 2002:II to 2010:I. We find that following a monetary contraction, small banks with liquid balance sheets cut their lending less than other small banks. In contrast large banks maintain their lending irrespective of their liquidity positions. Islamic banks, though similar in size to small banks, respond to monetary policy shocks as large banks. Hence ceteris paribus the credit channel of monetary policy may weaken when Islamic banking grows in relative importance.
AB - We investigate the differences in banks’ responses to monetary policy shocks across bank size, liquidity, and type, i.e., conventional versus Islamic, in Pakistan between 2002:II to 2010:I. We find that following a monetary contraction, small banks with liquid balance sheets cut their lending less than other small banks. In contrast large banks maintain their lending irrespective of their liquidity positions. Islamic banks, though similar in size to small banks, respond to monetary policy shocks as large banks. Hence ceteris paribus the credit channel of monetary policy may weaken when Islamic banking grows in relative importance.
KW - Monetary policy
KW - Islamic Banking
KW - Pakistan
M3 - Discussion paper
VL - 2011-078
T3 - CentER Discussion Paper
BT - The Transmission of Monetary Policy through Conventional and Islamic Banks
PB - Finance
CY - Tilburg
ER -