Search results
1 – 10 of over 1000Zakaria Savon and Abdellah Yousfi
This study aims to review to what extent Islamic banks carry conventional monetary policy impulses. Hence, the authors focus to review on the presence or absence of an Islamic…
Abstract
Purpose
This study aims to review to what extent Islamic banks carry conventional monetary policy impulses. Hence, the authors focus to review on the presence or absence of an Islamic financing channel.
Design/methodology/approach
A systematic approach to the literature review was adopted. The search criterion is confined to empirical studies that examined the transmission of interest-based monetary policy through Islamic banks’ financing, particularly empirical studies that check the existence of an Islamic bank financing channel of conventional monetary policy. By adopting a systematic approach, over 40 empirical papers published in Scopus and Google Scholar were selected for review and analysis to suggest prospects for future analysis in this field.
Findings
The existence of Islamic banks may raise concerns for local central banks, particularly in terms of implementing monetary policies that rely on interest rates. Indeed, the specific nature of the business model of Islamic banks based on the sharing of losses and profits as an alternative to interest rate–based remuneration suggests a priori the non-transmission of monetary policy through these free-interest banks. Despite this, the actual asset structure of Islamic banks may facilitate the transmission of monetary impulses to the economy. Currently, there are limited and inconclusive empirical studies on how Islamic bank financing contributes to the transmission of monetary policy. Additional research is required to fully comprehend the response of Islamic banks to fluctuations in monetary policy interest rates, as well as the factors that impact their reactions.
Originality/value
This literature review is incredibly important as it thoroughly examines a critical issue from both academic and practical perspectives. Analyzing how monetary policy actions can be transmitted through Islamic bank financing is an important task that can provide insights for future research. A straightforward response to this inquiry could assist central banks in formulating effective monetary policy.
Details
Keywords
Olumide O. Olaoye and Mulatu F. Zerihun
The study examined the roles of fiscal and monetary policy in reducing poverty in sub-Saharan Africa (SSA), while accounting for macroeconomic disruptions. In particular, the…
Abstract
Purpose
The study examined the roles of fiscal and monetary policy in reducing poverty in sub-Saharan Africa (SSA), while accounting for macroeconomic disruptions. In particular, the study examined the complementarity of fiscal and monetary policy to mitigate shocks and reduce poverty in SSA.
Design/methodology/approach
The study adopts the fixed effect (within regression) model to account for country-specific characteristics, and a cross-sectional dependence – consistent model to control for the potential cross-sectional in panel data modelling. The study used the dummy variable approach to account for the macroeconomic shocks. The authors assigned 1 to the following years – 2008, 2014 and 2020; and 0 otherwise to take care of the global financial crisis, commodity terms of trade shocks and the COVID-19 pandemic respectively.
Findings
The study found that fiscal policy (particularly, government spending on health and education) has the greater capacity to reduce the level of poverty in SSA. The results also indicate that fiscal policy and monetary policy can work in tandem to reduce the negative effects of a pandemic. However, the study found an optimal threshold level of monetary policy beyond which monetary policy reduces the effectiveness of fiscal policy to reduce poverty in SSA. The research and policy implications are discussed.
Originality/value
The study, unlike previous studies, accounts for the impact of macroeconomic shocks in the monetary/fiscal policy and poverty literature.
Details
Keywords
Thang Ngoc Doan, Dong Phu Do and Dat Van Luong
This paper analyzes the effects of the monetary stance on the media's favorable (or otherwise) attitude to the State Bank of Vietnam's (SBV) monetary policy using monthly data…
Abstract
Purpose
This paper analyzes the effects of the monetary stance on the media's favorable (or otherwise) attitude to the State Bank of Vietnam's (SBV) monetary policy using monthly data from 2011 to 2021. Monetary stance is a multivariate index based on the growth rates of money supply and domestic credit. A large set of articles published in five Vietnam daily newspapers are utilized to construct a view of the media's favorableness to the monetary policy.
Design/methodology/approach
This paper uses hand-collected data from 211 articles published in five newspapers from December 2011 to September 2021 in order to examine the relationship between the monetary stance and the media's favorableness to monetary policy. Following the studies of He and Pauwels (2008) and Xiong (2012), the authors constructed a multivariate stance index to capture most of the important changes in the SBV's monetary policy stance.
Findings
The study's main findings are that a change in monetary stance from easing to neutral/tightening, or from neutral to tightening, is greatly appreciated by the media. The study's findings are robust, especially in terms of alternative measures of the media's favorableness and monetary policy variables.
Research limitations/implications
These findings have important policy implications for implementing SBV's monetary policy.
Originality/value
The main contribution of this paper is that the authors are the first to study the nexus of multivariate monetary stance and the media's favorableness to a central bank's non-inflation-targeting mandate. In particular, the study’s findings confirm that the SBV's multivariate monetary stance affects the media's favorableness, whereas the effect of inflation is statistically insignificant.
Details
Keywords
This study presents a systematic review of the literature on monetary policy and corporate investment together with bibliometric analysis.
Abstract
Purpose
This study presents a systematic review of the literature on monetary policy and corporate investment together with bibliometric analysis.
Design/methodology/approach
This study selected 455 articles from databases, Scopus and Web of science and the papers are reviewed systematically to identify their theoretical and empirical contributions.
Findings
The results reveal that monetary policy can influence corporate investment. Post to the economic crisis (2008), there is an exponential growth in the number of publications. Berger, A., and Hubbard are the two prominent authors based on the highest citation score, whereas Marquez, R., and Vermuelen, P. are the two prolific authors, subject to their highest h-index. Journal of Banking & Finance was the top journal (total citations = 1482) and 5 publications.
Practical implications
This study positively contributes to the comprehensive understanding of corporate investment, monetary policy transmission and firm capital structure choices.
Originality/value
To the best of the author’s knowledge, this is the first study that conducts a systematic review of the influence of monetary policy on corporate investment.
Details
Keywords
Haobo Zou, Mansoora Ahmed, Syed Ali Raza and Rija Anwar
Monetary policy has major impacts on macroeconomic indicators of the country. Accordingly, uncertainty regarding monetary policy shifts can cause challenges and risks for…
Abstract
Purpose
Monetary policy has major impacts on macroeconomic indicators of the country. Accordingly, uncertainty regarding monetary policy shifts can cause challenges and risks for businesses, financial markets and investors. Thus, the purpose of this study is to investigate how real estate market volatility responds to monetary policy uncertainty.
Design/methodology/approach
The GARCH-MIDAS model is applied in this study to investigate the nexus between monetary policy uncertainty and real estate market volatility. This model was fundamentally instituted to accommodate low-frequency variables.
Findings
The results of this study reveal that increased monetary policy uncertainty highly affects the volatility in real estate market during the peak period of COVID-19 as compared to full sample period and COVID-19 recovery period; hence, a significant decline is evident in real estate market volatility during crisis.
Originality/value
This study is particularly focused on peak and recovery period of COVID-19 considering the geographical region of Greece, Japan and the USA. This study provides a complete perspective on the nexus between monetary policy uncertainty and real estate markets volatility in three distinct economic views.
Details
Keywords
Paul Owusu Takyi, Daniel Sakyi, Hadrat Yusif, Grace Nkansa Asante, Anthony Kofi Osei-Fosu and Gideon Mensah
This paper explores the implications of financial inclusion and financial development for the conduct of monetary policy in achieving price stability and economic growth in…
Abstract
Purpose
This paper explores the implications of financial inclusion and financial development for the conduct of monetary policy in achieving price stability and economic growth in sub-Saharan Africa (SSA).
Design/methodology/approach
The paper employs the system-generalized methods of moment (GMM) estimation technique using panel data spanning 2004 to 2019 and sourced from Databases of (International Monetary Fund's) IMF's Financial Access Survey (FAS), IMF's International Financial Statistics (IFS), World Bank's Global Financial Development Database (GFDD) and World Bank's World Development Indicators (WDI).
Findings
The authors find that financial inclusion has a double-edge effect in SSA. That is, it increases economic growth and lowers inflation in SSA. Furthermore, the results show that a simultaneous increase in financial inclusion and financial development have restrictive effects on economic growth. On the evidence provided, the authors conclude that financial inclusion is an important predictor of economic growth and the conduct of monetary policy in the sub-region.
Originality/value
This paper expands and contributes to the frontier of knowledge how financial inclusion is important for the conduct of monetary policy by monetary authorities in achieving its intended objectives in SSA. The paper highlights the need for ongoing enhancement of financial inclusion of many governments in the sub-region to achieving high economic growth and price stability. Thus, there is the need for policy makers to ensure that a more stringent, effective and appropriate policies and measures are put in place to enhance financial inclusion while taking into consideration the extent of financial development in SSA.
Details
Keywords
This article analyzes the impact of monetary policy on income inequality across 16 advanced economies. The author investigates three key points: (1) the relationship between…
Abstract
Purpose
This article analyzes the impact of monetary policy on income inequality across 16 advanced economies. The author investigates three key points: (1) the relationship between domestic monetary policy and domestic income inequality, (2) the spillover effect of USA monetary policy (including quantitative easing) on international inequality and (3) the quantitative influence of the monetary policies of both the USA and the Eurozone on the formation of domestic income inequalities.
Design/methodology/approach
The author employed the Global Vector Autoregressive (GVAR) model, which uses Vector Autoregressive with Exogenous Variables (VARXs) models of each economy to build an integrated system that enables us to evaluate individual responses to global shocks.
Findings
The author's analysis reveals that (1) contractionary monetary policy exacerbates domestic inequality and (2) USA monetary policy, including quantitative easing, affects international inequality. Furthermore, the author's variance decomposition analysis highlights that USA monetary policy is especially influential on income inequality in Norway and Sweden. Additionally, the cointegrating analysis confirms that monetary policy's impact on inequality persists in the long term.
Originality/value
Most of the studies focused on investigating domestic economies as closed economies. However, the author's approach differs in that the author uses the GVAR, which treats all economies as open. This allows us to incorporate the world economy into the domestic dynamics and connect the economies using bilateral trade. Another advantage of the GVAR is that it captures spillover effects by modeling each economy and constructing the international economy.
Details
Keywords
Francesco Busato, Maria Ferrara and Monica Varlese
This paper analyzes real and welfare effects of a permanent change in inflation rate, focusing on macroprudential policy’ role and its interaction with monetary policy.
Abstract
Purpose
This paper analyzes real and welfare effects of a permanent change in inflation rate, focusing on macroprudential policy’ role and its interaction with monetary policy.
Design/methodology/approach
While investigating disinflation costs, the authors simulate a medium-scale dynamic general equilibrium model with borrowing constraints, credit frictions and macroprudential authority.
Findings
Providing discussions on different policy scenarios in a context where still it is expected high inflation, there are three key contributions. First, when macroprudential authority actively operates to improve financial stability, losses caused by disinflation are limited. Second, a Taylor rule directly responding to financial variables might entail a trade-off between price and financial stability objectives, by increasing disinflation costs. Third, disinflation is welfare improving for savers, while costly for borrowers and banks. Indeed, while savers benefit from policies reducing price stickiness distortion, borrowers are worried about credit frictions, coming from collateral constraint.
Practical implications
The paper suggests threefold policy implications: the macroprudential authority should actively intervene during a disinflation process to minimize costs and financial instability deriving from it; policymakers should implement a disinflationary policy stabilizing also output; the central bank and the macroprudential regulator should pursue financial and price stability goals, separately.
Originality/value
This paper is the first attempt to study effects of a permanent inflation target reduction in focusing on the macroprudential policy’ role.
Details
Keywords
Jihane Benkhaira and Hafid El Hassani
The present article aims to estimate an autoregressive vector model covering the period of 1990–2021 to analyze the effect of public spending and monetary supply increases in…
Abstract
Purpose
The present article aims to estimate an autoregressive vector model covering the period of 1990–2021 to analyze the effect of public spending and monetary supply increases in economic activity in Morocco.
Design/methodology/approach
A literature review on the policy of recovery with fiscal and monetary tools and its theoretical foundations was established. Then, an empirical study on the Moroccan context was executed to study the effectiveness of these instruments in Morocco from 1990 to 2021, using autoregressive vector modeling.
Findings
The results present a state of a positive relationship and statistical significance of public spending, money supply and economic growth. The impulse response function analysis and the forecast error variance decomposition showed that public spending does not have a large impact on gross domestic product, while the money supply has a real power to stimulate the growth of economic activity in Morocco.
Originality/value
This study aims to demonstrate the positive effect of the coordination of public spending and monetary supply increases on gross domestic product in Morocco. Additionally, the analysis using vector autoregressive modeling, impulse response functions, variance decomposition techniques and causality tests, provides crucial insights to guide researchers, practitioners and policymakers in developing more effective and resilient economic strategies. The findings from this study not only illuminate immediate recovery strategies but also contribute to strengthening the resilience of economies against potential future shocks.
Details
Keywords
Kofi Kamasa, Solomon Luther Afful and Isaac Bentum-Ennin
This paper seeks to examine the effect of monetary policy rate (MPR) on the lending rates of commercial banks in Ghana.
Abstract
Purpose
This paper seeks to examine the effect of monetary policy rate (MPR) on the lending rates of commercial banks in Ghana.
Design/methodology/approach
The paper employed the autoregressive distributed lag (ARDL) model as well as the non-linear autoregressive distributed lag (NARDL) model econometric techniques on a quarterly time series data from 2002 to 2018.
Findings
The ARDL results revealed that, MPR has a positive and significant effect on lending rate in the long and short run. Although there exists a direct relationship between MPR and lending rate, from the NARDL revealed an asymmetric effect of MPR on lending rate to the effect that, lending rate in Ghana responds more to positive shock (a rise in MPR) compared to a negative shock (a decrease in MPR) both in the long and short run.
Originality/value
The paper contributes to policy and literature in Ghana by providing empirical evidence on the asymmetric effect that MPR has on lending rates in Ghana. The paper recommends among others, the establishment of a rating system of banks according to their monetary policy compliance, where highly rated banks could have for instance a reduction on borrowed reserves from the central bank.
Details