[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/37862.html
   My bibliography  Save this paper

Monetary Transmission in Pakistan: The Balance Sheet Channel

Author

Listed:
  • Shabbir, Safia
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.

Suggested Citation

  • Shabbir, Safia, 2012. "Monetary Transmission in Pakistan: The Balance Sheet Channel," MPRA Paper 37862, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37862
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/37862/1/MPRA_paper_37862.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mark Gertler & Simon Gilchrist, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 309-340.
    2. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    3. Guariglia, Alessandra & Mateut, Simona, 2006. "Credit channel, trade credit channel, and inventory investment: Evidence from a panel of UK firms," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2835-2856, October.
    4. repec:onb:oenbwp:y::i:41:b:1 is not listed on IDEAS
    5. Oliner, Stephen D & Rudebusch, Glenn D, 1996. "Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance: Comment," American Economic Review, American Economic Association, vol. 86(1), pages 300-309, March.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. Katrin Wesche, 2000. "Is there a Credit Channel in Austria? The Impact of Monetary Policy on Firms' Investment Decisions," Working Papers 41, Oesterreichische Nationalbank (Austrian Central Bank).
    8. Shah Hussain & Amna Saeed & Amer Hassan, 2011. "The Financial Accelerator: An Emerging Market Story," SBP Working Paper Series 41, State Bank of Pakistan, Research Department.
    9. Karrar Hussain, 2009. "Monetary Policy Channels of Pakistan and Their Impact on Real GDP and Inflation," CID Working Papers 41, Center for International Development at Harvard University.
    10. Tasneem Alam & Muhammad Waheed, 2006. "Sectoral Effects of Monetary Policy: Evidence from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 1103-1115.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nehrebecki Marian, 2020. "Cash flow sensitivity of investment: Evidence from the Polish listed companies," Central European Economic Journal, Sciendo, vol. 7(54), pages 157-171, January.
    2. Shabbir, Safia, 2012. "Balance Sheet Channel of Monetary Policy and Economic Growth under Fiscal Dominance: Evidence from Pakistan," MPRA Paper 41496, University Library of Munich, Germany.
    3. Zia Abbas & Syed Faizan Iftikhar & Shaista Alam, 2019. "Does bank capital affect the monetary policy transmission mechanism? A case study of Emerging Market Economies (EMEs)," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 6(02), pages 1-20, June.
    4. Shabbir, Safia & Iqbal, Javed & Hameed, Saima, 2013. "Risk Premium, Interest Rate Differential, and Subsidized Lending in Pakistan," MPRA Paper 48250, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Syed Ozair Ali, 2011. ": Power, Profits and Inflation: A Study of Inflation and Influence in Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 7, pages 11-41.
    2. Shabbir, Safia, 2012. "Balance Sheet Channel of Monetary Policy and Economic Growth under Fiscal Dominance: Evidence from Pakistan," MPRA Paper 41496, University Library of Munich, Germany.
    3. Spaliara, Marina-Eliza, 2009. "Do financial factors affect the capital-labour ratio? Evidence from UK firm-level data," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1932-1947, October.
    4. Safia Shabbir, 2013. "Implications of Monetary Policy for Corporate Sector and Economic Growth in Pakistan," SBP Working Paper Series 61, State Bank of Pakistan, Research Department.
    5. Guariglia, Alessandra & Mateut, Simona, 2006. "Credit channel, trade credit channel, and inventory investment: Evidence from a panel of UK firms," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2835-2856, October.
    6. Eiji Goto, 2020. "Industry Impacts of Unconventional Monetary Policy," 2020 Papers pgo873, Job Market Papers.
    7. Bougheas, Spiros & Mizen, Paul & Yalcin, Cihan, 2006. "Access to external finance: Theory and evidence on the impact of monetary policy and firm-specific characteristics," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 199-227, January.
    8. Peek, Joe & Rosengren, Eric S & Tootell, Geoffrey M B, 2003. "Identifying the Macroeconomic Effect of Loan Supply Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(6), pages 931-946, December.
    9. Degryse, Hans & Matthews, Kent & Zhao, Tianshu, 2018. "SMEs and access to bank credit: Evidence on the regional propagation of the financial crisis in the UK," Journal of Financial Stability, Elsevier, vol. 38(C), pages 53-70.
    10. Abdul Karim, Zulkefly, 2010. "Monetary policy and firms’ investment: Dynamic panel data evidence from Malaysia," MPRA Paper 23962, University Library of Munich, Germany, revised 15 May 2010.
    11. Santiago Villegas Salazar, 2009. "Evidencia del canal de la hoja de balance a través de la inversión de las empresas colombianas (1995-2007)," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 27(60), pages 168-215, December.
    12. Díaz, Roger Aliaga & Olivero, María Pía, 2010. "On the firm-level implications of the Bank Lending Channel of monetary policy," Journal of Economic Dynamics and Control, Elsevier, vol. 34(10), pages 2038-2055, October.
    13. Cihan Yalcin & Spiros Bougheas & Paul Mizen, 2004. "The Impact of Firm-Specific Characteristics on the Response to Monetary Policy Actions," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 4(1), pages 1-30.
    14. Altunok, Fatih & Mitchell, Karlyn & Pearce, Douglas K., 2020. "The trade credit channel and monetary policy transmission: Empirical evidence from U.S. panel data," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 226-250.
    15. Santiago Carbó Valverde & Rafael López del Paso, 2005. "Do non-financial firms react to monetary policy actions as banks do?," ThE Papers 05/03, Department of Economic Theory and Economic History of the University of Granada..
    16. Iacoviello, Matteo & Minetti, Raoul, 2008. "The credit channel of monetary policy: Evidence from the housing market," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 69-96, March.
    17. Sinha, Pankaj & Agnihotri, Shalini, 2015. "Macroeconomic risk and firms financing decision: An empirical panel data investigation using system GMM," MPRA Paper 67088, University Library of Munich, Germany, revised 30 Sep 2015.
    18. repec:dgr:rugccs:200212 is not listed on IDEAS
    19. Nguyen, Bao Khac Quoc & To, Bao Cong Nguyen & Nguyen, Nham Thi Hong, 2022. "Unexpected money growth, nonfinancial firms as large shareholders and investment-cash flow relationship: Evidence from Vietnam," Journal of Economics and Business, Elsevier, vol. 119(C).
    20. Nan‐Kuang Chen & Hung‐Jen Wang, 2008. "Identifying the Demand and Supply Effects of Financial Crises on Bank Credit—Evidence from Taiwan," Southern Economic Journal, John Wiley & Sons, vol. 75(1), pages 26-49, July.
    21. Oscar Landerretche, 2007. "Job flows in chile," Working Papers wp240, University of Chile, Department of Economics.

    More about this item

    Keywords

    Monetary Policy; Monetary Transmission; Firm; Models with Panel Data;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:37862. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.