The Impact of Monetary Policy on Lending and Deposit Rates in Pakistan: Panel Data Analysis
Year: 2011
Type: article
Abstract: This study estimates the impact of monetary policy on lending and deposit rates in Pakistan, using bank data for the period November 2001 to March 2011. We find evidence of a long-run relationship between the lending and discount rate, but the deposit rate is not co-integrated, and the pass-through is not complete. The study finds that, overall, banks pass on only 20 percent of the impact of a change in the discount rate to lenders in the first month. There is also a significant difference among various banks’ pass-through rates. A shortrun analysis reveals that the pass-through of the deposit rate is low at 0.16, which implies that the effectiveness of monetary policy is limited in Pakistan.
Source: The Lahore journal of economics
Author: Hasan Muhammad Mohsin
Institution: Pakistan Institute of Development Economics
Language: English
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2108025096