The Role of Bank Loans and Deposits in the Monetary Transmission Mechanism of Pakistan (original) (raw)

2012, SSRN Electronic Journal

This study is an attempt to examine the impact of bank lending channel in the monetary transmission mechanism of Pakistan, Analyzing five-year monthly data with the use of cointegration test, Vector Error Correction Model and Variance Decomposition Analysis. This study concludes that the bank loans and deposits are unable to play their role significantly in the monetary transmission mechanism of Pakistan. Further this study provides evidence in favor of macroeconomic variables in playing important role in the conduct of monetary transmission mechanism.