Monetary policy and the commercial banks: an overview
Monetary policy and the commercial banks: an overview
The relationship between monetary policy and economic activity is one of the basic questions of macroeconomics. Economists have addressed this question in a number of ways. The traditional approach focuses on the importance of the liability side of the bank balance sheet. However, the traditional approach becomes less relevant as the number of substitutes for conventionally defined money increases in consumer’s portfolio. Recently, discussion on this relationship has gone further to include both credit rationing and bank structure. Interest has also grown in exploring the possible links between Islamic banks and monetary policy, and the deregulation process in the banking system. As a result, the role of money supply as an operating target of monetary policy has been undermined. The deregulation of commercial banks has changed the transmission mechanism for monetary policy from money supply to interest rates and bank credit
29-35
Ismail, Abdul Ghafar
406f5c88-89a5-4564-9493-d464a55b573a
Smith, Peter
68d1515a-f5cc-4b39-ae9c-b923b8c093cd
September 1993
Ismail, Abdul Ghafar
406f5c88-89a5-4564-9493-d464a55b573a
Smith, Peter
68d1515a-f5cc-4b39-ae9c-b923b8c093cd
Ismail, Abdul Ghafar and Smith, Peter
(1993)
Monetary policy and the commercial banks: an overview.
Jurnal Ekonomi Malaysia, 27, .
Abstract
The relationship between monetary policy and economic activity is one of the basic questions of macroeconomics. Economists have addressed this question in a number of ways. The traditional approach focuses on the importance of the liability side of the bank balance sheet. However, the traditional approach becomes less relevant as the number of substitutes for conventionally defined money increases in consumer’s portfolio. Recently, discussion on this relationship has gone further to include both credit rationing and bank structure. Interest has also grown in exploring the possible links between Islamic banks and monetary policy, and the deregulation process in the banking system. As a result, the role of money supply as an operating target of monetary policy has been undermined. The deregulation of commercial banks has changed the transmission mechanism for monetary policy from money supply to interest rates and bank credit
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Published date: September 1993
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Local EPrints ID: 33030
URI: http://eprints.soton.ac.uk/id/eprint/33030
ISSN: 0127-1962
PURE UUID: 5dd1ecf1-25a9-4ea4-9658-605ae9816ae7
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Date deposited: 23 May 2008
Last modified: 11 Dec 2021 15:18
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Contributors
Author:
Abdul Ghafar Ismail
Author:
Peter Smith
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