Monetary Transmission Mechanisms In Five ASEAN Countries

This study examines monetary transmission mechanisms in ASEAN countries, namely Malaysia, Indonesia, the Philippines, Singapore and Thailand, for the period 1970:1- 2002:4. Views diverge among economists on how monetary policy variable affects the economic activity. The traditional theory explains t...

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Main Author:	Yusof, Zarinah
Format:	Thesis
Language:	English English
Published:	2006
Subjects:	Monetary policy - Asean countries Finance - Asean countries Economics
Online Access:	http://psasir.upm.edu.my/id/eprint/5006/1/FEP_2006_6.pdf
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id	my-upm-ir.5006
record_format	uketd_dc
spelling	my-upm-ir.50062013-05-27T07:19:43Z Monetary Transmission Mechanisms In Five ASEAN Countries 2006 Yusof, Zarinah This study examines monetary transmission mechanisms in ASEAN countries, namely Malaysia, Indonesia, the Philippines, Singapore and Thailand, for the period 1970:1- 2002:4. Views diverge among economists on how monetary policy variable affects the economic activity. The traditional theory explains that money is more important. Via interest rate, money affects the economy. However, it has been challenged by some economists who believe that bank credit has a major role. In addition, in a highly internationalized economy and mobility of capital is rapid, changes in exchange rate have major impact on output and prices but the effects have always been left out. Using analysis of cointegration and vector error correction model (VECM), the study estimates both aggregate and sectoral output to examine the channels. The findings resolve the dispute. Money, bank credit, interest rate and exchange rate significantly affect economic activity and active channels. Further evidence finds that highly liquid money (M1) is more influential in Malaysia and the Philippines. Broad money (M2) is more superior in Indonesia and Thailand. Singapore’s well-developed financial market exhibits the importance of bank lending channel. Exchange rate is important particularly in Singapore and Malaysia’s manufacturing sector. The Asian financial crisis in mid-1997 had significant impact on Malaysia and Thailand. Indonesia is more affected by the early 1980s financial reforms. Oil price shock in 1979-1981 has significant impact on the economy of Thailand. Only estimates on Malaysian sectoral output gave satisfactory results and were discussed. The findings found strong evidence that all the channels are important. The evidence highlights highly liquid money (M1) has stronger effects on the output of agricultural and manufacturing sectors. Broad money (M2) has greater impact on services output and credit is the main transmission mechanism in construction output. Notable finding is rapid modern sophisticated technological banking facilities have resulted in a fundamental change in the behavior of M1. All the channels are crucial and it is money that matters most. Monetary policy - Asean countries Finance - Asean countries Economics 2006 Thesis http://psasir.upm.edu.my/id/eprint/5006/ http://psasir.upm.edu.my/id/eprint/5006/1/FEP_2006_6.pdf application/pdf en public phd doctoral Universiti Putra Malaysia Monetary policy - Asean countries Finance - Asean countries Economics Faculty Economics and Management English
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English English
topic	Monetary policy - Asean countries Finance - Asean countries Economics
spellingShingle	Monetary policy - Asean countries Finance - Asean countries Economics Yusof, Zarinah Monetary Transmission Mechanisms In Five ASEAN Countries
description	This study examines monetary transmission mechanisms in ASEAN countries, namely Malaysia, Indonesia, the Philippines, Singapore and Thailand, for the period 1970:1- 2002:4. Views diverge among economists on how monetary policy variable affects the economic activity. The traditional theory explains that money is more important. Via interest rate, money affects the economy. However, it has been challenged by some economists who believe that bank credit has a major role. In addition, in a highly internationalized economy and mobility of capital is rapid, changes in exchange rate have major impact on output and prices but the effects have always been left out. Using analysis of cointegration and vector error correction model (VECM), the study estimates both aggregate and sectoral output to examine the channels. The findings resolve the dispute. Money, bank credit, interest rate and exchange rate significantly affect economic activity and active channels. Further evidence finds that highly liquid money (M1) is more influential in Malaysia and the Philippines. Broad money (M2) is more superior in Indonesia and Thailand. Singapore’s well-developed financial market exhibits the importance of bank lending channel. Exchange rate is important particularly in Singapore and Malaysia’s manufacturing sector. The Asian financial crisis in mid-1997 had significant impact on Malaysia and Thailand. Indonesia is more affected by the early 1980s financial reforms. Oil price shock in 1979-1981 has significant impact on the economy of Thailand. Only estimates on Malaysian sectoral output gave satisfactory results and were discussed. The findings found strong evidence that all the channels are important. The evidence highlights highly liquid money (M1) has stronger effects on the output of agricultural and manufacturing sectors. Broad money (M2) has greater impact on services output and credit is the main transmission mechanism in construction output. Notable finding is rapid modern sophisticated technological banking facilities have resulted in a fundamental change in the behavior of M1. All the channels are crucial and it is money that matters most.
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Yusof, Zarinah
author_facet	Yusof, Zarinah
author_sort	Yusof, Zarinah
title	Monetary Transmission Mechanisms In Five ASEAN Countries
title_short	Monetary Transmission Mechanisms In Five ASEAN Countries
title_full	Monetary Transmission Mechanisms In Five ASEAN Countries
title_fullStr	Monetary Transmission Mechanisms In Five ASEAN Countries
title_full_unstemmed	Monetary Transmission Mechanisms In Five ASEAN Countries
title_sort	monetary transmission mechanisms in five asean countries
granting_institution	Universiti Putra Malaysia
granting_department	Faculty Economics and Management
publishDate	2006
url	http://psasir.upm.edu.my/id/eprint/5006/1/FEP_2006_6.pdf
_version_	1747810329287458816

Monetary Transmission Mechanisms In Five ASEAN Countries

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