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MONETARY POLICY AND FIRMS' INVESTMENT IN MALAYSIA: A PANEL EVIDENCE

International Journal of Economics, Management and Accounting

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Title MONETARY POLICY AND FIRMS' INVESTMENT IN MALAYSIA: A PANEL EVIDENCE
 
Creator Karim, Zulkefly Abdul
 
Description his study examines the effects of monetary policy on firms’ balance  sheets, witha particular focus onthe effects upon firms’ fixed-investment spending. Ituses a dynamic panel system GMM estimation proposedby Blundell and Bond (1998). The focal point concernsthe two mainchannels  ofmonetary policy transmissionmechanism,namely theinterest rates and  broad creditchannelsinaffectingfirms’ investmentspending.By estimating thefirms’ investment  modelusing a dynamic neoclassical frameworkinan autoregressive distributed lagged(ARDL) model,the  empirical results tendtosupport the relevance ofinterestrates and broad  credit channels intransmittingto the firmbalance sheet condition, thatis,  firms’ investmentspending.  Theresultsalso reveal that theeffect of  monetarypolicychannelstothe firms’ investmentare heterogeneous,in that the small firms which faced financial constraint responded more to  monetarytightening ascomparedtothelarge firm(less constrained firms).  Thus,themonetaryauthorityhastoconsiderthe microeconomicaspects of firmbehaviour informulating their monetarypolicy. JEL Classification:  E22, E52, C33  Key words:  Monetarypolicy, Financialconstraint,  Firminvestment,  Dynamic paneldata
 
Publisher Kulliyyah of Economics and Management Sciences
 
Date 2013-03-04
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/173
 
Source International Journal of Economics, Management and Accounting; Vol 18 No 2 (2010)
2462-1420
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/173/142