NDLI: Non-Core Liabilities and Monetary Policy Transmission in Indonesia During the Post-2007 Global Financial Crisis

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Non-Core Liabilities and Monetary Policy Transmission in Indonesia During the Post-2007 Global Financial Crisis

Content Provider	Scilit
Author	Pontines, Victor Siregar, Reza
Copyright Year	2017
Description	Journal: SSRN Electronic Journal The policy importance of non-core liabilities has risen to prominence in recent years with the studies of Shin and Shin (2010), Hahm, et al., (2010) and Hahm, et al., (2013) highlighting it as a useful indicator of financial procyclicality and vulnerability. In this paper, we look at non-core liabilities in relation to its role in the transmission of monetary policy, particularly by examining how the interest rate channel of monetary policy is affected by non-deposit liabilities. We analyse this issue in the context of an emerging economy experience of Indonesia, which in recent years, has seen an increased reliance of its banking sector on non-core funding. Our investigation employs available bank-level data on non-core liabilities and lending rates in Indonesia over the period October 2011 to July 2016. We find that including non-core liabilities in the estimation has an effect, relative to the baseline, of stronger overall and immediate pass-through, albeit with a more sluggish adjustment towards correction of disequilibrium in the next period. The overall effect is that non-core liabilities make the duration lengthier for the monetary policy rate to transmit to bank lending rates in Indonesia.
Related Links	https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2017-12/78_2017_pontines_siregar.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3084387
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3084387
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2017-12-07
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Development Studies Social Sciences, Interdisciplinary Non-core Liabilities Lending Rates Policy Rates Interest Rate Channel Monetary Policy Transmission Dynamic Panel
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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