Investigating the impact of International Monetary Policy Spillover on Bank Lending in Upper Middle –Income Countries: A Panel Smooth Transition Regression approach

Document Type : Original Article

Authors

1 Ph.D. Candidate Faculty of Economic and Managements, University of Tabriz

2 Professor Faculty of Economic and Managements, University of Tabriz

Abstract

The main objective of the present study is to investigate the international spillover effect of US monetary policies on bank lending for 34 upper-middle-income countries during the period of 2000-2021. For this purpose, Panel Smooth Transition Regression model (PSTR) method has been used to estimate the model of this research. Based on the estimation results, the model includes two regimes and its transition variable is the monetary policy rate of the United States, which is not significant in the first regime and is negative and significant in the second regime. So, with the reduction of interest rates and the implementation of expansionary monetary policies in the United States, the lending rate in the studied countries increases; and vice versa. Based on the results obtained and the lack of independence of monetary policies in the studied countries, it is recommended that the countries make their internal economic conditions more stable than the external conditions with targeted policies and somehow secure their economy against external shocks.    

Keywords

References

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