We use cookies to ensure that we give you the best experience on our website. By continuing to browse this repository, you give consent for essential cookies to be used. You can read more about our Privacy and Cookie Policy.

Durham Research Online
You are in:

The bank lending channel in the Malaysian Islamic and conventional banking system.

Caporale, M.G. and Catik, A.N. and Helmi, M.H. and Ali, F. M. and Tajik, M. (2020) 'The bank lending channel in the Malaysian Islamic and conventional banking system.', Global finance journal., 45 . p. 100478.


This paper examines the bank lending channel of monetary transmission in Malaysia, a country with a dual banking system including both Islamic and conventional banks, over the period 1994: 01-2015:06. A two-regime threshold vector autoregression (TVAR) model is estimated to take into account possible nonlinearities in the relationship between bank lending and monetary policy under different economic conditions. The results indicate that Islamic credit is less responsive than conventional credit to interest rate shocks in both the high and low growth regimes; however, the sub-sample estimation shows that its response has increased in more recent years becoming quite similar to that of conventional credit. Moreover, the relative importance of Islamic credit shocks in driving output growth is notable in the low growth regime, their effects being positive. These findings can be interpreted in terms of the distinctive features of Islamic banks.

Item Type:Article
Full text:Publisher-imposed embargo
(AM) Accepted Manuscript
Available under License - Creative Commons Attribution.
File format - PDF
Full text:(VoR) Version of Record
Available under License - Creative Commons Attribution.
Download PDF
Publisher Web site:
Publisher statement:© 2019 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license (
Date accepted:26 May 2019
Date deposited:29 May 2019
Date of first online publication:03 June 2019
Date first made open access:18 August 2020

Save or Share this output

Look up in GoogleScholar