Analyzing the Maturity wise Interest Rate Pass Through in Pakistan

Authors

  • Samaira Batool PhD Scholar, International Islamic University (IIU), Islamabad, Pakistan
  • Nabila Asghar Assistant Professor, Department of Economics and Business Administration, Division of Arts and Social Sciences, University of Education, Lahore, Pakistan
  • Farhat Rasul Assistant Professor, Department of Economics (SBE), University of Management and Technology, Lahore, Pakistan

DOI:

https://doi.org/10.47067/ramss.v4i1.103

Keywords:

Monetary Policy, Deposit Rates, Asymmetric Adjustment

Abstract

This paper examines the degree of pass through and adjustment speed of maturity wise deposit rates in response to changes in the discount rate in Pakistan during the time period from 1978 to 2019. The study finds evidence of a long run relationship among maturity wise deposit rates and discount rate. However, the estimates of long run model proposed by Philips & Loretan (1990) and short run Error Correction Model indicate that pass through is incomplete and slow. This study confirms asymmetric adjustment of pass through and upward rigidity in deposit rates. Overall, the finding of less than complete and asymmetric pass through suggests limited efficiency of monetary policy in Pakistan.

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Published

2020-03-31

How to Cite

Batool, S. ., Asghar, N. ., & Rasul , F. . (2020). Analyzing the Maturity wise Interest Rate Pass Through in Pakistan. Review of Applied Management and Social Sciences, 4(1), 93-104. https://doi.org/10.47067/ramss.v4i1.103