Evaluating the Lending Channel of Monetary Transmission in Qatar

Abstract

This study uses OLS, fixed effect and random effect models to evaluate the lending channel of the monetary policy transmission in Qatar over the 2000-2013 period. The growth in the loans extended by the Qatari banks is regressed on the current and lagged values of monetary policy stance, bank liquid assets, deposits, GDP and the lagged values of change in bank lending. The results show that bank lending responds positively but insignificantly to changes in the monetary policy stance. In contrast, the results reveal that bank lending responds to changes in the values of cash and due with banks and customer deposits. These results may indicate lack of a lending channel in Qatar though it may concur with the implicit objective of the Qatari monetary policy of changing the structure of banking system assets and liabilities but not on the account of the target credit in the market.