Published
2018-06-22
Issue
Section
Articles
How to Cite
Interaction of Monetary and Macro-prudential Policies: The Case of Jordan- Credit Gap as an Example
Rami Obeid
Head of Data Analysis & Management Division, Central Bank of Jordan, Amman, Jordan
Bassam Awad
Head of Systemic Risk & Macro-prudential Policy Analysis Division, Central Bank of Jordan, Amman, Jordan
DOI: https://doi.org/10.20448/journal.501.2018.51.99.111
Keywords: Macro-prudential policy, monetary policy, countercyclical capital buffer, Credit gap.
Abstract
This study aims at investigating the extent of interaction between monetary policy and macro-prudential policy in Jordan during the period (2005-2015) using the Vector Error Correction Model (VECM) to check the presence of short-term and long-term impacts of the monetary policy tools in general on the accumulation of systemic risks in the banking system. Systemic risk was measured using the credit gap. The results showed the existence of a statistically significant negative effect of deposit window rate and required reserve ratio on the accumulation of systemic risks, whereas the rediscount rate had a positive effect.