Investigating the mechanism of monetary policy transmission in the short term with the approach of Islamic wisdom, relying on a structural vector auto regression model in Iran

Subject Areas : Economic and financial markets

Mahshid Tabatabaie zavareh ¹ , beitollah akbari moghadam ² , Farhad Ghaffari ³

1 - Ph.D. Student of Economics, Department of Economics, Qazvin Branch, Islamic Azad University, Qazvin, Iran
2 - Associate Professor of the Faculty of Management and Accounting, Department of Economics, Qazvin Branch, Islamic Azad University, Qazvin, Iran
3 - Associate Professor of the Faculty of Management and Economics, Islamic Azad University Science and Research Branch University, Tehran, Iran

Received: 2023-03-26 Accepted : 2023-05-29 Published : 2024-09-22

Keywords: Islamic wisdom, structural vector autoregression model, monetary transmission mechanism, monetary transmission channels,

Abstract :

In this research, attempts have been made to identify the characteristics and distinctive features of Islamic banking compared to conventional banking by studying the theoretical framework of Islamic banking literature. Subsequently, by focusing on each characteristic, their relevant indicators were designed and introduced.Purpose: The purpose of this article is to investigate the effects of monetary policy through monetary transmission channels (interest channel, exchange rate channel, credit channel and expectations channel) in the short term during the period of 1386Q1 - 1396Q4.Methodology: Using the structural vector autoregression (SVAR) model, the effects of monetary policy were investigated through channels.Findings: The experimental results obtained from the estimation of the relationships between the variables using the SVAR approach based on statistical data show that in the short term the exchange rate channel is the most effective one in the transmission of monetary policy in a way that the expectations variable has the most effect on this channel. After the exchange rate channel, the expectations channel and the credits and interest rate channel have the most impact in the short term, respectively.Conclusion: By examining the relative importance of monetary transfer channels, we can point out the principle that with the passage of time, the effectiveness of the channels will change. Accordingly, with price shocks, the expectations channel has the most impact in the short term.