asymmetric effects of monetary policy on commercial banks deposits in iraq

This study propose and test a new channel for the transmission ofmonetary policy, when monetary policy changes banks respond tothe interest they charge on deposits and affects directly on the sizeof banks deposits and, thus, affects lending power of commercialbanks. given this issue in mind, this study examines theasymmetric effects of monetary policies on commercial banksdeposits in iraq. the study applied unit root test, nonlinearautoregressive distributed lag (nardl) approach, error correctionmodel (ecm), bound test and wald test using monthly dataspanning from jan 2005 to dec 2019. policy interest rate (ir),cash reserve requirement (rr), and broad money supply (m2)were used to proxy the monetary policies. bank deposit (bd),were used as the proxy of the iraqi commercial banks deposit. thefindings of nardl show a non-linear relationship betweenmonetary policies and banks deposit. furthermore, the results ofbound test and ecm confirmed the existence of the long run andshort run relation between monetary policies and commercial banksdeposit in iraq. finally, the result of wald test indicates that policyinterest rate and reserve requirement has asymmetric effect onbanks deposit, while money supply has symmetric effect. hence, itis suggested that policy makers in iraq should consider the positiveand negative shocks of monetary policy as commercial banksrespond asymmetrically to the monetary policy instruments.