TITLE:
Effects of Monetary Policy on Business Startups and Trade Activities: Global Empirical Evidences
AUTHORS:
Muhammad Ayub Mehar, Mamdouh Abdulaziz Saleh Al-Faryan
KEYWORDS:
Credit to Private Sector, External Trade, Fixed Effect Model, Initial Public Of-fering, Monetary Policy, New Business Density, Panel Least Square, Quantitative Easing
JOURNAL NAME:
Theoretical Economics Letters,
Vol.12 No.6,
December
30,
2022
ABSTRACT: The objective of this study is to examine the role
of monetary policy in creation of new business entities and enhancement of
external trade. The effectiveness of interest rate, banks’ credit to private
sector and other explanatory variables have been tested through a statistical
model based on two simultaneous equations estimated by 20 years’ data of 105
countries. This study provides a guideline for the policy makers to assess the strength of credit
to private sector. It explores some important and interesting relations among
the creation of new business entities, volume of external trade, lending
interest rate and credit to private sector. It was further revealed that
foreign direct investment complements the externals trade. The quantification
of the impacts of different modes of investment financing on business
activities adds some new
dimensions to economic
literature. For policy makers, it identifies the transformation mechanism of monetary
policy for enhancement in the business activities.