How Do Changing U.S. Interest Rates Affect Banks in the Gulf Cooperation Council (GCC) Countries?

IMF Working Papers, December 6, 2019

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Canonical URL: How Do Changing U.S. Interest Rates Affect Banks in the Gulf Cooperation Council (GCC) Countries?

Given pegged exchange rate regimes, GCC countries usually adjust their policy rates to match shifting U.S. monetary policy.
Central question: How do changes in U.S. monetary policy affect banks in the GCC, specifically funding costs, asset rates, and profitability?

Uses bank-level panel data.
Exploits variation across banks within countries to isolate the impact of changing U.S. interest rates on GCC banks.

Stronger pass-through from U.S. monetary policy to liability rates than to asset rates and bank profitability.
The asymmetric pass-through largely reflects funding structures of GCC banks.
The study explores:
- The role of shifts in the quantity of bank liabilities as policy rates change.
- The role of large banks with relatively stable funding costs in explaining observed findings.

Subject: Bank soundness, Banking, Central bank policy rate, Commercial banks, Competition, Deposit rates, Financial institutions, Financial markets, Financial sector policy and analysis, Financial services
Keywords: bank, bank assets rate, bank level, Bank soundness, banks scope, Central bank policy rate, Commercial banks, Competition, Deposit rates, GCC bank assets rate, Global, liability, liability rate, liability structure, panel data, rate, sensitive bank, WP

Olumuyiwa S Adedeji, Yacoub Alatrash, and Divya Kirti. "How Do Changing U.S. Interest Rates Affect Banks in the Gulf Cooperation Council (GCC) Countries?", IMF Working Papers 2019, 268 (2019), accessed 9/10/2026, https://doi.org/10.5089/9781513519319.001

IMF Working Paper No. 2019/268