HETEROGENEITY RESPONSE OF BANKS TO MONETARY POLICY: CASE OF LEBANON

Hassan Hamadi
Roy Khoueiri
Maud Moawad
Notre Dame University – Louaize
ABSTRACT
This study focuses on the major micro and macroeconomics variables that affect banks’
setting of interest rates for loans and deposits, in Lebanon. Secondary data taken from the
Lebanese central bank and IMF are used for all banks in Lebanon; Banks were divided into
domestic and subsidiaries. The variables that are dealt with are categorized into macroeconomics
variables, the banking industry variables and specific banks variables like efficiency, banks credit
risk, liquidity and capitalization. The study shows that characteristics like size of a bank,
capitalization credit risk, gross domestic product (GDP) growth and bank concentration are most
relevant when assessing the amount of reaction to any monetary policy in Lebanon.