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The Economics of Bounced Checks in Lebanon

Year 2017, Volume: 7 Issue: 1, 106 - 114, 01.03.2017

Abstract

The purpose of this paper is to identify the variables that determine or explain the supply of bounced checks, either issued in Lebanese pounds or issued in US dollars. This is an area that the extant empirical research fails to cover, and hence, this paper is, by itself, quite innovative. Four major explanatory variables are identified. Two of them are structural, and the other two are under the control of a bank on its own, and of the central bank, or at least of the Association of Banks. The high values of the goodness-of-fit, the favorable econometric diagnostics, and the failure to reject stability, all point to the same direction: the models have all the necessary characteristics to predict correctly bounced checks. In case actual bounced checks are consistently and persistently higher than those predicted by the models, corrective action can be taken to avert a financial crisis. The first action is that banks can control the amount of loans they extend to their clientele. And the second action is by a manipulation of interest rates. It is understood that these two actions should be used sparingly and only in a case of financial crisis.

Year 2017, Volume: 7 Issue: 1, 106 - 114, 01.03.2017

Abstract

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Details

Other ID JA34UY44CF
Journal Section Research Article
Authors

Samih Antoine Azar This is me

Said Elfakhani This is me

Khaled Abdallah This is me

Publication Date March 1, 2017
Published in Issue Year 2017 Volume: 7 Issue: 1

Cite

APA Azar, S. A., Elfakhani, S., & Abdallah, K. (2017). The Economics of Bounced Checks in Lebanon. International Journal of Economics and Financial Issues, 7(1), 106-114.
AMA Azar SA, Elfakhani S, Abdallah K. The Economics of Bounced Checks in Lebanon. IJEFI. March 2017;7(1):106-114.
Chicago Azar, Samih Antoine, Said Elfakhani, and Khaled Abdallah. “The Economics of Bounced Checks in Lebanon”. International Journal of Economics and Financial Issues 7, no. 1 (March 2017): 106-14.
EndNote Azar SA, Elfakhani S, Abdallah K (March 1, 2017) The Economics of Bounced Checks in Lebanon. International Journal of Economics and Financial Issues 7 1 106–114.
IEEE S. A. Azar, S. Elfakhani, and K. Abdallah, “The Economics of Bounced Checks in Lebanon”, IJEFI, vol. 7, no. 1, pp. 106–114, 2017.
ISNAD Azar, Samih Antoine et al. “The Economics of Bounced Checks in Lebanon”. International Journal of Economics and Financial Issues 7/1 (March 2017), 106-114.
JAMA Azar SA, Elfakhani S, Abdallah K. The Economics of Bounced Checks in Lebanon. IJEFI. 2017;7:106–114.
MLA Azar, Samih Antoine et al. “The Economics of Bounced Checks in Lebanon”. International Journal of Economics and Financial Issues, vol. 7, no. 1, 2017, pp. 106-14.
Vancouver Azar SA, Elfakhani S, Abdallah K. The Economics of Bounced Checks in Lebanon. IJEFI. 2017;7(1):106-14.