Banking sector globalization and monetary policy transmission: Evidence from Asian countries

AbstractWe provide evidence for a risk-taking channel of monetary policy transmission in the euro area that works through an increase in shadow banks’ total asset growth and their risk assets ratio. Our dataset covers the period 2000Q1–2018Q3 and includes, in addition to the standard variables for real GDP growth, inflation, and the monetary policy stance, the aforementioned two indicators for the shadow banking sector. Based on vector autoregressive models for the euro area as a whole, we find a portfolio reallocation effect towards riskier assets and evidence for a general expansion of assets. Both effects last for roughly six quarters in the case of conventional monetary policy shocks, whereas for unconventional monetary policy shocks the responses are significant for two quarters only. Country-specific as well as sector-specific estimations confirm these findings for most of the euro area countries and all non-bank types, but also reveal some heterogeneity in the reaction of financial institutions.

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RISK BEHAVIOR IN THE TRANSMISSION MECHANISM OF MONETARY POLICY IN INDONESIA

Buletin Ekonomi Moneter dan Perbankan ◽

10.21098/bemp.v13i3.393 ◽

2011 ◽

Vol 13 (3) ◽

pp. 243-270

Author(s):

Doni Satria ◽

Solikin M. Juhro

Keyword(s):

Monetary Policy ◽

Risk Behavior ◽

Banking Sector ◽

Risk Behaviour ◽

Financial Sector ◽

Transmission Mechanism ◽

Asymmetric Effect ◽

Monetary Policy Transmission ◽

Policy Transmission ◽

Monetary Policy Transmission Mechanism

This study explores interconnections between risk behaviour in the financial sector, particularly banking sector, with monetary policy stance. Referring Bernanke and Blinder (1988) modified model for analyzing the bank credit behavior, we develop an empirical model to test the role of risk behaviour in monetary policy transmission mechanism. Vector Error Correction Model are applied to test the significance of interaction between risk variables and monetary policy stance in the short run dynamics of credit behavior around its long-run cointegration with real GDP. Some empirical results emerge from this preliminary study. First, there is early indication that risk taking channel in the monetary policy transmission mechanism exists in Indonesia during analysis period. Second, risk variables and credit tend to move procyclicalyl while monetary policy stance tends to a-cyclical. Third, pro-cyclical behavior of credit and risk variables reverses the effect of loose monetary policy stance, and there is an indication of asymmetric effect between tight monetary policy and loose monetary policy in Indonesian economy. These empirical findings bring about policy recommencations for better understanding on the risk behavior in the banking sector, as well as integration beetween monetary dan financial sector policies.JEL Code : E52, E58,Keyword: Monetary Policy Transmission Mechanism, Monetary Policy Stance, Banking Risk Behavior, Risk Perception

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The Effect of Monetary Policy on Bank Wholesale Funding

Management Science ◽

10.1287/mnsc.2019.3463 ◽

2020 ◽

Author(s):

Dong Beom Choi ◽

Hyun-Soo Choi

Keyword(s):

Monetary Policy ◽

Banking Sector ◽

Financial Frictions ◽

Bank Lending ◽

Monetary Policy Transmission ◽

Bank Lending Channel ◽

Lending Channel ◽

Policy Transmission ◽

Effect Of Monetary Policy

We study how monetary policy affects the funding composition of the banking sector. When monetary tightening reduces the supply of retail deposits, banks attempt to substitute wholesale funding for deposit outflows to smooth their lending. Because of financial frictions, banks have varying degrees of access to wholesale funding. Therefore, large banks, or those with greater reliance on wholesale funding, increase their wholesale funding more. Consequently, monetary tightening increases both the reliance on and the concentration of wholesale funding within the banking sector. Our findings also suggest that liquidity requirements could bolster monetary policy transmission through the bank lending channel. This paper was accepted by Tyler Shumway, finance.

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Banking Sector and Monetary Policy Transmission: Bank Capital, Credit and Risk-Taking Channels

Modern Economy ◽

10.4236/me.2013.41010 ◽

2013 ◽

Vol 04 (01) ◽

pp. 77-86 ◽

Cited By ~ 2

Author(s):

Philippe Gilles ◽

Marie-Sophie Gauvin ◽

Nicolas Huchet

Keyword(s):

Monetary Policy ◽

Risk Taking ◽

Banking Sector ◽

Bank Capital ◽

Monetary Policy Transmission ◽

Policy Transmission

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Long-run and Short-run Monetary Policy Transmission Channels in Lebanon

Review of Middle East Economics and Finance ◽

10.1515/rmeef-2017-0023 ◽

2018 ◽

Vol 14 (1) ◽

Author(s):

Ali Awdeh

Keyword(s):

Monetary Policy ◽

Private Sector ◽

Interest Rates ◽

Banking Sector ◽

Foreign Currency ◽

Monetary Policy Transmission ◽

Long Run ◽

Policy Transmission ◽

Short Run ◽

Pass Through

Abstract This research detects the existence of monetary policy transmission mechanisms in Lebanon through which the actions of the central bank propagate. By adopting co-integration analysis and VECM frameworks, and by exploiting monthly data between January 1994 and December 2016, the research revealed the existence of a long-run interest rate channel, affecting both resident private sector deposits and credit to the private sector. Another short-run capital channel was revealed, affecting total credit provided by the banking sector. Additionally, the empirical results show that (1) deposit inflows are not attracted by high interest rates, but stimulated by confidence provided by large foreign currency reserves held by the central banks; (2) non-residents deposit inflows could represent a substitute for local credit; (3) banks pass-through any increase in funding cost to borrowers; and (4) an increase in external interest rates may trigger deposit outflows.

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PERILAKU RISIKO DALAM MEKANISME TRANSMISI KEBIJAKAN MONETER DI INDONESIA

Buletin Ekonomi Moneter dan Perbankan ◽

10.21098/bemp.v13i3.262 ◽

2011 ◽

Vol 13 (3) ◽

Author(s):

Doni Satria ◽

Solikin M. Juhro

Keyword(s):

Monetary Policy ◽

Risk Behavior ◽

Banking Sector ◽

Risk Behaviour ◽

Financial Sector ◽

Transmission Mechanism ◽

Asymmetric Effect ◽

Monetary Policy Transmission ◽

Policy Transmission ◽

Monetary Policy Transmission Mechanism

This study explores interconnections between risk behaviour in the financial sector, particularly banking sector, with monetary policy stance. Referring Bernanke and Blinder (1988) modified model for analyzing the bank credit behavior, we develop an empirical model to test the role of risk behaviour in monetary policy transmission mechanism. Vector Error Correction Model are applied to test the significance of interaction between risk variables and monetary policy stance in the short run dynamics of credit behavior around its long-run cointegration with real GDP. Some empirical results emerge from this preliminary study. First, there is early indication that risk taking channel in the monetary policy transmission mechanism exists in Indonesia during analysis period. Second, risk variables and credit tend to move procyclicalyl while monetary policy stance tends to a-cyclical. Third, pro-cyclical behavior of credit and risk variables reverses the effect of loose monetary policy stance, and there is an indication of asymmetric effect between tight monetary policy and loose monetary policy in Indonesian economy. These empirical findings bring about policy recommencations for better understanding on the risk behavior in the banking sector, as well as integration beetween monetary dan financial sector policies.JEL Code : E52, E58,Key word: Monetary Policy Transmission Mechanism, Monetary Policy Stance, Banking Risk Behavior, Risk Perception

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