Spillovers of the United States’ Unconventional Monetary Policy to Emerging Asia

2019 ◽  
pp. 118-145
Author(s):  
Ying Xu ◽  
Hai Anh La
Keyword(s):  
United States ◽  
Monetary Policy ◽  
Bank Lending ◽  
The United States ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Cross Border ◽  
Syndicated Loan Market

This chapter assesses the spillover effects of the United States’ unconventional monetary policy on the Asian credit market. With a focus on cross-border bank lending, it employs firm-level loan data with regard to the syndicated loan market and measures the international bank lending channel through changes in United States dollar-denominated loans extended to Asian borrowers. It finds that the growth of dollar credit in Asia increased substantially in response to quantitative easing in the US financial market. The results of this study confirm the existence of the bank lending channel in Asia and emphasize the role of credit flows in transmitting financial conditions. The chapter also provides new evidence of cross-border liquidity spillover in the syndicated loan market. It finds that the overall spillover effect was large but differed significantly in Asia by types of borrowing firms, financing purposes, and loan terms at different stages of the quantitative easing programmes.

scholarly journals Bank Lending Channel in Transmission of Monetary Policy in Japan, 2000–2012: The Sign Restrictions VAR Approach

2017 ◽  
Vol 4 (2) ◽  
pp. 87
Author(s):  
Masao Kumamoto ◽  
Juanjuan Zhuo
Keyword(s):  
Monetary Policy ◽  
Forecast Error ◽  
Error Variance ◽  
Bank Lending ◽  
Quantitative Easing ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Forecast Error Variance ◽  
Monetary Policy Shock ◽  
Regional Banks

This paper investigates empirically whether the bank lending channel of monetary policy existed in Japan from 2000 to 2012. We employ the sign restrictions VAR approach to deal with the identification problem. In particular, we focus on the differential effects of a quantitative easing monetary policy regardless of bank (City banks vs. Regional banks) and firm (all enterprises vs. small and medium-sized enterprises－SMEs) size. Our impulse response function analyses show that following a quantitative easing monetary policy shock, the lending of Regional banks increases more than that of City banks, and the bank lending rate of Regional banks declines in a larger magnitude. Moreover, the responses of output to reserve supply are larger in Regional banks than that in City banks. Our variance decomposition analyses show that a larger proportion of the forecast error variance in the bank lending of Regional banks relative to City banks, and a larger proportion of the forecast error variance in the bank lending to SMEs relative to all firms can be explained by monetary policy shock. Similarly, the loans of Regional banks have a larger impact on output than the loans of City banks, and the loans to SMEs have a larger impact on output than the loans to all firms. Moreover, output is more affected by the reserve supply to Regional banks than to City banks. These results together indicate that a quantitative easing policy has a greater impact on the real economy through the lending of Regional banks.

Determinants of Bank Lending in Europe and the United States

2018 ◽  
Author(s):  
Brunella Bruno ◽  
Alexandra D'Onofrio ◽  
Immacolata Marino
Keyword(s):  
United States ◽  
Global Financial Crisis ◽  
Bank Lending ◽  
The United States ◽  
Bank Lending Channel ◽  
Loan Portfolio ◽  
Government Bonds ◽  
Lending Channel ◽  
Main Bank ◽  
The Global Financial Crisis

We provide a comprehensive analysis of the main drivers of bank lending in Europe and the United States over the period from 2008 to 2014. We relate bank characteristics prior to the global financial crisis to their lending behaviour during and after the crisis period. Our analysis confirms the existence of a bank lending channel, that seems stronger in Europe than in the United States, especially if we look at corporate loans rather than at the whole loan portfolio. We uncover that the main bank characteristics affecting lending are size, capitalization, liquidity, and ownership structure, as well as, to a lesser extent, reliance on deposits and exposure to government bonds. Some of these factors have indeed shielded bank lending as predicted, but the results are not always in the expected direction, which points to the existence of a revised version of the traditional bank lending channel.

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