Bank Lending Margins in China and the Effects of the June 2012 Liberalization

Financial liberalization in China has begun to allow more flexibility in bank interest rate setting but may threaten bank profit margins. This paper documents the initial response to the June 2012 initiative that, for the first time, allowed Chinese banks to meaningfully depart from the benchmark rates laid down by the People's Bank. We use an event study to assess the initial effects on bank share prices and compare the response of the larger state-owned banks to the smaller commercial banks. We identify significant reactions in both the Shanghai and Hong Kong markets.

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Monetary Policy and Commercial Bank Lending to the Real Sector in Nigeria: A Time Series Study

American Finance & Banking Review ◽

10.46281/amfbr.v2i1.127 ◽

2018 ◽

Vol 2 (1) ◽

pp. 10-41

Author(s):

Ogolo . ◽

Tamunotonye Magnus

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Interest Rate ◽

Money Supply ◽

Commercial Banks ◽

Bank Lending ◽

Real Sector ◽

Treasury Bill ◽

The Real ◽

Negative Effect

This study empirically examined the effects of monetary policy on commercial banks lending to the real sector from 1981 – 2014. The objective was to examine the effectiveness of monetary policy in channeling bank credit to the real sector. Annual time series data were sourced from Central Bank of Nigeria statistical bulletin. Two multiple regression models were specifically estimated with the aid of Software Package for Social Sciences. The study modeled commercial banks credit to agricultural and manufacturing sector as the function of interest rate, monetary policy rate, treasury bill rate, exchange rate, broad money supply and liquidity ratio. The result shows collinearity that corresponds with the Eigen value condition index, and variance constant are less than the required value. The Durbin Watson statistics shows the absence of multiple auto correlation and negative autocorrelation, while the variance inflation factors indicate the absence of auto-correlation. The regression results from model one found that interest rate, monetary policy rate have positive relationship with commercial banks lending to the agricultural sector while Treasury bill rate, exchange rate, broad money supply and liquidity ratio have negative effect on the dependent variable. Model two found that interest rate, Treasury bill rate, exchange rate, broad money supply and liquidity ratio have negative effect on commercial banks lending the manufacturing sector while monetary policy rate have positive relationship with the dependent variable. We recommend that monetary policy should be harmonize with bank lending objectives to enhance commercial banks lending to the real sector of the economy and that management of commercial banks should formulate policies of managing the negative effect of monetary policy variables on its lending.

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Market structure, state ownership and monetary policy transmission through bank lending channel: Evidence from Vietnamese commercial banks

Economics and Business Letters ◽

10.17811/ebl.10.3.2021.164-177 ◽

2021 ◽

Vol 10 (3) ◽

pp. 164-177

Author(s):

Huu Huan Nguyen ◽

Minh Vu Ngo ◽

Thanh Phuc Nguyen

Keyword(s):

Monetary Policy ◽

Interest Rate ◽

Market Structure ◽

Commercial Banks ◽

Banking Sector ◽

Bank Lending ◽

State Ownership ◽

Bank Loan ◽

Bank Lending Channel ◽

Lending Channel

This paper examines the impact of market structure and state ownership on bank lending as a transmission channel for monetary policies. For controlling the effects of bank heterogeneities and macroeconomic factors on bank lending, dynamic models using two-step difference GMM with panel data collected from 25 Vietnamese commercial banks and the Vietnamese banking sector from 1999 to 2017 are employed. Results indicate that a higher level of concentration in the banking market and state ownership dampen the expected impacts of interbank interest rate on the loan growth in commercial banks, which decreases the effectiveness of monetary policy via the bank lending channel. These results are robust regarding the use of alternative measures of market structure and the inclusion of event time variables in the dynamic model. Based on the findings, monetary policy could be implied using the significant moderating impacts of state-ownership as well as the market structure of the Vietnamese banking sector on the relationship between bank loan supply and interbank interest rate.

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The Politics of Financial Control and Reform in Korea

Korean Journal of Policy Studies ◽

10.52372/kjps06004 ◽

1991 ◽

Vol 6 (0) ◽

pp. 41-73

Author(s):

ByungSun Choi

Keyword(s):

Interest Rate ◽

Industrial Policy ◽

Commercial Banks ◽

Financial Liberalization ◽

Economic Structure ◽

Financial Control ◽

Government Control ◽

Financial Industry ◽

Central Argument ◽

The Government

Government control over finance has been a persistent feature of the politco-economic structure of Korea. This paper first seeks to explain the process in which the government's control over finance had intensified by the late 1970s. with a focus on particular episodes such as the dramatic interest rate reform in 1965, Emergency Decree in August 1972, and several recurring "restructuring (in effect, bail-outs)" attempts, and in relation to the changing industrialization strategy and the consequent relationship between the government and chaebol. And then it will review critically the financial liberalization policies in the 1980s: the privatization of commercial banks, the conflict between the banks and the non-bankfinancial intermediaries (NBFI's) in the process of the restructuring the financial industry, and the freeing of interest rate and to "policy funds." The central argument of this paper is that a considerable progress of financial liberalization notwithstanding, the financial system of Korea still serves as the fulcrum of Korean industrial policy and as a fundamental tool with which Korean policymakers can induce business cooperation and compliance.

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Determinants of Lending Interest Rates of Nepalese Commercial Banks

Economic Journal of Development Issues ◽

10.3126/ejdi.v19i1-2.17701 ◽

2017 ◽

pp. 39-59

Author(s):

Yuga Raj Bhattarai

Keyword(s):

Interest Rate ◽

Interest Rates ◽

Commercial Banks ◽

Default Risk ◽

Fixed Effects ◽

Positive Impact ◽

Operating Cost ◽

Bank Lending ◽

Operating Costs ◽

Lending Rate

The aim of this study is to investigate the determinants of lending rate of Nepalese commercial banks. The analysis of data was based on a sample of 6 commercial banks observed over the period 6 years (2010 to 2015). The models used in the study were: pooled OLS model, fixed effects model and random effects model. This study has used ‘lending rate’ as dependent variable, while the explanatory variables are: operating cost to total assets ratio, deposit interest rate, profitability (ROA) and default risk. The estimated results of these three regression models reveal that operating costs to total assets ratio, profitability (ROA) and default risk have significant positive impact on the commercial bank lending rate. However, deposit rate has negligible impact on lending interest rate. Thus, this study concludes that the major determinants of commercial banks’ lending rate are: operating costs to total assets ratio, profitability (ROA) and default risk in Nepalese perspectives.Economic Journal of Development Issues Vol. 19 & 20 No. 1-2 (2015) Combined Issue, Page: 39-59

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The effect of monetary and financial variables on share prices of Jordanian commercial banks

Banks and Bank Systems ◽

10.21511/bbs.15(3).2020.13 ◽

2020 ◽

Vol 15 (3) ◽

pp. 147-159

Author(s):

Hel Ajmi Jameel Al-Dhaimesh

Keyword(s):

Interest Rate ◽

Money Supply ◽

Commercial Banks ◽

Government Expenditures ◽

Share Prices ◽

Financial Variables ◽

Time Deposits ◽

Domestic Debt ◽

The Interest Rate ◽

Positive Effect

This study aims to examine the effect of monetary and financial variables on share prices of Jordanian commercial banks for the period 2001–2018. The monetary variables used in the research include broad money supply, the interest rate on time deposits and inflation, while financial variables include both the deficit of the general budget and government expenditures, and the general government domestic debt. A multiple linear regression equation is designed using E-Views program to test this effect. The study shows that there is a significant positive effect of broad money supply, whereas a negative effect of the general budget deficit and a positive effect of the domestic debt on share prices of commercial banks in Jordan for the specified period. In contrast, there is no effect of both inflation and the interest rate on time deposits and government expenditures on the price of shares of Jordanian commercial banks. The study recommends taking into account the relationship between the variables mentioned in the prices of shares of commercial banks when setting monetary and financial policies by the central bank and the government to determine the extent to which these variables reflect share prices of Jordanian commercial banks. Overall, the regression model reached R2 = 0.63, and this means that 63% of the change in the share prices of Jordanian commercial banks is due to changes in the independent variables included in the model.

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Risk-Relevance of Fair-Value Income Measures for Commercial Banks

The Accounting Review ◽

10.2308/accr.2006.81.2.337 ◽

2006 ◽

Vol 81 (2) ◽

pp. 337-375 ◽

Cited By ~ 128

Author(s):

Leslie D. Hodder ◽

Patrick E. Hopkins ◽

James M. Wahlen

Keyword(s):

Standard Deviation ◽

Stock Returns ◽

Commercial Banks ◽

Fair Value ◽

Net Income ◽

Income Volatility ◽

Expected Return ◽

Market Pricing ◽

Share Prices ◽

Comprehensive Income

We investigate the risk relevance of the standard deviation of three performance measures: net income, comprehensive income, and a constructed measure of full-fair-value income for a sample of 202 U.S. commercial banks from 1996 to 2004. We find that, for the average sample bank, the volatility of full-fair-value income is more than three times that of comprehensive income and more than five times that of net income. We find that the incremental volatility in full-fair-value income (beyond the volatility of net income and comprehensive income) is positively related to marketmodel beta, the standard deviation in stock returns, and long-term interest-rate beta. Further, we predict and find that the incremental volatility in full-fair-value income (1) negatively moderates the relation between abnormal earnings and banks' share prices and (2) positively affects the expected return implicit in bank share prices. Our findings suggest full-fair-value income volatility reflects elements of risk that are not captured by volatility in net income or comprehensive income, and relates more closely to capital-market pricing of that risk than either net-income volatility or comprehensiveincome volatility.

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