scholarly journals Corporate leverage and monetary policy transmission mechanism in India: A dynamic approach.

2021 ◽  
Vol 17 (2) ◽  
pp. 189-215
Author(s):  
Aishwarya Nagpal ◽  
Megha Jain
Keyword(s):  
Monetary Policy ◽  
Financial Stability ◽  
Balance Sheet ◽  
Policy Implications ◽  
Corporate Debt ◽  
Monetary Policy Transmission ◽  
Macroeconomic Policies ◽  
Macroeconomic Conditions ◽  
Policy Transmission ◽  
The Impact

The macroeconomic policies of a nation have a major bearing on the financial performance of the companies and their potential sustainability and growth. This study investigates the impact of monetary policy on the corporate leverage adjustment through microscopic monetary policy transmission channels, mainly the interest rate and credit channels, using a sample of 422 manufacturing firms in India from 2011 to 2017 by employing partial adjustment model. The findings suggest that contractionary monetary policy cuts down overall corporate debt. The study further asserts that corporate debt in Indian firms demonstrates target behaviour and the speed at which firms adjust their actual debt ratios towards target debt ratios is a function of not only firm-specific characteristics but also macroeconomic conditions prevailing in the country, proxied by monetary policy indicators in our study. The study has critical policy implications as the balance sheet situation of corporates is a crucial factor in the financial stability of the economy.

Does bank capital affect the monetary policy transmission mechanism? A case study of Emerging Market Economies (EMEs)

2019 ◽  
Vol 06 (02) ◽  
pp. 1950019
Author(s):  
Zia Abbas ◽  
Syed Faizan Iftikhar ◽  
Shaista Alam
Keyword(s):  
Monetary Policy ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Transmission Mechanism ◽  
Bank Capital ◽  
Monetary Policy Transmission ◽  
Policy Transmission ◽  
Loan Supply ◽  
Monetary Policy Transmission Mechanism ◽  
The Impact

The objective of this study is to investigate the impact of bank capital on monetary policy transmission mechanism during the period from 2010 to 2016 for 20 Emerging Market Economics (EMEs) by using the two-step system generalized method of moments (GMM). The coefficient of excess capital in low-asset countries is found to be negative which reveals the importance of excess capital for the effectiveness of monetary transmission. However, the study could not find the significance of excess capital for high-asset countries as they may afford the risky way to generate their income by increasing the loan supply.

scholarly journals Monetary policy transmission: Balance sheet channel and investment behavior of firms in Pakistan

2021 ◽  
Vol 13 (1) ◽  
pp. 1-12
Author(s):  
Amir Rafique ◽  
Muhammad Umer Quddoos ◽  
Shujat Ali ◽  
Faheem Aslam ◽  
Muneeb Ahmad
Keyword(s):  
Monetary Policy ◽  
Balance Sheet ◽  
Investment Behavior ◽  
Monetary Policy Transmission ◽  
Balance Sheet Channel ◽  
Policy Transmission

EVALUATION OF MONETARY POLICY IN EMU THROUGH CREDIT CHANNELS INTERCONNECTEDNESS: EVIDENCE USING BLS DATA

2021 ◽  
pp. 1-27
Author(s):  
MICHAIL E. PETSALAKIS ◽  
AHMED M. KHALID ◽  
GAMINI PREMARATNE
Keyword(s):  
Monetary Policy ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Balance Sheet ◽  
Principal Component ◽  
Bank Lending ◽  
European Countries ◽  
Policy Transmission ◽  
Credit Channels ◽  
The Impact

Credit channel(s) of the monetary policy transmission has not been debated much in the literature especially in the context of the European monetary union (EMU) and the apparent rising fragmentation of the previously much integrated European banking system. This discussion is even more important in the aftermath of the global financial crisis (GFC) and the decade-long European debt crisis (EDC), a number of European countries have been experiencing. This paper attempts to investigate the interconnectedness of credit channels in policy transmission in the context of EMU using bank lending survey (BLS) data for a sample of eight European countries. One of the main contributions of this paper is to use BLS data for the entire 11 credit channels. We use principal component analysis (PCA) to investigate the impact of monetary policy on the interconnectedness structure of credit channels. PCA is conducted both for EMU across channels and sample countries. EFA-orthogonal vector rotation indicates a core versus periphery interconnectedness pattern. The results suggest that the household balance sheet channel, borrower cash flow channel and interest rate channel are the most divergent channels in EMU.

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