The impact of banks’ capital adequacy ratio on bank lending channel of monetary transmission in Russia

2017 ◽  
pp. 62-78 ◽  
Author(s):  
O. Borzykh
Keyword(s):  
Banking Sector ◽  
Value Added ◽  
Bank Lending ◽  
Capital Adequacy ◽  
Transmission Mechanism ◽  
Monetary Transmission ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Capital Adequacy Ratio ◽  
The Impact

The new Basel III rules of macroprudential regulation were introduced for the Russian banking sector in 2014. This article analyzes a previously unexamined for Russia impact of capital adequacy ratio on the effectiveness of bank lending channel. It is shown that when banks satisfy capital regulation rules this has a direct influence on this channel of monetary transmission mechanism: a high capital adequacy ratio weakens a contractionary effect of an increase in the Bank of Russia key rate and further stimulates credit growth when the Bank of Russia decreases its key rate. The peculiar properties of the Bank of Russia key rate dynamics in the previous years allowed to reveal the asymmetry of monetary transmission. Such an analysis also reflects the value-added of the present study.

What Do a Million Observations on Banks Say About the Transmission of Monetary Policy?

2000 ◽  
Vol 90 (3) ◽  
pp. 407-428 ◽  
Author(s):  
Anil K Kashyap ◽  
Jeremy C Stein
Keyword(s):  
Monetary Policy ◽  
Bank Lending ◽  
Monetary Transmission ◽  
Bank Lending Channel ◽  
Data Set ◽  
Balance Sheets ◽  
Lending Channel ◽  
The Impact ◽  
Transmission Of Monetary Policy ◽  
Quantitative Importance

We study the monetary-transmission mechanism with a data set that includes quarterly observations of every insured U.S. commercial bank from 1976 to 1993. We find that the impact of monetary policy on lending is stronger for banks with less liquid balance sheets—i.e., banks with lower ratios of securities to assets. Moreover, this pattern is largely attributable to the smaller banks, those in the bottom 95 percent of the size distribution. Our results support the existence of a “bank lending channel” of monetary transmission, though they do not allow us to make precise statements about its quantitative importance. (JEL E44, E52, G32)

scholarly journals Size of Banks as a Factor Which Impacts the Efficiency of the Bank Lending Channel

e-Finanse ◽  
2020 ◽  
Vol 16 (1) ◽  
pp. 36-44 ◽  
Author(s):  
Filip Świtała ◽  
Iwona Kowalska ◽  
Karolina Malajkat
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Banking Sector ◽  
Bank Lending ◽  
Annual Data ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Lending Policy ◽  
Cooperative Banks ◽  
The Impact

AbstractIn most economies the banking sector plays the major role in the financial system. Therefore, it is of great importance to analyse and understand the mechanism of transmission of monetary policy and its impact on the banking sector. One of the possible repercussions of changing the level of official interest rates is the ability to influence the size of bank lending, by means of the bank lending channel. The key aspect our research is a thorough understanding of the functioning of the bank lending channel, with the main goal of this study being an examination of the efficiency of monetary policy transmission through the bank lending channel depending on the size of banks in the sector. This paper examines the abovementioned relation using annual data from 1995-2015 by 1709 commercial and cooperative banks from 27 EU countries and analyzing them in various econometric models. The results indicate that there is a positive impact of a bank’s size on loan growth (defined as the bank size increases, the impact of changes in interest rates in the bank’s lending policy is getting smaller), however, interaction between the variables of size and the interest rate, was proved to be insignificant (in the group of all analysed banks, as well as in commercial and cooperative banks separately).

scholarly journals What Role Does the Housing Market Play for the Macroeconomic Transmission Mechanism?

2020 ◽  
Vol 13 (6) ◽  
pp. 112
Author(s):  
Mats Wilhelmsson
Keyword(s):  
Interest Rate ◽  
Housing Market ◽  
Housing Prices ◽  
Bank Lending ◽  
Transmission Mechanism ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
The Interest Rate ◽  
The Impact ◽  
Over Time

The main objective is to answer the question: What role does the housing market play for the transmission mechanism and (in particular) is the impact constant over time? The research question also includes analyzing the importance of the housing market for the transmission mechanism. We estimate an eight-variable structural vector autoregression (SVAR) model of the Swedish economy over the period 1993 and 2018 using quarterly data, covering both the internet bubble in 2000 and the financial crises in 2008. The results indicate that interest rates have both a direct effect on housing prices and an indirect impact through the bank lending channel. Over time, the traditional interest rate channel importance has been stable. On the other hand, the role of the bank lending channel has increased over time. Household debt has increased substantially in Sweden and elsewhere. That means that the interest rate sensitivity in society has increased. Based on the results, it is possible to evaluate and forecast potential house price effects (both direct and indirect) when the interest rate changes.

scholarly journals A relevância do canal de empréstimos bancários no Brasil

2008 ◽  
Vol 6 (3) ◽  
pp. 359
Author(s):  
Fernando Nascimento de Oliveira ◽  
Renato Da Motta Andrade Neto
Keyword(s):  
Commercial Banks ◽  
Balance Sheet ◽  
Bank Lending ◽  
Transmission Mechanism ◽  
Monetary Transmission ◽  
Monetary Shocks ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Demand Deposits ◽  
The Empirical Analysis

This paper evaluates the existence of an active bank-lending channel of monetary policy. The empirical analysis is based on a two-step regression that tests how the liquidity of commercial banks reacted to monetary shocks. We use balance sheet information of 293 commercial banks from July 1994 to December 2005. Our main conclusion is that the banklending channel is relevant for our understanding of the monetary transmission mechanism in Brazil. This result is found when monetary shocks are identified by the SELIC rate endogenously or exogenously or by required reserves over demand deposits.

Bank lending channel and banking sector efficiency: panel data of Egypt

2018 ◽  
Vol 13 (5) ◽  
pp. 1291-1310 ◽  
Author(s):  
Mohamed Aseel Shokr ◽  
Anwar Al-Gasaymeh
Keyword(s):  
Monetary Policy ◽  
Panel Data ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Bank Lending ◽  
Bank Loan ◽  
Bank Lending Channel ◽  
Bank Efficiency ◽  
Content Type ◽  
Lending Channel

Purpose The purpose of this paper is to examine the relevance of the bank lending channel (BLC) of monetary policy and the bank efficiency in Egypt. Design/methodology/approach This paper examines the effectiveness of bank lending channel using generalized method of moments GMM model during the period from 1996 to 2014. Also, it uses stochastic frontier approach (SFA) to examine the bank efficiency in Egypt. Findings This study supports the relevance of the BLC using panel data. Moreover, applying SFA, this paper computes cost efficiency taking account of both time and country effects directly. The finding suggests that banks with low inflation and high GDP tend to perform more efficiently. Research limitations/implications The limitation of the study is examining one country only. Practical implications The finding signals that the Central Bank of Egypt (CBE) should adjust interest rate in order to stabilize the bank loan supply. Social implications It is important for the CBE and Egyptian banks because it highlights the importance of BLC. Originality/value It examines one channel of monetary policy and bank efficiency in Egypt.

scholarly journals Banking: Interest Spread, Inelastic Deposit Supply, and Mergers

2006 ◽  
Vol 45 (4II) ◽  
pp. 1055-1070 ◽  
Author(s):  
M. Idrees Khawaja ◽  
Musleh-Ud Din
Keyword(s):  
Monetary Policy ◽  
Banking Sector ◽  
Developing Economies ◽  
Bank Lending ◽  
Bank Lending Channel ◽  
Treasury Bills ◽  
Lending Channel ◽  
Lending Rates ◽  
The Difference ◽  
Pass Through

Interest spread, the difference between what a bank earns on its assets and what it pays on its liabilities, has been on an upward trend during the last few years: during 2005 the average interest spread of the banking sector has increased by 2.14 percent. An increase in the interest spread implies that either the depositor or the borrower or both stand to loose. In the context of developing economies, the lack of alternate avenues of financial intermediation aggravates the adverse impact of increase in spread.1 Interest spread also has implications for the effectiveness of the bank lending channel. For example, with a commitment to market based monetary policy, the central bank influences the yield on treasury bills (T. bill hereafter) that in turn affects the deposit and lending rates.2 The change in these rates influences the cost of capital that in turn affects the level of consumption and investment in the economy. If the pass-through of the changes in yield on T. bill rate to the deposit and lending rates is asymmetric then this changes the spread, for better or worse, depending upon the nature of asymmetry. If the increase in spread is due to lower return to depositors then this discourages savings; alternatively if it is due to higher charge on loans, investment decisions are affected. In either case the increase in spread has an adverse bearing upon the effectiveness of bank lending channel of monetary policy and has therefore important implications for the economy......

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