scholarly journals Thrift and Credit Cooperative Lending Channel under Prolonged Low-Interest Rates: The Case of Thailand

2020 ◽  
Vol 5 (2) ◽  
pp. 59-71
Author(s):  
Kovit Charnvitayapong
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Fixed Effects ◽  
Bank Lending ◽  
Annual Data ◽  
Lending Channel ◽  
Interaction Terms ◽  
Credit Cooperatives ◽  
Low Interest Rates ◽  
The Impact

Objective – Considerable research indicates that during times of prolonged low interest rates, commercial bank lending channels are less effective in conveying the impact of expansionary monetary policies. What is the impact of easy money policy through lending channels of non-banking financial institutions (NBFIs) such as thrift and credit cooperatives (TCCs) and why should this result occur? The objective of this study is to examine the effectiveness of monetary policy through TCC lending channels compared to bank lending channels from 2008 to 2017. Methodology/Technique – Annual data from 546 TCCs was used in this investigation. A fixed effects model for TCCs and random effect for banks were employed to examine the data. Two models of each institution, one with lagged interaction terms and the other with contemporaneous interaction terms, were tested and compared. The impact of institutional characteristics such as size, deposit, liquidity and equity, and macroeconomic variables such as GDP growth and yield spread, on lending channels were also examined. Finding – As expected, the results show that TCC lending channels respond positively to prolonged low interest rate policies, whilst bank lending channels respond negatively in one model. Thus, if monetary authorities wish to increase the effectiveness of expansionary monetary policy, TCCs should be allowed to develop under careful supervision. Novelty –This study concludes that incremental budgeting caused by regulation must be borne by TCCs. Type of Paper: Empirical. JEL Classification: E44 E51 E52 E58. Keywords: Thrift and Credit Cooperatives (TCCs); Prolonged Low-Interest Rates; Transmission Mechanism; Lending Channels; Fixed Effects. Reference to this paper should be made as follows: Charnvitayapong, K. 2020. Thrift and Credit Cooperative Lending Channel under Prolonged Low Interest Rates: The Case of Thailand, J. Bus. Econ. Review 5(2) 59 – 71 https://doi.org/10.35609/jber.2020.5.2(2)

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).

Thrift and Credit Cooperative Lending Channels under Prolonged Low-Interest Rates: The Case of Thailand

2020 ◽  
Vol 11 (1) ◽  
pp. 1-1
Author(s):  
Kovit Charnvitayapong
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Fixed Effects ◽  
Global Financial Crisis ◽  
Bank Lending ◽  
The United States ◽  
Credit Union ◽  
The European Union ◽  
Low Interest Rates ◽  
The Global Financial Crisis

Since the global financial crisis of 2007–08, the United States, Japan, and the European Union (EU) have heavily stimulated their economies with expansionary monetary policy. World finance has been affected by this policy conduct. Interest rates in most open economies were pushed to very low levels and have remained low ever since. Nevertheless, monetary stimulation has not improved the economic situation to a satisfactory level as of the end of 2019. Several studies such as Claudio Borio and Boris Hofmann (2017) and Nasha Ananchotikul and Dulani Seneviratne (2015) attempted to examine the inefficiency of expansionary monetary policy by looking at bank lending channels. Koot and Walker (1980) studied monetary policy effectiveness through credit union lending channels. They found that at first, credit unions responded well to expansionary monetary policy, but after prolonged easy money policy, the response died down. Keywords: Fixed effects, Lending channel, Prolonged low interest rates, Thrift and credit cooperatives (TCCs), Transmission mechanism.

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)

Monetary Policy Pass-through, Ownership and Crisis: How Robust is the Indian Evidence?

2021 ◽  
Vol 15 (4) ◽  
pp. 456-483
Author(s):  
Jugnu Ansari ◽  
Saibal Ghosh
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Bank Lending ◽  
Loan Pricing ◽  
Lending Channel ◽  
Private Banks ◽  
Monetary Policy Shock ◽  
Pass Through ◽  
The Interest Rate ◽  
The Impact

Employing disaggregated data for 2001–2016, this study investigates the lending and loan pricing behaviour of state-owned and domestic private banks in response to monetary policy. Three major findings emerge. First, although both the interest rate and the bank lending channels are relevant for monetary pass-through, there is a trade-off: the impact of the former is much higher than the latter, although it occurs with a significant lag. Second, domestic private banks have a far greater response to a monetary policy shock under the interest rate channel, whereas state-owned banks display a greater response under the bank-lending channel. And finally, state-owned banks cut back lending during periods of crises, although no such response is manifest in domestic private banks. JEL Codes: C23, D4, E43, E52, G21, L10

Real interest rate, income and bank loans: panel evidence from Egypt

2019 ◽  
Vol 12 (2) ◽  
pp. 227-243
Author(s):  
Mohamed Aseel Shokr
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Bank Lending ◽  
Bank Loans ◽  
Bank Lending Channel ◽  
Content Type ◽  
Lending Channel ◽  
Policy Shocks ◽  
Effect Of Monetary Policy ◽  
The Impact

Purpose This paper aims to examine the effectiveness of monetary policy on bank loans in Egypt using generalized method of moments (GMM) model. Also, it investigates the impact of bank level variables, namely, total assets, liquidity, capital and income on bank loans. It develops the equation of loans, which is introduced by Ehrmann et al. (2002) using bank level variables such as income and the interaction between income and interest rate. Design/methodology/approach This paper examines the impact of monetary policy shocks on bank loans in Egypt by applying the GMM technique and panel data from 1996 to 2014. Findings The results reveal that real interest rate has a significant impact on bank loans, which indicates that the bank lending channel is effective in Egypt. Furthermore, the bank level variables, namely, banks’ size, liquidity and income have significant effects on bank loans in Egypt, which sustains the heterogeneous effect of monetary policy on bank loans. Therefore, the Central Bank of Egypt (CBE) can adjust interest rate to influence the bank loans and total demand. Research limitations/implications It does not examine the effect of monetary policy on small and large banks in Egypt. Practical implications The policy implications from this paper indicate that the monetary authority in Egypt should adjust interest rate to stabilize the bank loan supply. By stabilizing the bank loans, the monetary authority is able to stabilize investment, consumption and total demand. Social implications The relevance of bank lending channel indicates that the role of commercial banks is very important in transmitting monetary policy shocks to the real sector. Originality/value It is important for the CBE, banks and people because it shows the effectiveness of bank lending channel and the effect of global financial crisis on the Egyptian economy.

scholarly journals Essays on the bank lending channel

2014 ◽  
Author(s):  
Ευφροσύνη Αλεβιζοπούλου
Keyword(s):  
Monetary Policy ◽  
Banking System ◽  
Bank Lending ◽  
European Countries ◽  
Financial Capital ◽  
Bank Lending Channel ◽  
Gmm Estimator ◽  
Additional Variable ◽  
Lending Channel ◽  
The Impact

This chapter examines two issues: First, it investigates the efficiency of the banking system in six European countries spanning the period of 1994 to 2008. The methodology used is the profit frontier methodology, following the approach suggested in Mester (1996), who indicates that financial capital should be taken into account. Furthermore total assets consist an additional variable that controls for size and is included in the model as well. Second, the chapter examines the impact of efficiency on monetary policy, through the bank lending channel, using the GMM estimator methodology suggested in Arellano and Bond (1991). The results indicate that when efficiency is explicitly included in the model, it weakens the operation of the bank lending channel.

scholarly journals Low Interest Rates and Bank Risk-Taking: Has the Crisis Changed Anything? Evidence from the Eurozone

2015 ◽  
Vol 8 (1) ◽  
pp. 125-148 ◽  
Author(s):  
Alin Marius Andries ◽  
Vasile Cocriş ◽  
Ioana Pleşcău
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Risk Taking ◽  
Fixed Effects ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Bank Risk ◽  
Fixed Effects Model ◽  
Loan Loss ◽  
The Impact

AbstractThis paper examines the impact of monetary policy on bank risk-taking and the influence of the recent financial crisis on this relation. We use a dataset of 571 commercial banks from Eurozone and analyze the relation on the period from 1999 to 2011, with emphasize on the period 2008 to 2011. We use non-performing loans, loan loss provisions and Z-score as measures for bank risk-taking, while for monetary policy the proxies are short-term interest rates (computed using a Taylor rule) and long-term interest rates. We determine the relation between the two by taking into account some specific control variables and analyze it using an entity fixed-effects model and Generalized Method of Moments, alternatively. Empirical results point to a negative relation between interest rates and bank risk-taking. In addition to this, results show that the crisis has led to an additional negative impact on the relation between interest rates and bank risk-taking for the turmoil period 2008-2011.

scholarly journals Monetary Policy and Domestic Investment in Nigeria: The Role of the Inflation Rate

2020 ◽  
Vol 34 (1) ◽  
pp. 139-155
Author(s):  
Obinna Franklin Ezeibekwe
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Money Supply ◽  
Inflation Rate ◽  
Bank Lending ◽  
Policy Tools ◽  
Open Market ◽  
Domestic Investment ◽  
Inflation Rates ◽  
The Impact

AbstractEconomic theory suggests that monetary policy can be used to stabilize an economy. However, the ability of monetary policy targets—interest rates and money supply—to stabilize an economy depends on their ability to achieve price stability. Using data from 1981 to 2018 and applying the vector error correction model, this paper seeks to determine how the changes in the inflation rate affect the ability of monetary policy tools to stabilize the Nigerian economy and stimulate investment. Empirical results suggest that the impact of the interest rates on investment depends on the level of the inflation rate. The size of the effect of interest rates on investment gets weaker as the inflation rate increases suggesting that monetary policy tools, such as the monetary policy rate (MPR), that directly change the interest rates are robust stabilization tools during periods of declining inflation rates but not relevant during periods of rising inflation rates. This is attributable to low bank lending rates. Additionally, the impact of the money supply target on investment does not depend on the level of the inflation rate. This suggests that monetary policy tools, such as open market operations, that directly change the money supply can be relevant stabilization tools during economic booms and recessions. As a result, the Central Bank of Nigeria should work to deepen the scale, capacity, and efficiency of its open market operations by ensuring that most of the people can participate with minimal transaction cost and by making different financial instruments available.

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