scholarly journals International Bank Lending Channel of Monetary Policy

2019 ◽  
Vol 19 (234) ◽  
Author(s):  
Silvia Albrizio ◽  
Sangyup Choi ◽  
Davide Furceri ◽  
Chansik Yoon
Keyword(s):  
Monetary Policy ◽  
Dynamic Effect ◽  
Bank Lending ◽  
Bank Lending Channel ◽  
Portfolio Rebalancing ◽  
Exogenous Shocks ◽  
Lending Channel ◽  
Cross Border ◽  
Policy Shocks ◽  
Effect Of Monetary Policy

How does domestic monetary policy in systemic countries spillover to the rest of the world? This paper examines the transmission channel of domestic monetary policy in the cross-border context. We use exogenous shocks to monetary policy in systemically important economies, including the U.S., and local projections to estimate the dynamic effect of monetary policy shocks on bilateral cross-border bank lending. We find robust evidence that an increase in funding costs following an exogenous monetary tightening leads to a statistically and economically significant decline in cross-border bank lending. The effect is weakened during periods of high uncertainty. In contrast, the effect is found to not vary according to the degree of borrower country riskiness, further weakening support for the international portfolio rebalancing channel.

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.

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 Monetary Policy, Development of Financial Market and Banking Lending : An Analysis of the Bank-Lending Channel in Malaysia

2020 ◽  
Author(s):  
Noor A. Ghazali ◽  
Aisyah A. Rahman
Keyword(s):  
Monetary Policy ◽  
Financial Market ◽  
Bank Lending ◽  
Monetary Authority ◽  
Credit Channel ◽  
Direct Influence ◽  
Economic Activities ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Effect Of Monetary Policy

Recent resurgence of interest in understanding the transmission mechanism of monetary policy focuses on two main channels of explanation, i.e. the money and credit channel. This paper investigates a version of the credit channel, i.e. the bank-lending channel for the Malaysian economy. The bank-lending channel assigns a critical role for the supply of bank loans in transmitting the effect of monetary policy on real economic activities. The study analyzes the effect of monetary policy on the ability and willingness of Malaysian banks to issue loans with respect to the development in the open financial market. Specifically it argues on the changes of the pattern of influence as progress in the open financial market takes place. A multivariate system analysis of vector auto regression (VAR) is used. The results show that prior to the progress in open financial market, the monetary authority has a direct influence on supply of loans of banks. However, this direct influence lessens as the open financial market develops. Loans are more affected by interest rates spread that dictates conditions in open financial markets. Thus, the ability of the monetary authority to steer real economic activities is subjected to development in the financial market.

Bank lending channel in Zambia: empirical evidence from bank level data

2015 ◽  
Vol 42 (6) ◽  
pp. 1159-1174 ◽  
Author(s):  
Anthony Simpasa ◽  
Boaz Nandwa ◽  
Tiguéné Nabassaga
Keyword(s):  
Monetary Policy ◽  
Bank Lending ◽  
Dynamic Panel Data ◽  
Policy Framework ◽  
Relationship Lending ◽  
Bank Lending Channel ◽  
Content Type ◽  
Lending Channel ◽  
Level Data ◽  
Effect Of Monetary Policy

Purpose – The purpose of this paper is to explore the effect of monetary policy on the lending behaviour of commercial banks in Zambia using bank-level data. Design/methodology/approach – Dynamic panel data econometric analysis is used to uncover the evidence of monetary transmission mechanism in Zambian banking industry. Other specifications are used as robustness checks. Findings – Contrary to received evidence, the authors find that the bank lending channel in Zambia operates mainly through large banks. The effect of monetary policy on medium-sized banks is moderate while it is virtually non-existent for smaller banks. Furthermore, the data does not show evidence of relationship lending for smaller banks. Originality/value – Overall, the findings of this investigation suggest that price signals, rather than quantity aggregates, matter the most in the transmission of monetary policy in Zambia. The results therefore lend support to the central bank’s recent shift in monetary policy framework from using monetary aggregates to interest rate targeting as a means to strengthen effectiveness of monetary policy.

scholarly journals The Effect of Monetary Policy on Bank Wholesale Funding

2020 ◽  
Author(s):  
Dong Beom Choi ◽  
Hyun-Soo Choi
Keyword(s):  
Monetary Policy ◽  
Banking Sector ◽  
Financial Frictions ◽  
Bank Lending ◽  
Monetary Policy Transmission ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Policy Transmission ◽  
Effect Of Monetary Policy

We study how monetary policy affects the funding composition of the banking sector. When monetary tightening reduces the supply of retail deposits, banks attempt to substitute wholesale funding for deposit outflows to smooth their lending. Because of financial frictions, banks have varying degrees of access to wholesale funding. Therefore, large banks, or those with greater reliance on wholesale funding, increase their wholesale funding more. Consequently, monetary tightening increases both the reliance on and the concentration of wholesale funding within the banking sector. Our findings also suggest that liquidity requirements could bolster monetary policy transmission through the bank lending channel. This paper was accepted by Tyler Shumway, finance.

Bank-Lending Channel of Monetary Policy Transmission: Evidence from ASEAN

2019 ◽  
Vol 21 (4) ◽  
pp. 892-905
Author(s):  
Fazelina Sahul Hamid ◽  
Norhanishah Mohd Yunus
Keyword(s):  
Monetary Policy ◽  
Bank Lending ◽  
Governance Structure ◽  
Policy Changes ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Consumer Loans ◽  
Policy Transmission ◽  
Commercial Loans ◽  
Effect Of Monetary Policy

This article examines the existence of a bank-lending channel in Association of Southeast Asian Nations (ASEAN) using a sample of 328 banks from 2009 to 2015. The findings confirm that a bank-lending channel is effective. In particular, we find that consumer loans and commercial loans are sensitive to changes in monetary policy, but mortgage and corporate loans are not. We also find that commercial banks are vulnerable to monetary policy changes, but both investment and Islamic banks are not. On the contrary, special purpose banks are able to overcome the effect of monetary policy tightening by supplying more loans. The effectiveness of a bank-lending channel in ASEAN also holds when we control for the differences in governance structure of the countries. Policymakers need to take these into consideration in designing an effective monetary policy.

Econometric Analysis of Bank Lending Channel Efficiency in Russia

2017 ◽  
Vol 2017 (3) ◽  
pp. 61-79
Author(s):  
Svetlana Zhabina
Keyword(s):  
Monetary Policy ◽  
Bank Lending ◽  
Monetary Policy Shocks ◽  
Bank Lending Channel ◽  
Balance Sheets ◽  
Lending Channel ◽  
Channel Efficiency ◽  
Panel Regressions ◽  
Policy Shocks ◽  
The Relationship

The paper investigates the relationship between monetary policy indicator and bank lending in Russia using dynamic panel regressions and quarterly banks’ balance sheets data for the period of 2010- 2016. The main purpose of the paper is to identify bank characteristics, which determine the reaction of bank lending to monetary policy shocks. The results support the existence of a bank lending channel of monetary transmission. The extent to which banks change lending in response to monetary policy changes depends on banks’ liquidity, size and refinancing from the central bank.

scholarly journals The Bank Lending Channel of Monetary Policy? The Panel Evidence from Egypt

2014 ◽  
Vol 16 (3) ◽  
pp. 255 ◽  
Author(s):  
Mohamed Aseel Shokr ◽  
Zulkefly Abdul Karim ◽  
Mansor Jusoh ◽  
Mohd. Azlan Shah Shah Zaidi
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Empirical Studies ◽  
Bank Lending ◽  
Bank Loans ◽  
Bank Loan ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Level Data ◽  
Effect Of Monetary Policy

This paper examines the relevance of the bank lending channel of monetary policy in Egypt using bank-level data. Previous empirical studies in Egypt that used macro-level data have not supported the relevance of the bank lending channel. However, using a sample of 32 commercial banks for the period from 1998 until 2011 and a dynamic panel GMM technique, the empirical findings revealed the relevance of the bank lending channel of monetary policy in Egypt. Moreover, there is a heterogeneity effect of monetary policy on bank loans according to bank size, in which the small banks are more affected during a monetary contraction than larger banks. This finding signals that the monetary authorities in Egypt should take cognizance of the stability of interest rates in order to stabilize the bank loan supply.       

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