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Foreign Banks and the Bank Lending Channel
journal contributionposted on 2021-01-19, 09:51 authored by Piotr Denderski, Wojtek Paczos
We provide new evidence on bank ownership and the transmission of monetary policy using bank-level data on 453 banks in Central and Eastern European economies between 1998 and 2012. Only domestic banks adjust loans to changes in monetary policy, while foreign banks do not. Conventional wisdom says that this is because foreign banks can rely on parent banks’ funding to insulate against monetary policy shocks. In this paper we document an alternative explanation. Deposits in foreign banks do not react to monetary policy, hence the bank lending channel is only triggered in domestic banks.
Narodowy Bank Polski. Grant Number: 2014 National Bank of Poland (NBP) research grant
CitationEconomic Inquiry, Volume 59, Issue 1, January 2021, Pages 478-493
Author affiliationSchool of Business
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