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Foreign Banks and the Bank Lending Channel

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Version 2 2021-01-19, 09:51
Version 1 2020-07-28, 14:47
journal contribution
posted 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.

Funding

Narodowy Bank Polski. Grant Number: 2014 National Bank of Poland (NBP) research grant

History

Citation

Economic Inquiry, Volume 59, Issue 1, January 2021, Pages 478-493

Author affiliation

School of Business

Version

  • VoR (Version of Record)

Published in

Economic Inquiry

Volume

59

Issue

1

Pagination

478-493

Publisher

Wiley for Western Economic Association International

eissn

1465-7295

Acceptance date

2020-07-24

Copyright date

2020

Available date

2020-08-24

Language

en

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