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Monetary Policy Transmission in Emerging Asia: The Role of Banks and the Effects of Financial Globalization
Author:
Nasha Ananchotikul
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Series:
IMF Working Papers
Volume/Issue:
Volume 2015: Issue 207
Language:
English
Publication Date:
28 Sep 2015
DOI:
https://doi.org/10.5089/9781513516233.001
ISBN:
9781513516233
ISSN:
1018-5941
Pages:
34
Keywords:
WP; bank characteristic; interest rate; lending channel; bank penetration; loan growth; Monetary policy transmission; bank lending channel; financial globalization; parent bank; ownership structure; banking sector; bank competition; Foreign banks; Bank credit; Commercial banks; Credit; Loans; Global; Asia and Pacific
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Given the heavy reliance on bank lending as the main source of financing in most Asian economies, banks could potentially play a pivotal role in monetary policy transmission. However, we find that Asia’s bank lending channel or, more broadly, credit channel of domestic monetary policy is not very strong at the aggregate level. Using bank-level data for nine Asian economies during 2000–2013, we show that heterogeneity of bank characteristics (e.g., ownership type, financial position), degree of foreign bank penetration of the domestic banking sector, and global financial conditions all have a bearing on the response of domestic credit to changes in domestic monetary policy, and may account for the apparently weak credit channel at aggregate level.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund