The size distribution of the banking sector and the effects of monetary policy

Ghossoub, Edgar A.; Reed, Robert R.

doi:10.1016/j.euroecorev.2015.01.002

Cited by 20 publications

(17 citation statements)

References 14 publications

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“…For example, Olivero et al (2011aOlivero et al ( , 2011 using data for several emerging markets, found that financial sectors with lower competition levels or higher number of consolidation processes are less responsive to monetary policy shocks via the bank lending channel. Similar results are found in Ghossoub and Reed (2015) who study the optimal size distribution of the banking sector as well as the effect of banking concentration on monetary policy transmission. Finally, Aiyar et al (2016) analyze the interaction of monetary and bank capital-requirement policies for the determination of credit supply in the UK.…”

Section: Literature Reviewsupporting

confidence: 83%

The bank lending channel of monetary policy : does the financial structure of banks matter

Gómez-González¹,

Kutan²,

Ojeda-Joya³

et al. 2016

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This paper tests the importance of the financial structure of banks in the bank lending channel of monetary policy transmission in Colombia, using an unbalanced panel of 51 banks for the period of 1996:4-2014:8. We find that an increase in the interbank rate (proxy of the intervention rate) has a response of a drop in the growth of the total loan portfolio of banks. When we breakdown by type of policy, the bank lending channel works better in times of monetary contraction, exhibiting significant reactions from banks with low levels of solvency rather than those with high solvency. In contrast, when the policy is expansionary, the high solvency banks are the only segment exhibiting the presence of the bank lending channel. We discuss the policy implications of findings.

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Section: Literature Reviewsupporting

confidence: 83%

The bank lending channel of monetary policy : does the financial structure of banks matter

Gómez-González¹,

Kutan²,

Ojeda-Joya³

et al. 2016

View full text Add to dashboard Cite

show abstract

“…Olivero et al (2011aOlivero et al ( , 2011b who used data for several emerging markets and reported that consolidated financial sectors with lower competition levels are less responsive to monetary policy changes. Ghossoub and Reed (2015) also confirmed the effect of the banking concentration on monetary policy transmission. Saumitra and Toto (2012) used the bank level data and concluded that small, illiquid banks are more responsive to monetary policy changes.…”

Section: Literaturesupporting

confidence: 58%

The Bank Lending Channel of Monetary Transmission in Turkey

Turguttopbaş¹

2019

berj

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In this paper, it is aimed to fill a gap in the literature by providing empirical evidence on the influence of monetary policy of Central Bank of Turkey on bank lending in Turkish financial system. In the analysis, the bank level data consisting of 20 banks and monthly market interest rates are used for the period 2001-2017. The findings of the study address three different perspectives of transmission of monetary policy rates. Firstly, the effect of the policy rate on bank lending rates is evaluated and it is confirmed that a change in the policy rate has been reflected in banks' lending rate with 3 months lag. The second group of findings report that the monetary policy affects banks' lending rate in Turkey mainly through its effects on the deposit rates with a lag of 2 months. The third perspective focuses on the balance sheet channel of monetary policy transmission. The results indicate that mainly the policy rate of central bank and liquidity level affect the supply of bank loans. Each of the variables of the adequacy of bank capital and ROA affects the bank's supply of the loans. Amongst the economic variables, the GDP growth has a positive and significant and stock exchange index has negative and significant relation with the supply of bank loans.

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“…Kashyap and Stein (2000) and Ghossoub and Reed (2015), for example, analyze how 4 National Income and Product Accounts (NIPA) table 6.16 the bank size distribution influences the propagation of monetary policy. Gray and Malone (2008) discuss the implications of different bank size distributions for large scale private-public risk transfers.…”

Section: Introductionmentioning

confidence: 99%

Why Are Big Banks Getting Bigger?

Fernholz

Koch

2016

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The U.S. banking sector has become substantially more concentrated since the 1990s, raising questions about both the causes and implications of this consolidation. We address these questions using nonparametric empirical methods that characterize dynamic power law distributions in terms of two shaping factors -the reversion rates (a measure of crosssectional mean reversion) and idiosyncratic volatilities of assets for different size-ranked banks. Using quarterly data for subsidiary commercial banks and thrifts and their parent bank-holding companies, we show that the greater concentration of U.S. bank-holding company assets is a result of lower mean reversion, a result consistent with policy changes such as interstate branching deregulation and the repeal of Glass-Steagall. In contrast, the greater concentration of both U.S. commercial bank and thrift assets is a result of higher idiosyncratic volatility, yet, idiosyncratic volatility of parent bank-holding company assets fell. This contrast suggests that diversification through non-banking activities has reduced the idiosyncratic asset volatilities of the largest bank-holding companies and affected systemic risk.

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The size distribution of the banking sector and the effects of monetary policy

Cited by 20 publications

References 14 publications

The bank lending channel of monetary policy : does the financial structure of banks matter

The bank lending channel of monetary policy : does the financial structure of banks matter

The Bank Lending Channel of Monetary Transmission in Turkey

Why Are Big Banks Getting Bigger?

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