Non-Bank Finance and Monetary Policy Transmission in Asia

Focusing on Asian economies over the period 2006 to 2019, we find that while non-bank finance appears complement rather than substitute credit provision by traditional banking sector, weaker regulatory quality is an important driving factor. Moreover, central bank policy rates countercyclically affect non-banks, impulse responses monetary shocks with and without indicate effectiveness of as a transmission channel GDP growth, inflation, house prices, weakened in presence finance. Our paper has implications for implementation, potentially incorporating non-banks into operations liquidity provision, well financial supervisors mitigating arbitrage.