Banks around the world, particularly in emerging markets, often face large shocks to their supply of liquidity due to regime shifts, speculative bank runs, “hot money” flows, or exchange rate volatility. Many argue that banks pass these fluctuations on to borrowing firms even when there is no change in the firms’ overall credit worthiness. This can lead to large real effects if firms are unable...

Exploring the functioning of internal capital markets in financial conglomerates, this paper conducts a novel test of the credit channel of monetary policy. We look at how the response of lending to monetary policy shocks differs across small banks that are affiliated with the same bank holding company but that operate in distinct geographical areas. These subsidiaries tap into the same pool of...

In this paper we re-examine commercial banks’ lending behavior taking into account changes in the stance of monetary policy in conjunction with changes in financial sector uncertainty. Using a very large data set covering all banks in the US between 1986–2000, we show that financial uncertainty has an important and significant role in the monetary policy transmission mechanism that varies acros...

This paper studies bank loans over the business cycles in Iran to determine the role of Iranian banks in stabilizing credit. By estimating the long-run relations using dynamic OLS and fully modified OLS estimators, the findings show that real bank lending is positively related to real GDP in the long-run providing evidences of the pro-cyclicality of bank lending in Iran. Hence, Iranian banking ...

role of credit in the economy by suggesting that the capital structure of the firm was mostly irrelevant. Moreover, the strong and robust correlation between money and real variables found in the empirical literature of the 1960s provided strong support for the view that the main transmission mechanism for monetary policy operates through changes in the cost of capital and their impact on inves...

In recent years, considerable research has they take as evidence for a bank lending explored the role played by bank lending in channel. the transmission of monetary shocks. In conWe reexamine KSW's analysis. In contrast trast to the traditional Keynesian transmission to KSW's use of aggregate data, we analyze mechanism that operates strictly through inthe mix of bank and nonbank debt separatel...

This paper analyzes the adjustments in the structure of assets and liabilities of the Austrian banking sector taking place after a monetary tightening. Following increases in short-term interest rates, the share of loans to non-banks in interest-earning assets rises, which is at odds with predictions from the bank lending channel of monetary policy transmission. An extension of credit to nonfin...

Using credit-registry data for Spain and Peru, we document that four main types of commercial credit—asset-based loans, cash flow trade finance leasing—are easily identifiable represent the bulk corporate credit. We show credit growth dynamics bank lending channels vary across these loan types. The effects monetary policy propagating through banks’ balance sheets are primarily driven by whereas...