Monetary Policy Transmission in Emerging Asia: The Role of Banks and the Effects of Financial Globalization

Nasha Ananchotikul and Dulani Seneviratne

No 2015/207, IMF Working Papers from International Monetary Fund

Abstract: 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.

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 (search for similar items in EconPapers)
Pages: 34
Date: 2015-09-28
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=43313 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2015/207

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().