The impact of foreign banks on monetary policy transmission during the global financial crisis of 2008-2009: Evidence from Korea

Bang Jeon, Hosung Lim and Ji Wu
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Hosung Lim: Economic Research Institute, Postal: The Bank of Korea, Seoul, Korea

No 2014-7, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: This paper examines the impact of foreign banks on the monetary policy transmission mechanism in the Korean economy during the period from 2000 to 2012, with a specific focus on the lending behavior of banks with different types of ownership. Using the bank-level panel data of the banking system in Korea, we present consistent evidence on the buffering impact of foreign banks, especially foreign bank branches including U.S. bank branches, on the effectiveness of the monetary policy transmission mechanism in Korea from the bank-lending channel perspective during the period of the global financial crisis of 2008-2009. One of the underlying reasons for the buffering effect of foreign bank branches is the existence of internal capital markets operated by multinational banks to overcome capital market frictions faced when the foreign banks finance their loans.

Keywords: foreign banks; monetary policy transmission; financial crisis (search for similar items in EconPapers)
JEL-codes: E52 G01 G21 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-05-01
New Economics Papers: this item is included in nep-cba, nep-cfn, nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: The Impact of Foreign Banks on Monetary Policy Transmission During the Global Financial Crisis of 2008–2009: Evidence from Korea (2016)
Working Paper: The Impact of Foreign Banks on Monetary Policy Transmission during the Global Financial Crisis of 2008-2009: Evidence from Korea (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:drxlwp:2014_007

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