Financial technologies and the effectiveness of monetary policy transmission

Iftekhar Hasan, Boreum Kwak and Xiang Li

No 26/2020, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: This study investigates whether and how financial technologies (FinTech) influence the effectiveness of monetary policy transmission. We use an interacted panel vector autoregression model to explore how the effects of monetary policy shocks change with regional-level FinTech adoption. Results indicate that FinTech adoption generally mitigates the transmission of monetary policy to real GDP, consumer prices, bank loans, and housing prices, with the most significant impact observed in the weakened transmission to bank loan growth. The relaxed financial con straints, regulatory arbitrage, and intensified competition are the possible me chanisms underlying the mitigated transmission.

Keywords: financial technology; interacted panel VAR; monetary policy (search for similar items in EconPapers)
JEL-codes: C32 E52 G21 G23 (search for similar items in EconPapers)
Date: 2023, Revised 2023
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fdg, nep-mac, nep-mon and nep-pay
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Citations: View citations in EconPapers (4)

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Journal Article: Financial technologies and the effectiveness of monetary policy transmission (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:262020

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