The effects of monetary policy on the composition of bank deposits and on loan supply
Mattia Girotti ()
Rue de la Banque, 2018, issue 59
Using US bank level data, this Rue de la Banque shows that when monetary policy tightens, banks with a larger proportion of zero-interest deposits on their balance sheet experience larger increases in their interest-bearing deposit rate. A larger increase in the interest-bearing deposit rate then corresponds to a larger decrease in their loan supply. Therefore, the funding composition of the banking system plays a role in the transmission of monetary policy: the bank lending channel is still at play.
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