International transmission of monetary policy shocks and the bank lending channel: Evidence from Australia

Hamid Yahyaei, Abhay Singh and Tom Smith

Journal of Financial Stability, 2024, vol. 75, issue C

Abstract: We examine the transmission of international monetary policy shocks via the bank lending channel. Exploiting a panel of regulatory data on foreign banks operating in Australia, we show that the supply of credit is vulnerable to the international pass-through of monetary policy, with banks headquartered in Asia demonstrating high elasticity. Household and non-financial corporate loans are the most susceptible channels to policy shocks, while higher-margin lending, non-lending assets, and reservable liabilities are insensitive. We demonstrate that although banks curtail lending in the face of tighter monetary policy, they increase their non-reservable borrowing, suggesting an increased reliance on capital markets. Finally, we show that unconventional monetary policies have a muted effect compared to traditional measures.

Keywords: Bank lending; Credit supply; Monetary policy; Quantitative easing (search for similar items in EconPapers)
JEL-codes: E32 E51 E52 E58 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:75:y:2024:i:c:s1572308924001281

DOI: 10.1016/j.jfs.2024.101343

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