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Financial development and the bank lending channel in developing countries

Sanfilippo-Azofra, Sergio, Torre-Olmo, Begoña, Cantero-Saiz, María and López-Gutiérrez, Carlos

Journal of Macroeconomics, 2018, vol. 55, issue C, 215-234

Abstract: This article analyses how financial development affects the bank lending channel in developing countries. Our analysis is carried out on a sample of 693 commercial banks from 31 developing countries between 2000 and 2012. We find that the loan supply of banks that operate in countries with less developed financial systems is not affected by monetary policy changes. In countries with more developed financial systems, the bank lending channel is effective, but only after the financial crisis. Moreover, in these countries, the negative effect of monetary policy contractions on bank lending is greater when financial development rises.

Keywords: Financial development; Banks’ loan supply; Monetary policy; Bank lending channel (search for similar items in EconPapers)
JEL-codes: E42 E52 O16 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:jmacro:v:55:y:2018:i:c:p:215-234