Monetary Expansion and the Banking Lending Channel

Benjamin Tabak, Tito Moreira (), Dimas Fazio, André Luiz Cordeiro Cavalcanti and George Henrrique de Moura Cunha

PLOS ONE, 2016, vol. 11, issue 10, 1-11

Abstract: This paper examines the bank lending channel, which considers how monetary authority actions affect the variation of loans. We focus on the BRICS (Brazil, Russia, India, China and South Africa) totalizing 1254 banks from five countries in the period 2000–2012 (totalizing 13 years). The empirical results show that the effect of money supply growth on the growth of loans is non-linear and inverted U-shaped. In this context, our results show empirical evidence expansionary monetary policies do not increase the propensity of economic agents to systematically take greater risks on the market. After a certain level of money stock, increases in the money supply do not lead to increased negotiated credit.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0164338

DOI: 10.1371/journal.pone.0164338

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