Monetary Policy Pass-through, Ownership and Crisis: How Robust is the Indian Evidence?

Jugnu Ansari and Saibal Ghosh
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Jugnu Ansari: Jugnu Ansari (corresponding author) is at the Reserve Bank of India, Mumbai, India.

Margin: The Journal of Applied Economic Research, 2021, vol. 15, issue 4, 456-483

Abstract: Employing disaggregated data for 2001–2016, this study investigates the lending and loan pricing behaviour of state-owned and domestic private banks in response to monetary policy. Three major findings emerge. First, although both the interest rate and the bank lending channels are relevant for monetary pass-through, there is a trade-off: the impact of the former is much higher than the latter, although it occurs with a significant lag. Second, domestic private banks have a far greater response to a monetary policy shock under the interest rate channel, whereas state-owned banks display a greater response under the bank-lending channel. And finally, state-owned banks cut back lending during periods of crises, although no such response is manifest in domestic private banks. JEL Codes: C23, D4, E43, E52, G21, L10

Keywords: Interest rate; Bank lending channel; Monetary pass-through; Capital; Liquidity (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:15:y:2021:i:4:p:456-483

DOI: 10.1177/09738010211036276

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