Bank Market Power and Monetary Policy Transmission: Evidence from Loan-Level Data

Nadezhda Ivanova, Svetlana Popova () and Konstantin Styrin ()
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Konstantin Styrin: Bank of Russia, Russian Federation

No wps123, Bank of Russia Working Paper Series from Bank of Russia

Abstract: This paper asks the following questions. How does market structure reshape the transmission of monetary policy to bank lending? How are loan characteristics such as loan volume, maturity, lending rate, risk, and the extensive margin of lending affected? Is there a trade-off between financial stability and the strength of monetary transmission? We find that, on more concentrated markets, the effect of monetary policy on lending rate and risk taking is amplified whereas the effect on loan volume is muted. Our current findings may imply the existence of a trade-off between the strength of monetary policy transmission and financial stability, but are subject to further investigation.

Keywords: Monetary policy transmission; Market concentration. (search for similar items in EconPapers)
JEL-codes: C14 E44 E52 G21 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2024-01
New Economics Papers: this item is included in nep-ban, nep-cba, nep-com, nep-ifn and nep-mon
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