Does bank efficiency affect the bank lending channel in China?
Zuzana Fungáčová (),
Eeva Kerola and
Laurent Weill ()
No 3/2021, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition
This work examines the impact of bank efficiency on the bank lending channel in China. Using a sample of 175 Chinese banks over the period 2006–2017, we investigate how the reaction of the loan supply to monetary policy actions depends on a bank’s efficiency. While bank efficiency does not exert an impact on the effectiveness of monetary policy transmission overall, it does favor the transmission of monetary policy for banks with low loan-to-deposit ratios. In addition, the expansion of shadow banking activities has been associated with a positive impact of bank efficiency on monetary policy transmission. These results suggest that bank efficiency may influence the bank lending channel in certain cases.
JEL-codes: E52 G21 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:bof:bofitp:2021_003
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