 Global banking and the balance sheet channel of monetary transmissionUluc Aysun and
Sami Alpanda ()
No 2011-04, Working Papers from University of Central Florida, Department of Economics Abstract: The literature typically finds that the development of financial markets has decreased the ability of central banks to affect the real economy. This paper shows that this negative relationship does not hold between the balance sheet channel of monetary transmission and bank globalization -- one aspect of financial development. The reason is that global banks are more sensitive to their borrowers’ leverage. By affecting this leverage, monetary policy has a larger impact on global banks’ lending and aggregate economic activity. We use bank-level, Call Report data to find this disparity between more and less global banks. We then use these data in the estimation of a general equilibrium model and find that the balance sheet channel of monetary transmission operates mainly through more global banks. Keywords: balance sheet channel; bank globalization; financial accelerator (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cfl:wpaper:2011-04 Access Statistics for this paper More papers in Working Papers from University of Central Florida, Department of Economics |
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