Transmission of Monetary Policy and Bank Heterogeneity in Colombia
Carolina Ortega Londoño ()
Documentos de Trabajo CIEF from Universidad EAFIT
This study provides evidence of bank heterogeneity in Colombiafor the period 2002-2014 and analyzes how bank-specific character-istics determine the bank-lending channel for monetary policy. Toanalyze bank heterogeneity, this study estimates technical (cost) effi-ciency using Stochastic Frontier Analysis, which also allows for themeasurement of Returns to Scale and a Lerner Index to proxy mar-ket power in the loans market. This study also provides measuresof capitalization, liquidity, and the commonly used ratios of financialand operational efficiency with bank’s balance-sheet data. Further-more, using a long and unbalanced panel, this study finds evidence ofthe existence of a bank-lending channel and finds that this transmis-sion mechanism is determined by bank-specific characteristics. Theresults suggest higher technical and operational efficiency, capitaliza-tion, liquidity and market power, increase the sensitivity of loans dis-bursements to monetary policy shocks, while higher returns to scalelowers this sensitivity.
Keywords: monetary policy transmission; bank lending channel; bank heterogeneity; bank efficiency (search for similar items in EconPapers)
JEL-codes: G21 E52 E59 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eff, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:col:000122:016792
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