Is the International Bank Lending Channel Driven by Ownership? Evidence from Local Banks and Foreign Subsidiaries

Carlos Giraldo, Iader Giraldo, Jose E. Gomez-Gonzalez and Jorge Uribe
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Carlos Giraldo: Fondo Latinoamericano de Reservas - FLAR
Jose E. Gomez-Gonzalez: Department of Finance, Information Systems, and Economics, City University of New York – Lehman College

Documentos de trabajo from FLAR

Abstract: This paper examines whether bank ownership shapes the international transmission of monetary policy through the bank lending channel. Specifically, it investigates whether foreign subsidiaries respond differently from domestic banks to U.S. monetary policy shocks. Using a large bank-level dataset covering 2,039 institutions across 116 countries over the period 2001–2020, we combine detailed balance sheet information with an exogenous measure of U.S. monetary policy shocks. Our results indicate that foreign-owned banks seem to adjust their lending more strongly in response to U.S. monetary policy shocks than domestic banks. However, this effect is highly heterogeneous across banks and therefore not statistically significant. These findings hold regardless of whether lending persistence is explicitly modeled or not. Overall, the evidence downplays the role of internal capital markets in driving the international credit channel of monetary policy over yearly horizons. More broadly, results point suggest that foreign ownership appears to play a secondary role relative to broader balance sheet characteristics and exposure to global financial conditions

Keywords: International bank lending channel; Monetary policy spillovers; Foreign bank ownership; Global financial cycle; Bank lending; Cross-border banking (search for similar items in EconPapers)
JEL-codes: E52 F34 F42 G21 (search for similar items in EconPapers)
Pages: 22
Date: 2026-06-04
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Persistent link: https://EconPapers.repec.org/RePEc:col:000566:023051

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