Financial Development and Monetary Policy: Loan Applications, Rates, and Real Effects

Peydró, José-Luis, Charles Abuka, Ronnie Alinda, , and Camelia Minoiu
Authors registered in the RePEc Author Service: Andrea Filippo Presbitero and Jose-Luis Peydro

No 12171, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The finance-growth literature argues that institutional constraints in developing countries impede financial intermediation and monetary policy transmission. Recent studies using aggregate data document a weak bank lending channel. For identification, we instead exploit Uganda’s super- visory credit register, with loan applications and rates, and unanticipated variation in monetary policy. A monetary tightening strongly reduces credit supply—increasing loan application rejections and tightening volume and rates—especially for banks with more leverage and sovereign debt exposure (even within the same borrower-period). There are spillovers on inflation and eco- nomic activity, especially in more financially-developed areas, including on commercial building, trade, and social unrest.

Keywords: Financial development; Bank credit; Bank lending channel; Monetary policy; Real effects; Developing countries (search for similar items in EconPapers)
JEL-codes: E42 E44 E52 E58 G21 G28 (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fdg, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP12171 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12171

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP12171

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().