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The international bank lending channel of monetary policy rates and QE: Credit supply, reach-for-yield, and real effects

Bernardo Morais, José-Luis Peydró, Jessica Roldán-Peña and Claudia Ruiz-Ortega

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: We identify the international credit channel by exploiting Mexican supervisory data sets and foreign monetary policy shocks in a country with a large presence of European and U.S. banks. A softening of foreign monetary policy expands credit supply of foreign banks (e.g., U.K. policy affects credit supply in Mexico via U.K. banks), inducing strong firm-level real effects. Results support an international risk-taking channel and spill overs of core countries’ monetary policies to emerging markets, both in the foreign monetary softening part (with higher credit and liquidity risk-taking by foreign banks) and in the tightening part (with negative local firm-level real effects).

Keywords: monetary policy; financial globalization; quantitative easing (QE); credit supply; risk-taking; foreign banks (search for similar items in EconPapers)
JEL-codes: E52 E58 G01 G21 G28 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:216785

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