EconStor >
Federal Reserve Bank of New York >
Staff Reports, Federal Reserve Bank of New York >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/60640
  
Title:Borrowers' financial constraints and the transmission of monetary policy: Evidence from financial conglomerations PDF Logo
Authors:Ashcraft, Adam B.
Campello, Murillo
Issue Date:2002
Series/Report no.:Staff Report, Federal Reserve Bank of New York 153
Abstract:Building on recent evidence concerning the functioning of internal capital markets in financial conglomerates, we conduct a novel test of the balance-sheet channel of monetary policy. Specifically, we investigate how the response of lending to monetary policy differs across small banks that are affiliated with the same bank holding company but operate in different geographical areas. These banks face similar constraints in accessing internal and external sources of funds, but have different pools of borrowers. Because they typically concentrate their lending with small local businesses, we can exploit cross-sectional differences in local economic indicators at the time of a policy shock to study whether the strength of borrowers' balance sheets affects the response of bank lending. We find evidence that the negative response of bank loan growth to a monetary contraction is significantly stronger when borrowers have weaker balance sheets.
Subjects:monetary policy, balance sheet channel, financial conglomerates, internal capital markets
JEL:E50
E51
G22
Document Type:Working Paper
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

Files in This Item:
File Description SizeFormat
354401319.pdf273.41 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/60640

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.