Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/60669
Authors: 
Ashcraft, Adam B.
Year of Publication: 
2001
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 136
Abstract: 
Do banks play a special role in the transmission mechanism of monetary policy? I use the presence of internal capital markets in bank holding companies to isolate plausibly exogenous variation in the financial constraints faced by subsidiary banks. In particular, I demonstrate that affiliated bank loan growth is less sensitive to changes in the federal funds rate than that of unaffiliated banks, and that these relatively unconstrained banks are better able to smooth insured deposit outflows by issuing uninsured debt. State loan growth also becomes less sensitive to changes in the federal funds rate as loan market share of affiliated banks increases, but state output growth is largely unaffected.
JEL: 
E50
E51
Document Type: 
Working Paper

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