Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174131
Authors: 
Denderski, Piotr
Paczos, Wojciech
Year of Publication: 
2017
Series/Report no.: 
Cardiff Economics Working Papers E2017/3
Abstract: 
We provide new evidence on the bank lending channel of monetary policy using bank-level data of 440 banks from eleven CEE transition economies between 1998 and 2012. Our findings are: i) banks adjust their loans to changes in host country's monetary policy, ii) foreign-owned banks are less responsive to monetary policy of a host country than domestic-owned banks in both normal and crisis times, iii) foreign parent bank characteristics are irrelevant for the bank lending channel. We propose market segmentation hypothesis that can account for those facts better than the alternative, the internal market hypothesis. Foreign banks have a competitive advantage so that their loan portfolio adjusts less to changes in monetary policy. As a consequence, an increase in foreign penetration of the banking sector does not render monetary policy less effective.
Subjects: 
banks
bank ownership
bank lending channel
monetary policy
JEL: 
E44
E50
G21
Document Type: 
Working Paper

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