Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288139 
Year of Publication: 
2022
Citation: 
[Journal:] International Journal of Finance & Economics [ISSN:] 1099-1158 [Volume:] 28 [Issue:] 4 [Publisher:] John Wiley & Sons, Ltd. [Place:] Chichester, UK [Year:] 2022 [Pages:] 3789-3807
Publisher: 
John Wiley & Sons, Ltd., Chichester, UK
Abstract: 
In this paper, we incorporate a stock market and a banking sector in a behavioural macro‐finance model with heterogenous and boundedly rational expectations. Households' savings are diversified among bank deposits and stock purchases, and banks' lending to firms is subject to capital‐related deviation costs. We find that households' participation in the stock market, coupled to the existence of a capital‐constrained banking sector affects the transmission of monetary policy to the economy significantly, and that households' deposits act as a critical spill‐over channel between the real and the financial sectors. Further, we relate the deviation costs in the banking sector with the degree of pass‐through of monetary policy shocks. Last, we investigate the performance of a leaning‐against‐the‐wind monetary policy, which targets asset prices concerning macroeconomic and financial stability.
Subjects: 
banking
Behavioural macroeconomics
monetary policy
stock markets
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

Files in This Item:
File
Size





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