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The Role of Banks in Monetary Policy Transmission: Empirical Evidence from Russia

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  • Tuuli Juurikkala
  • Alexei Karas
  • Laura Solanko

Abstract

This paper focuses on the role of the banking sector in monetary policy transmission in an emerging economy with a rapidly developing financial system. Specifically, we exam whether the central bank's monetary policy stance affects banks' lending behaviour. Based on a comprehensive quarterly dataset on all Russian banks from 1Q1999 to 1Q2007, we find evidence for the existence of a bank lending channel in Russia. Contrary to several studies on developed economies, the level of a bank's capitalization matters for the transmission process. Better capitalized banks are less likely to adjust their lending practices following a change in the monetary policy stance.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 19 (2011)
Issue (Month): 1 (02)
Pages: 109-121

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Handle: RePEc:bla:reviec:v:19:y:2011:i:1:p:109-121

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References

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  1. Golodniuk, Inna, 2006. "Evidence on the bank-lending channel in Ukraine," Research in International Business and Finance, Elsevier, vol. 20(2), pages 180-199, June.
  2. Karas, Alexei & Schoors , Koen & Weill, Laurent, 2008. "Are private banks more efficient than public banks? Evidence from Russia," BOFIT Discussion Papers 3/2008, Bank of Finland, Institute for Economies in Transition.
  3. Marco Arena & Carmen Reinhart & Francisco Vázquez, 2006. "The Lending Channel in Emerging Economics: Are Foreign Banks Different?," NBER Working Papers 12340, National Bureau of Economic Research, Inc.
  4. Balázs �gert & Ronald MacDonald, 2009. "Monetary Transmission Mechanism In Central And Eastern Europe: Surveying The Surveyable," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 277-327, 04.
  5. Francisco F. Vázquez & Carmen Reinhart & Marco Arena, 2007. "The Lending Channel in Emerging Economies," IMF Working Papers 07/48, International Monetary Fund.
  6. Vdovichenko, Anna G. & Voronina, Victoria G., 2006. "Monetary policy rules and their application in Russia," Research in International Business and Finance, Elsevier, vol. 20(2), pages 145-162, June.
  7. Korhonen, Iikka & Mehrotra, Aaron, 2007. "Money demand in post-crisis Russia: De-dollarisation and re-monetisation," BOFIT Discussion Papers 14/2007, Bank of Finland, Institute for Economies in Transition.
  8. Gambacorta, Leonardo, 2005. "Inside the bank lending channel," European Economic Review, Elsevier, vol. 49(7), pages 1737-1759, October.
  9. Esanov, Akram & Merkl, Christian & Vinhas de Souza, Lúcio, 2004. "Monetary Policy Rules for Russia," BOFIT Discussion Papers 11/2004, Bank of Finland, Institute for Economies in Transition.
  10. Matousek, Roman & Sarantis, Nicholas, 2009. "The bank lending channel and monetary transmission in Central and Eastern European countries," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 321-334, June.
  11. A. Karas & K. Schoors, 2005. "Heracles or Sisyphus? Finding, cleaning and reconstructing a database of Russian banks," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/327, Ghent University, Faculty of Economics and Business Administration.
  12. Kishan, Ruby P & Opiela, Timothy P, 2000. "Bank Size, Bank Capital, and the Bank Lending Channel," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(1), pages 121-41, February.
  13. Kishan, Ruby P. & Opiela, Timothy P., 2006. "Bank capital and loan asymmetry in the transmission of monetary policy," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 259-285, January.
  14. Vymyatnina, Yulia, 2006. "How much control does Bank of Russia have over money supply?," Research in International Business and Finance, Elsevier, vol. 20(2), pages 131-144, June.
  15. Konstantins Benkovskis, 2008. "Is there a Bank Lending Channel of Monetary Policy in Latvia? Evidence from Bank Level Data," Working Papers 2008/01, Latvijas Banka.
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Citations

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Cited by:
  1. Birendra Bahadur Budha, 2013. "The Bank Lending Channel of Monetary Policy of Nepal: Evidence from Bank Level," NRB Working Paper 17/2013, Nepal Rastra Bank, Research Department.
  2. Xiong , Qiyue, 2013. "The role of the bank lending channel and impacts of stricter capital requirements on the Chinese banking industry," BOFIT Discussion Papers 7/2013, Bank of Finland, Institute for Economies in Transition.
  3. Deryugina, Elena B. & Ponomarenko, Alexey A., 2011. "Identifying structural shocks behind loan supply fluctuations in Russia," BOFIT Discussion Papers 20/2011, Bank of Finland, Institute for Economies in Transition.
  4. Birendra Bahadur Budha, 2013. "The Bank Lending Channel of Monetary Policy in Nepal: Evidence from Bank Level Data," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 25(2), pages 43-65, October.
  5. Ono, Shigeki, 2013. "The effects of foreign exchange and monetary policies in Russia," Economic Systems, Elsevier, vol. 37(4), pages 522-541.
  6. Georgios P. Kouretas & Chris Tsoumas, 2013. "Bank Risk-Taking in CEE Countries," Central European Journal of Economic Modelling and Econometrics, CEJEME, vol. 5(2), pages 103-123, June.
  7. Ekin Ayse Ozsuca & Elif Akbostanci, 2012. "An Empirical Analysis of the Bank Lending Channel in turkey," ERC Working Papers 1205, ERC - Economic Research Center, Middle East Technical University, revised Aug 2012.
  8. repec:nrb:wpaper:nrbwp172013 is not listed on IDEAS
  9. Nicholas Apergis & Stephen M. Miller & Effrosyni Alevizopoulou, 2012. "The Bank Lending Channel and Monetary Policy Rules for European Banks: Further Extensions," Working papers 2012-10, University of Connecticut, Department of Economics.
  10. Sokolov, V., 2012. "The Impact of Central Bank Liquidity Infusions on Banks with High Level of Foreign Borrowing during the Crisis," Journal of the New Economic Association, New Economic Association, vol. 13(1), pages 51-78.
  11. Syden Mishi & Asrat Tsegaye, 2012. "The Role of Banks in Monetary Policy Transmission in South Africa," Working Papers 295, Economic Research Southern Africa.

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