Identifying the bank lending channel in a small open economy
AbstractThis paper attempts to provide an alternative method of identifying the bank lending channel in a small open economy at the aggregate level, with emphasis on the degree of the asset substitutability. By testing the long-run relationships underlying a general equilibrium model, our results show that, in the Canadian economy, the bank lending channel plays a role during the financial regulatory period (1970:Q3-1988:Q1) but becomes ineffective during the deregulated period (1988:Q2-2006:Q2). Our findings confirm the prediction of the theory that change in Canadian financial structure matters for change in its transmission of monetary policy.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 33 (2013)
Issue (Month): 2 ()
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Bank lending channel; Monetary policy; Small open economy;
Find related papers by JEL classification:
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
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