The effect of bank ownership and deposit insurance on monetary policy transmission
AbstractIn this paper we develop a theoretical model with a representative bank whose ownership is shared between state and private sector. The bank faces a risk of failure and provides private and public explicit deposit insurance. Banks owned to a larger extent by the government are more able to counteract a restrictive monetary policy because of their capacity to raise additional volume of deposits. Therefore, the greater the state's share in the bank ownership, the less the impact of a monetary tightening on the level of loan supply.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Banking & Finance.
Volume (Year): 34 (2010)
Issue (Month): 12 (December)
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Web page: http://www.elsevier.com/locate/jbf
State-owned banks Deposit insurance Monetary policy transmission;
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