The bank lending channel of monetary policy transmission: evidence from an emerging aarket, India
AbstractThis study analyzes the monetary policy transmission in India with the help of bank lending channel hypothesis. We test the shift in loan supply emanating from the changes in the prime policy rate used by the Reserve Bank of India. Using yearly bank balance sheet data from 1996 to 2007, the paper provides evidence of an operational BLC in India. Further, segregating banks by asset size and liquidity, we find that small, illiquid banks are more affected by policy changes, and the effect is more pronounced in areas of non-priority sector lending. Finally, the domestically owned banks are more sensitive to policy rate changes vis-à-vis foreign banks.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37997.
Date of creation: 10 Apr 2012
Date of revision:
Bnak lending Channel India;
Find related papers by JEL classification:
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-17 (All new papers)
- NEP-BAN-2012-04-17 (Banking)
- NEP-CFN-2012-04-17 (Corporate Finance)
- NEP-MON-2012-04-17 (Monetary Economics)
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