Bank globalization and the balance sheet channel of monetary transmission
AbstractThe literature typically finds that the development of financial markets has decreased the ability of central banks to affect the real economy. This paper shows that this negative relationship does not hold for the balance sheet channel of monetary transmission and bank globalization -- one aspect of financial development. The reason is that global banks are more sensitive to borrowers' leverage. By affecting this leverage, monetary policy has a larger impact on global banks' lending and aggregate economic activity. We use bank-level, Call Report data to obtain this disparity between more and less global banks. We then use this data in the estimation of a general equilibrium model and find that the balance sheet channel of monetary policy operates mainly through more global banks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2010-20.
Length: 36 pages
Date of creation: Jul 2010
Date of revision:
Contact details of provider:
Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
More information through EDIRC
balance sheet channel; bank globalization; financial accelerator;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-08-06 (Accounting & Auditing)
- NEP-ALL-2010-08-06 (All new papers)
- NEP-BAN-2010-08-06 (Banking)
- NEP-CBA-2010-08-06 (Central Banking)
- NEP-DGE-2010-08-06 (Dynamic General Equilibrium)
- NEP-MAC-2010-08-06 (Macroeconomics)
- NEP-MON-2010-08-06 (Monetary Economics)
- NEP-OPM-2010-08-06 (Open Economy Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Claudia M. Buch, 2001.
"Distance and International Banking,"
Kiel Working Papers
1043, Kiel Institute for the World Economy.
- Sami Alpanda & Adrian Peralta-Alva, 2008.
"Oil crisis, energy-saving technological change and the stock market crash of 1973-74,"
2008-019, Federal Reserve Bank of St. Louis.
- Sami Alpanda & Adrian Peralta-Alva, 2010. "Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(4), pages 824-842, October.
- Adrian Peralta-Alva & Sami Alpanda, 2004. "Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74," Macroeconomics 0405019, EconWPA.
- Alpanda, Sami & Peralta-Alva, Adrian, 2007. "Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74," MPRA Paper 5896, University Library of Munich, Germany.
- Sami Alpanda & Adrian Peralta-Alva, 2003. "Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74," Working Papers 0604, University of Miami, Department of Economics, revised Dec 2006.
- Nicola Cetorelli & Linda S. Goldberg, 2008.
"Banking Globalization, Monetary Transmission, and the Lending Channel,"
NBER Working Papers
14101, National Bureau of Economic Research, Inc.
- Cetorelli, Nicola & Goldberg, Linda S., 2008. "Banking globalization, monetary transmission and the lending channel," Discussion Paper Series 1: Economic Studies 2008,21, Deutsche Bundesbank, Research Centre.
- Nicola Cetorelli & Linda S. Goldberg, 2008. "Banking globalization, monetary transmission, and the lending channel," Staff Reports 333, Federal Reserve Bank of New York.
- Jeremy C. Stein & Anil K. Kashyap, 2000. "What Do a Million Observations on Banks Say about the Transmission of Monetary Policy?," American Economic Review, American Economic Association, vol. 90(3), pages 407-428, June.
- Gawande, Kishore, 1997. "Generated regressors in linear and nonlinear models," Economics Letters, Elsevier, vol. 54(2), pages 119-126, February.
- Ashcraft, Adam B. & Campello, Murillo, 2007. "Firm balance sheets and monetary policy transmission," Journal of Monetary Economics, Elsevier, vol. 54(6), pages 1515-1528, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kasey Kniffin).
If references are entirely missing, you can add them using this form.