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Does bank efficiency affect the bank lending channel in China?

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  • Fungáčová, Zuzana
  • Kerola, Eeva
  • Weill, Laurent

Abstract

This work examines the impact of bank efficiency on the bank lending channel in China. Using a sample of 148 Chinese banks over the period 2006–2017, we investigate how the reaction of the loan supply to monetary policy actions depends on a bank's efficiency. We find limited evidence that bank efficiency hampers the effectiveness of monetary policy transmission. In addition, bank efficiency does favor the transmission of monetary policy for banks with low loan-to-deposit ratios. These results suggest that bank efficiency may influence the bank lending channel in certain cases.

Suggested Citation

  • Fungáčová, Zuzana & Kerola, Eeva & Weill, Laurent, 2023. "Does bank efficiency affect the bank lending channel in China?," Emerging Markets Review, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:ememar:v:55:y:2023:i:c:s1566014122000814
    DOI: 10.1016/j.ememar.2022.100964
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    More about this item

    Keywords

    Chinese banks; Monetary policy; Bank efficiency; Bank lending channel;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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