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Impact of bank competition on the bank lending channel of monetary transmission: Evidence from China

Listed author(s):
  • Yang, Jun
  • Shao, Hanhua
Registered author(s):

    This paper examines how competition influences the loan supply reaction of banks to monetary policy through the bank lending channel and test whether this reaction differs in heterogeneous bank types. Based on a sample of Chinese banking micro-data over the period from 2003 to 2014, we find that increased competition in China's banking sector reduces the effectiveness of monetary policy transmission through the bank lending channel, and this impact is strongest for city-commercial banks, highly-liquid and well-capitalized banks. These results shed light on the need for the central bank to monitor the development of competition and market structure to improve the effectiveness of monetary transmission.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1059056016000113
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    Article provided by Elsevier in its journal International Review of Economics & Finance.

    Volume (Year): 43 (2016)
    Issue (Month): C ()
    Pages: 468-481

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    Handle: RePEc:eee:reveco:v:43:y:2016:i:c:p:468-481
    DOI: 10.1016/j.iref.2015.12.008
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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