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Global financial crisis and its effects on the bank lending channel in the Colombian economy

Author

Listed:
  • David Rodríguez-González

    (Universidad del Valle)

  • Inés María Ulloa-Villegas

    (Universidad del Valle)

Abstract

The objective of this article is to examine the bank lending channel in Colombia for the period 1995-2015, taking into account the repercussions that the 2007 global financial crisis had on it. To this end, the sample is divided into two periods (pre- and post-crisis) and two approaches are used in order to obtain robust results. By using panel data models, it is found that an increase in the reference interest rate of 1% decreases bank lending by 2-3% (regardless of the approach used), which shows the existence of the bank lending channel for the pre-crisis period; likewise, the results found show that this channel has heterogeneous effects on the economy. However, for the post-crisis period, the results lose statistical significance, thus suggesting that the global financial crisis did influence such a channel. These results imply that the Colombian central bank, at the time of making decisions and formulating its monetary policy, should take into account that the final effect on the economy is not the same as that observed before 2007.

Suggested Citation

  • David Rodríguez-González & Inés María Ulloa-Villegas, 2020. "Global financial crisis and its effects on the bank lending channel in the Colombian economy," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 93, pages 261-296, Julio-Dic.
    • Handle: RePEc:lde:journl:y:2020:i:93:p:261-296
    DOI: 10.17533/udea.le.n93a340990
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    References listed on IDEAS

    as
    1. José Gómez-González & Fernando Grosz, 2007. "Evidence of a Bank Lending Channel for Argentina and Colombia," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 44(129), pages 109-126.
    2. Leroy, Aurélien, 2014. "Competition and the bank lending channel in Eurozone," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 296-314.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    central bank; monetary policy; interest rate; global financial crisis; bank lending;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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