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Financial institutions' business models and the global transmission of monetary policy

Author

Listed:
  • Isabel Argimón

    () (Banco de España)

  • Clemens Bonner

    () (De Nederlandsche Bank and Vu University Amsterdam)

  • Ricardo Correa

    () (Federal Reserve Board)

  • Patty Duijm

    () (De Nederlandsche Bank)

  • Jon Frost

    () (De Nederlandsche Bank, Vu University Amsterdam and Financial Stability Board)

  • Jakob de Haan

    () (De Nederlandsche Bank, University of Groningen and CESifo)

  • Leo de Haan

    () (De Nederlandsche Bank)

  • Viktors Stebunovs

    () (Federal Reserve Board)

Abstract

Global financial institutions play an important role in channeling funds across countries and, therefore, transmitting monetary policy from one country to another. In this paper, we study whether such international transmission depends on financial institutions’ business models. In particular, we use Dutch, Spanish, and U.S. confidential supervisory data to test whether the transmission operates differently through banks, insurance companies, and pension funds. We find marked heterogeneity in the transmission of monetary policy across the three types of institutions, across the three banking systems, and across banks within each banking system. While insurance companies and pension funds do not transmit homecountry monetary policy internationally, banks do, with the direction and strength of the transmission determined by their business models and balance sheet characteristics.

Suggested Citation

  • Isabel Argimón & Clemens Bonner & Ricardo Correa & Patty Duijm & Jon Frost & Jakob de Haan & Leo de Haan & Viktors Stebunovs, 2018. "Financial institutions' business models and the global transmission of monetary policy," Working Papers 1815, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:1815
    as

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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Buch, Claudia M. & Bussierè, Matthieu & Goldberg, Linda & Hills, Robert, 2019. "The international transmission of monetary policy," Journal of International Money and Finance, Elsevier, vol. 91(C), pages 29-48.
    2. Albrizio, Silvia & Choi, Sangyup & Furceri, Davide & Yoon, Chansik, 2020. "International bank lending channel of monetary policy," Journal of International Money and Finance, Elsevier, vol. 102(C).
    3. Konstantin Styrin, 2018. "A Multi-Country Study of Cross-Border Transmission of Monetary Policy by IBRN," Russian Journal of Money and Finance, Bank of Russia, vol. 77(2), pages 81-94, June.
    4. Paul Ovidiu Handro, 2019. "Business Models and Banking Regulation Are Going Forward," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 168-178.
    5. Isabel Argimón, 2018. "The relevance of currency-denomination for the cross-border effects of monetary policy," Working Papers 1827, Banco de España;Working Papers Homepage.
    6. Jon Frost & Patty Duijm & Clemens Bonner & Leo Haan & Jakob Haan, 2019. "International Lending of Dutch Insurers and Pension Funds: the Impact of ECB Monetary Policy and Prudential Policies in the Host Country," Open Economies Review, Springer, vol. 30(3), pages 445-456, July.

    More about this item

    Keywords

    monetary policy transmission; global financial institutions; bank lending channel; portfolio channel; business models.;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G2 - Financial Economics - - Financial Institutions and Services

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