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Asymmetric financial integration bank ownership and monetary policy in emerging economies

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  • Piotr Denderski
  • Wojciech Paczos

Abstract

Over the last 30 years cross-country financial integration has increased significantly. In this process many banks in developing and transition economies became foreign-owned. Using a panel data on banks in eleven Central and Eastern Europe economies we provide new evidence that foreign-owned banks react differently to monetary policy changes than domestic-owned banks not only during financial crises but also in normal times. We embed bank heterogeneity in a stylized DSGE model featuring monopolistic competition in the banking sector and show that such a pattern may be driven not only by a facilitated access to internal market within the financial conglomerate they belong to but also by their competitive advantages. While the first mechanism leads to a decrease of the responsiveness of the banking sector to the monetary policy, the second mechanism does not.

Suggested Citation

  • Piotr Denderski & Wojciech Paczos, 2015. "Asymmetric financial integration bank ownership and monetary policy in emerging economies," NBP Working Papers 218, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:218
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    References listed on IDEAS

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    2. Toni Beutler & Matthias Gubler & Simona Hauri & Sylvia Kaufmann, 2020. "Bank lending in Switzerland: Capturing cross-sectional heterogeneity and asymmetry over time," Working Papers 20.04, Swiss National Bank, Study Center Gerzensee.
    3. Haddou, Samira, 2022. "International financial stress spillovers to bank lending: Do internal characteristics matter?," International Review of Financial Analysis, Elsevier, vol. 83(C).

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    More about this item

    Keywords

    banks; bank ownership; bank lending channel; monetary policy;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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