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A Global Lending Channel Unplugged? Does U.S. Monetary Policy Affect Cross-border and Affiliate Lending by Global U.S. Banks?

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  • Temesvary, Judit
  • Ongena, Steven
  • Owen, Ann L.

Abstract

We examine how U.S. monetary policy affects the international activities of U.S. Banks. We access a rarely studied US bank-level dataset to assess at a quarterly frequency how changes in the U.S. Federal funds rate (before the crisis) and quantitative easing (after the onset of the crisis) affects changes in cross-border claims by U.S. banks across countries, maturities and sectors, and also affects changes in claims by their foreign affiliates. We find robust evidence consistent with the existence of a potent global bank lending channel. In response to changes in U.S. monetary conditions, U.S. banks strongly adjust their cross-border claims in both the pre and post-crisis period. However, we also find that U.S. bank affiliate claims respond mainly to host country monetary conditions.

Suggested Citation

  • Temesvary, Judit & Ongena, Steven & Owen, Ann L., 2015. "A Global Lending Channel Unplugged? Does U.S. Monetary Policy Affect Cross-border and Affiliate Lending by Global U.S. Banks?," MPRA Paper 65913, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:65913
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Seung Jung Lee & Lucy Qian Liu & Viktors Stebunovs, 2017. "Risk Taking and Interest Rates : Evidence from Decades in the Global Syndicated Loan Market," International Finance Discussion Papers 1188, Board of Governors of the Federal Reserve System (U.S.).
    2. Gräb, Johannes & Żochowski, Dawid, 2017. "The international bank lending channel of unconventional monetary policy," Working Paper Series 2109, European Central Bank.
    3. Elod Takats & Judit Temesvary, 2016. "The currency dimension of the bank lending channel in international monetary transmission," BIS Working Papers 600, Bank for International Settlements.
    4. 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.
    5. Demirguc-Kunt, Asli & Horvath, Balint & Huizinga, Harry, 2017. "Foreign Banks and International Transmission of Monetary Policy: Evidence from the Syndicated Loan Market," CEPR Discussion Papers 11796, C.E.P.R. Discussion Papers.
    6. Claudia M. Buch & Matthieu Bussiere & Linda Goldberg & Robert Hills, 2018. "The International Transmission of Monetary Policy," NBER Working Papers 24454, National Bureau of Economic Research, Inc.
    7. Jin Cao & Valeriya Dinger, 2018. "Financial Globalization and Bank Lending: The Limits of Domestic Monetary Policy?," CESifo Working Paper Series 6900, CESifo Group Munich.
    8. Hills, Robert & Ho, Kelvin & Reinhardt, Dennis & Sowerbutts, Rhiannon & Wong, Eric & Wu, Gabriel, 2017. "The international transmission of monetary policy through financial centres: evidence from the United Kingdom and Hong Kong," Bank of England working papers 682, Bank of England.
    9. Simone Auer & Christian Friedrich & Maja Ganarin & Teodora Paligorova & Pascal Towbin, 2018. "International Monetary Policy Transmission through Banks in Small Open Economies," Working Papers 2018-04, Swiss National Bank.
    10. Steven Ongena & Ibolya Schindele & Dzsamila Vonnák, 2017. "In Lands of Foreign Currency Credit, Bank Lending Channels Run Through?," MNB Working Papers 2017/6, Magyar Nemzeti Bank (Central Bank of Hungary).

    More about this item

    Keywords

    bank lending channel; monetary transmission; global banking; cross-country analysis;

    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
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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