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  5. Do highly liquid banks insulate their lending behavior?
 
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Do highly liquid banks insulate their lending behavior?

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Download gearywp201709.pdf1.15 MB
Author(s)
Kapoor, Supriya 
Uri
http://hdl.handle.net/10197/9400
Date Issued
09 September 2017
Date Available
21T12:51:06Z May 2018
Abstract
The role of banks in the transmission of monetary policy has been of significance lately. We aim to analyse the bank lending behaviour during changes in monetary policy. We test for loan supply shifts by segregating banks based on their liquidity along with size and capital ratio. This paper employs uninsured, non-reservable liabilities such as time deposits and investigates whether banks are able to insulate themselves during a monetary policy change. We find that the loan supply shock can be neutralized post monetary policy changes. Furthermore, the less liquid and small banks are unable to carry out such operations and are more affected by monetary shocks. This has important implication in the working of commercial banks and effects of monetary policy.
Type of Material
Working Paper
Publisher
University College Dublin. Geary Institute
Series
UCD Geary Institute Discussion Paper Series
2017/09
Keywords
  • Bank lending channel

  • Monetary policy

  • Liquidity

  • Time deposits

Classification
E52
G21
E50
Web versions
http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201709.pdf
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
https://creativecommons.org/licenses/by-nc-nd/3.0/ie/
Owning collection
Geary Institute Working Papers
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