IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0164338.html
   My bibliography  Save this article

Monetary Expansion and the Banking Lending Channel

Author

Listed:
  • Benjamin Miranda Tabak
  • Tito Belchior Silva Moreira
  • Dimas Mateus Fazio
  • André Luiz Cordeiro Cavalcanti
  • George Henrrique de Moura Cunha

Abstract

This paper examines the bank lending channel, which considers how monetary authority actions affect the variation of loans. We focus on the BRICS (Brazil, Russia, India, China and South Africa) totalizing 1254 banks from five countries in the period 2000–2012 (totalizing 13 years). The empirical results show that the effect of money supply growth on the growth of loans is non-linear and inverted U-shaped. In this context, our results show empirical evidence expansionary monetary policies do not increase the propensity of economic agents to systematically take greater risks on the market. After a certain level of money stock, increases in the money supply do not lead to increased negotiated credit.

Suggested Citation

  • Benjamin Miranda Tabak & Tito Belchior Silva Moreira & Dimas Mateus Fazio & André Luiz Cordeiro Cavalcanti & George Henrrique de Moura Cunha, 2016. "Monetary Expansion and the Banking Lending Channel," PLOS ONE, Public Library of Science, vol. 11(10), pages 1-11, October.
    • Handle: RePEc:plo:pone00:0164338
    DOI: 10.1371/journal.pone.0164338
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0164338
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0164338&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0164338?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jeremy C. Stein, 2012. "Monetary Policy as Financial Stability Regulation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 57-95.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Lim, Jamus Jerome & Mohapatra, Sanket, 2016. "Quantitative easing and the post-crisis surge in financial flows to developing countries," Journal of International Money and Finance, Elsevier, vol. 68(C), pages 331-357.
    4. Donald L. Kohn, 2009. "Monetary Policy in the Financial Crisis," Book Chapters, in: John D. Ciorciari & John Taylor (ed.), The Road Ahead for the Fed, chapter 4, Hoover Institution, Stanford University.
    5. Bruno, Valentina & Shin, Hyun Song, 2015. "Capital flows and the risk-taking channel of monetary policy," Journal of Monetary Economics, Elsevier, vol. 71(C), pages 119-132.
    6. Piti Disyatat, 2011. "The Bank Lending Channel Revisited," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(4), pages 711-734, June.
    7. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    8. Apostolos Serletis & Khandokar Istiak & Periklis Gogas, 2013. "Interest Rates, Leverage, and Money," Open Economies Review, Springer, vol. 24(1), pages 51-78, February.
    9. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    10. James D. Hamilton & Jing Cynthia Wu, 2012. "The Effectiveness of Alternative Monetary Policy Tools in a Zero Lower Bound Environment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(s1), pages 3-46, February.
    11. Jeremy C. Stein & Anil K. Kashyap, 2000. "What Do a Million Observations on Banks Say about the Transmission of Monetary Policy?," American Economic Review, American Economic Association, vol. 90(3), pages 407-428, June.
    12. Bernanke, Ben S & Blinder, Alan S, 1988. "Credit, Money, and Aggregate Demand," American Economic Review, American Economic Association, vol. 78(2), pages 435-439, May.
    13. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Takáts, Előd & Temesvary, Judit, 2020. "The currency dimension of the bank lending channel in international monetary transmission," Journal of International Economics, Elsevier, vol. 125(C).
    2. Beutler, Toni & Bichsel, Robert & Bruhin, Adrian & Danton, Jayson, 2020. "The impact of interest rate risk on bank lending," Journal of Banking & Finance, Elsevier, vol. 115(C).
    3. Ramos-Tallada, Julio, 2015. "Bank risks, monetary shocks and the credit channel in Brazil: Identification and evidence from panel data," Journal of International Money and Finance, Elsevier, vol. 55(C), pages 135-161.
    4. Rahooja, Sabbah & Ali, Asif & Ahmed, Jameel & Hussain, Fayyaz & Rifat, Rizwana, 2014. "Monetary Policy and Bank Hetrogeneity: Effectiveness of Bank Lending Channel in Pakistan," MPRA Paper 60473, University Library of Munich, Germany.
    5. Moses M. Sichei, 2005. "Bank-Lending Channel in South Africa: Bank-Level Dynamic Panel Date Analysis," Working Papers 200510, University of Pretoria, Department of Economics.
    6. Abdul Karim, Zulkefly & Wan Ngah, Wan Azman Saini & Abdul Karim, Bakri, 2010. "Bank lending channel of monetary policy: dynamic panel data evidence from Malaysia," MPRA Paper 26157, University Library of Munich, Germany.
    7. Thai V. H. Nguyen & Agyenim Boateng & Tra Thi Thu Pham, 2019. "Involuntary excess reserve and heterogeneous transmission of policy rates to bank lending rates in China," Empirical Economics, Springer, vol. 57(3), pages 1023-1044, September.
    8. Nguyen, Vu Hong Thai & Boateng, Agyenim, 2013. "The impact of excess reserves beyond precautionary levels on Bank Lending Channels in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 358-377.
    9. Brei, Michael & Gambacorta, Leonardo & von Peter, Goetz, 2013. "Rescue packages and bank lending," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 490-505.
    10. repec:zbw:bofitp:2013_007 is not listed on IDEAS
    11. Altunbas, Yener & Gambacorta, Leonardo & Marques-Ibanez, David, 2009. "Securitisation and the bank lending channel," European Economic Review, Elsevier, vol. 53(8), pages 996-1009, November.
    12. D'Avino, Carmela, 2018. "Quantitative easing, global banks and the international bank lending channel," Economic Modelling, Elsevier, vol. 71(C), pages 234-246.
    13. Yang, Jun & Shao, Hanhua, 2016. "Impact of bank competition on the bank lending channel of monetary transmission: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 468-481.
    14. Bang Nam Jeon & Maria Pia Olivero & Ji Wu, 2013. "Multinational Banking and Financial Contagion: Evidence from Foreign Bank Subsidiaries," Working Papers 052013, Hong Kong Institute for Monetary Research.
    15. Christian Merkl & Stephanie Stolz, 2009. "Banks' regulatory buffers, liquidity networks and monetary policy transmission," Applied Economics, Taylor & Francis Journals, vol. 41(16), pages 2013-2024.
    16. I. Arnold & C.J.M. Kool & K. Raabe, 2011. "Industry Effects of Bank Lending in Germany," Working Papers 11-21, Utrecht School of Economics.
    17. Rosen Azad Chowdhury & Bill Russell, 2018. "The difference, system and ‘Double‐D’ GMM panel estimators in the presence of structural breaks," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(3), pages 271-292, July.
    18. Erdinç, Didar, 2013. "Monetary Transmission and Bank Lending Channel under the Currency Board: The Case of Bulgaria, 1999-2010," MPRA Paper 111539, University Library of Munich, Germany.
    19. Grandi, Pietro, 2019. "Sovereign stress and heterogeneous monetary transmission to bank lending in the euro area," European Economic Review, Elsevier, vol. 119(C), pages 251-273.
    20. Guillaume Arnould & Giuseppe Avignone & Cosimo Pancaro & Dawid Żochowski, 2022. "Bank funding costs and solvency," The European Journal of Finance, Taylor & Francis Journals, vol. 28(10), pages 931-963, July.
    21. Jeon, Bang Nam & Olivero, María Pía & Wu, Ji, 2013. "Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 952-972.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0164338. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.