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The effects of monetary policy on the composition of bank deposits and on loan supply

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  • Mattia Girotti

Abstract

Using US bank level data, this Rue de la Banque shows that when monetary policy tightens, banks with a larger proportion of zero-interest deposits on their balance sheet experience larger increases in their interest-bearing deposit rate. A larger increase in the interest-bearing deposit rate then corresponds to a larger decrease in their loan supply. Therefore, the funding composition of the banking system plays a role in the transmission of monetary policy: the bank lending channel is still at play.

Suggested Citation

  • Mattia Girotti, 2018. "The effects of monetary policy on the composition of bank deposits and on loan supply," Rue de la Banque, Banque de France, issue 59, march.
    • Handle: RePEc:bfr:rueban:2018:59
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    References listed on IDEAS

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    1. Allan H. Meltzer, 1963. "The Demand for Money: The Evidence from the Time Series," Journal of Political Economy, University of Chicago Press, vol. 71(3), pages 219-219.
    2. Mattia Girotti, 2021. "How monetary policy changes bank liability structure and funding cost," Oxford Economic Papers, Oxford University Press, vol. 73(1), pages 49-75.
    3. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    4. Anil K. Kashyap & Jeremy C. Stein, 1994. "Monetary Policy and Bank Lending," NBER Chapters, in: Monetary Policy, pages 221-261, National Bureau of Economic Research, Inc.
    5. 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.
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    Cited by:

    1. Tsang, Andrew, 2021. "Uncovering Heterogeneous Regional Impacts of Chinese Monetary Policy," WiSo-HH Working Paper Series 62, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.

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