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How do bank characteristics affect the bank liquidity creation channel of monetary policy?

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  • Dang, Van Dan
  • Dang, Van Cuong

Abstract

The paper examines how monetary policy affects bank liquidity creation, particularly highlighting the asymmetric effects induced by bank-specific characteristics. Using a sample of Vietnamese commercial banks during 2008–2018, we confirm the existence of the bank liquidity creation channel of monetary policy. We further document the conditionality on this new banking channel that liquidity creation rises more among smaller and more liquid banks amid monetary policy easing. These findings call for the focus of regulators on monitoring monetary policy and bank characteristics to shape the functioning of the bank liquidity creation channel.

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  • Dang, Van Dan & Dang, Van Cuong, 2021. "How do bank characteristics affect the bank liquidity creation channel of monetary policy?," Finance Research Letters, Elsevier, vol. 43(C).
    • Handle: RePEc:eee:finlet:v:43:y:2021:i:c:s1544612321000659
    DOI: 10.1016/j.frl.2021.101984
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    References listed on IDEAS

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    Cited by:

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    3. Huan Huu Nguyen & Thanh Phuc Nguyen & Anh Nguyen Tram Tran, 2022. "Impacts of monetary policy transmission on bank performance and risk in the Vietnamese market: Does the Covid-19 pandemic matter?," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2094591-209, December.
    4. Niu, Jijun, 2022. "Labor market conditions and bank liquidity creation," Economics Letters, Elsevier, vol. 218(C).
    5. Niu, Jijun, 2022. "Is bank liquidity creation procyclical? Evidence from the US," Finance Research Letters, Elsevier, vol. 47(PA).
    6. Gupta, Juhi & Kashiramka, Smita & Ly, Kim Cuong & Pham, Ha, 2023. "The interrelationship between bank capital and liquidity creation: A non-linear perspective from the Asia-Pacific region," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 793-820.

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    More about this item

    Keywords

    Bank characteristics; Bank lending channel; Liquidity creation; Monetary policy; JEL classification: E52; E58; G21;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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