IDEAS home Printed from https://ideas.repec.org/p/cca/wpaper/436.html
   My bibliography  Save this paper

Financial Sector Interconnectedness and Monetary Policy Transmission

Author

Listed:
  • Alessandro Barattieri
  • Maya Eden
  • Dalibor Stevanovic

Abstract

We document that, in the U.S., the share of financial assets that have a direct counterpart in the financial system has increased by between 15.8 and 21.8 percentage points during the period 1952-2011. Using a SVAR and a FAVAR, we find that, during the same period, the impulse responses of several real and financial variables to monetary policy shocks dampened. To relate these two trends, we present a stylized model that illustrates how interbank trading can reduce the sensitivity of lending to the entrepreneur's net worth, thus affecting the transmission mechanism of monetary policy through the credit channel.

Suggested Citation

  • Alessandro Barattieri & Maya Eden & Dalibor Stevanovic, 2015. "Financial Sector Interconnectedness and Monetary Policy Transmission," Carlo Alberto Notebooks 436, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:436
    as

    Download full text from publisher

    File URL: https://www.carloalberto.org/wp-content/uploads/2018/11/no.436.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel Carvalho, 2022. "Intra-financial assets and the intermediation role of the financial sector," Trinity Economics Papers tep0622, Trinity College Dublin, Department of Economics.
    2. Barattieri, Alessandro & Moretti, Laura & Quadrini, Vincenzo, 2016. "Banks Interconnectivity and Leverage," Research Technical Papers 07/RT/16, Central Bank of Ireland.
    3. Barattieri, Alessandro & Moretti, Laura & Quadrini, Vincenzo, 2021. "Banks funding, leverage, and investment," Journal of Financial Economics, Elsevier, vol. 141(1), pages 148-171.
    4. Saibal Ghosh, 2022. "Does financial interconnectedness affect monetary transmission? Evidence from India," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 15(3), pages 273-300, September.

    More about this item

    Keywords

    Financial sector interconnectedness; monetary policy transmission mechanism;

    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
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cca:wpaper:436. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Giovanni Bert (email available below). General contact details of provider: https://edirc.repec.org/data/fccaait.html .

    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.