Abstract

http://ssrn.com/abstract=1885297
 
 

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The Bank Lending Channel Revisited


Piti Disyatat


Puey Ungphakorn Institute for Economic Research, Bank of Thailand

July, 14 2011

Journal of Money, Credit and Banking, Vol. 43, Issue 4, pp. 711-734, June 2011

Abstract:     
A central proposition in research on the role of banks in the transmission mechanism is that monetary policy imparts a direct impact on deposits and that deposits act as the driving force of bank lending. This paper argues that the emphasis on policy-induced changes in deposits is misplaced. A reformulation of the bank lending channel is proposed that works primarily through the impact of monetary policy on banks’ balance sheet strength and risk perception. Such a recasting implies, contrary to conventional wisdom, that greater reliance on market-based funding enhances the importance of the channel.

Keywords: monetary policy, bank lending channel, bank capital, credit, money

JEL Classification: E40, E44, E51, E52, E58


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Date posted: July 16, 2011  

Suggested Citation

Disyatat, Piti, The Bank Lending Channel Revisited (July, 14 2011). Journal of Money, Credit and Banking, Vol. 43, Issue 4, pp. 711-734, June 2011 . Available at SSRN: http://ssrn.com/abstract=1885297

Contact Information

Piti Disyatat (Contact Author)
Puey Ungphakorn Institute for Economic Research, Bank of Thailand ( email )
273 Samsen Road
Bangkhunphrom, Bangkok 10200
Thailand
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