The Role of Banks in Monetary Policy Transmission: Empirical Evidence from Russia

Juurikkala, Tuuli; Karas, Alexei; Solanko, Laura

doi:10.2139/ssrn.1430366

The Role of Banks in Monetary Policy Transmission: Empirical Evidence from Russia

BOFIT Discussion Paper No. 8/2009

27 Pages Posted: 8 Jul 2009

See all articles by Tuuli Juurikkala

Alexei Karas

Utrecht University, University College Roosevelt; Utrecht University School of Economics; Centre for Russian International Socio-Political and Economic Studies (CERISE)

Laura Solanko

Bank of Finland - Institute for Economies in Transition (BOFIT)

There are 2 versions of this paper

Date Written: June 30, 2009

Abstract

This paper focuses on the role of the banking sector in monetary policy transmission in an emerging economy with a rapidly developing financial system. Specifically, we exam whether the central bank's monetary policy stance affects banks' lending behaviour. Based on a comprehensive quarterly dataset on all Russian banks from 1Q1999 to 1Q2007, we find evidence for the existence of a bank lending channel in Russia. Contrary to several studies on developed economies, the level of a bank's capitalization matters for the transmission process. Better capitalized banks are less likely to adjust their lending practices following a change in the monetary policy stance.

Keywords: monetary policy transmission, bank lending, Russia

JEL Classification: C23, E44, E52, G21

Suggested Citation: Suggested Citation

Juurikkala, Tuuli and Karas, Alexei and Solanko, Laura, The Role of Banks in Monetary Policy Transmission: Empirical Evidence from Russia (June 30, 2009). BOFIT Discussion Paper No. 8/2009, Available at SSRN: https://ssrn.com/abstract=1430366 or http://dx.doi.org/10.2139/ssrn.1430366