A Global Lending Channel Unplugged? Does U.S. Monetary Policy Affect Cross‐Border and Affiliate Lending by Global U.S. Banks?
CFS Working Paper No. 511
Posted: 19 Sep 2015 Last revised: 25 Feb 2018
Date Written: January 13, 2018
We examine how U.S. monetary policy affects the international activities of U.S. banks. We access a rarely studied U.S. bank-level regulatory dataset to assess at a quarterly frequency how changes in the U.S. Federal funds rate (before the crisis) and quantitative easing (after the onset of the crisis) affect changes in cross-border claims by U.S. banks across countries, maturities and sectors, and also affect changes in claims by their foreign affiliates. We find robust evidence consistent with the existence of a potent global bank lending channel. In response to changes in U.S. monetary conditions, U.S. banks strongly adjust their cross-border claims in both the pre- and post-crisis period. However, we also find that U.S. bank affiliate claims respond mainly to host country monetary conditions.
Keywords: bank lending channel, monetary transmission, global banking, cross‐country analysis
JEL Classification: E44, E52, F42, G15, G21
Suggested Citation: Suggested Citation