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

See all articles by Judit Temesvary

Judit Temesvary

Federal Reserve Board

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

Ann L. Owen

Hamilton College - Economics Department

Multiple version iconThere are 2 versions of this paper

Date Written: January 13, 2018

Abstract

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

Temesvary, Judit and Ongena, Steven R. G. and Owen, Ann L., A Global Lending Channel Unplugged? Does U.S. Monetary Policy Affect Cross‐Border and Affiliate Lending by Global U.S. Banks? (January 13, 2018). CFS Working Paper No. 511. Available at SSRN: https://ssrn.com/abstract=2662457 or http://dx.doi.org/10.2139/ssrn.2662457

Judit Temesvary (Contact Author)

Federal Reserve Board ( email )

1801 K Street
Washington, DC 20006
United States
202-452-3759 (Phone)

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Ann L. Owen

Hamilton College - Economics Department ( email )

198 College Hill Road
Clinton, NY 13323
United States
315-859-4419 (Phone)
303-859-4477 (Fax)

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