Financial Institutions' Business Models and the Global Transmission of Monetary Policy

39 Pages Posted: 7 Jun 2018

See all articles by Isabel Argimón

Isabel Argimón

Banco de España

Clemens Bonner

De Nederlandsche Bank; Tilburg University

Ricardo Correa

Board of Governors of the Federal Reserve System

Patty Duijm

De Nederlandsche Bank

Jon Frost

Bank for International Settlements (BIS) - Financial Stability Board (FSB); De Nederlandsche Bank

Jakob de Haan

University of Groningen - Faculty of Economics and Business; De Nederlandsche Bank; CESifo (Center for Economic Studies and Ifo Institute)

Leo de Haan

De Nederlandsche Bank

Viktors Stebunovs

Board of Governors of the Federal Reserve System

Date Written: June 6, 2018

Abstract

Global financial institutions play an important role in channeling funds across countries and, therefore, transmitting monetary policy from one country to another. In this paper, we study whether such international transmission depends on financial institutions’ business models. In particular, we use Dutch, Spanish, and U.S. confidential supervisory data to test whether the transmission operates differently through banks, insurance companies, and pension funds. We find marked heterogeneity in the transmission of monetary policy across the three types of institutions, across the three banking systems, and across banks within each banking system. While insurance companies and pension funds do not transmit homecountry monetary policy internationally, banks do, with the direction and strength of the transmission determined by their business models and balance sheet characteristics.

Keywords: monetary policy transmission, global financial institutions, bank lending channel, portfolio channel, business models.

JEL Classification: E5, F3, F4, G2.

Suggested Citation

Argimón, Isabel and Bonner, Clemens and Correa, Ricardo and Duijm, Patty and Frost, Jon and de Haan, Jakob and de Haan, Leo and Stebunovs, Viktors, Financial Institutions' Business Models and the Global Transmission of Monetary Policy (June 6, 2018). Banco de Espana Working Paper No. 1815. Available at SSRN: https://ssrn.com/abstract=3191930 or http://dx.doi.org/10.2139/ssrn.3191930

Isabel Argimón (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

Clemens Bonner

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Ricardo Correa

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Patty Duijm

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Jon Frost

Bank for International Settlements (BIS) - Financial Stability Board (FSB) ( email )

Basel
Switzerland

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Jakob de Haan

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Leo de Haan

De Nederlandsche Bank ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands
+31 20 5243539 (Phone)
+31 20 5242514 (Fax)

Viktors Stebunovs

Board of Governors of the Federal Reserve System ( email )

20th and C Streets, NW
Washington, DC 20551
United States

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