The Effect of Unconventional Monetary Policy on Cross‐Border Bank Loans: Evidence from an Emerging Market

53 Pages Posted: 22 Jul 2019

See all articles by Koray Alper

Koray Alper

Government of the Republic of Turkey - Central Bank of the Republic of Turkey

Fatih Altunok

Central Bank of the Republic of Turkey

Tanju Çapacıoğlu

Central Bank of Turkey

Steven Ongena

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

Date Written: July 17, 2019

Abstract

We analyze the impact of quantitative easing by the Federal Reserve, European Central Bank and Bank of England on cross‐border credit flows. Relying on comprehensive loan‐level data, we find that Fed QE strongly boosts cross‐border credit granted to Turkish banks by banks located in the US, Euro Area and UK, while ECB and BoE QEs work only moderately through banks in the EA and UK, respectively. In general QE works at short maturities across bank locations and loan currencies, more strongly for weaker lenders and borrowers, and may have resulted in maturity mismatches in Turkish banks searching for yield.

Keywords: bank lending channel; bank borrowing channel; monetary transmission; quantitative easing (QE); cross‐border bank loans, micro‐level data, capital requirements, financial de‐globalization

JEL Classification: E44; E52; F42; G15; G21

Suggested Citation

Alper, Koray and Altunok, Fatih and Çapacıoğlu, Tanju and Ongena, Steven R. G., The Effect of Unconventional Monetary Policy on Cross‐Border Bank Loans: Evidence from an Emerging Market (July 17, 2019). Swiss Finance Institute Research Paper No. 19-38. Available at SSRN: https://ssrn.com/abstract=3421459 or http://dx.doi.org/10.2139/ssrn.3421459

Koray Alper

Government of the Republic of Turkey - Central Bank of the Republic of Turkey ( email )

Fatih Altunok

Central Bank of the Republic of Turkey ( email )

Istiklal Cad. 10 Ulus
06100 Ankara, Ankara 06050
Turkey

Tanju Çapacıoğlu

Central Bank of Turkey ( email )

Ankara
Turkey

Steven R. G. Ongena (Contact Author)

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

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