Financial Technologies and the Effectiveness of Monetary Policy Transmission
72 Pages Posted: 27 Jan 2021
Date Written: November 12, 2020
This study investigates whether and how financial technologies (FinTech) influence the effectiveness of monetary policy transmission. We examine regional-level FinTech adoption and use an interacted panel vector autoregression model to explore how the effects of monetary policy shocks change with FinTech adoption. The results indicate that FinTech adoption generally enhances monetary policy transmission to real GDP, bank loans, and housing prices, while the evidence of transmission to consumer prices is mixed. A subcategorical analysis shows that the enhanced effectiveness is the most pronounced in the adoption of FinTech payment, compared to that of insurance and credit.
Keywords: Monetary Policy, Financial Technology, Interacted Panel VAR
JEL Classification: E52, G21, G23, C32
Suggested Citation: Suggested Citation