Financial Technologies and the Effectiveness of Monetary Policy Transmission

72 Pages Posted: 27 Jan 2021

See all articles by Iftekhar Hasan

Iftekhar Hasan

Fordham University ; Bank of Finland; University of Sydney

Boreum Kwak

Martin Luther University of Halle-Wittenberg; Halle Institute for Economic Research

Xiang Li

Halle Institute for Economic Research

Date Written: November 12, 2020

Abstract

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

Hasan, Iftekhar and Kwak, Boreum and Li, Xiang, Financial Technologies and the Effectiveness of Monetary Policy Transmission (November 12, 2020). Available at SSRN: https://ssrn.com/abstract=3743203 or http://dx.doi.org/10.2139/ssrn.3743203

Iftekhar Hasan

Fordham University ( email )

45 COLUMBUS AVENUE
GBA-5TH FLOOR
NEW YORK, NY 10023
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

University of Sydney ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

Boreum Kwak

Martin Luther University of Halle-Wittenberg

Universitätsplatz 10
Halle, Saxony-Anhalt 06108
Germany

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
Halle, 06108
Germany

Xiang Li (Contact Author)

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

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