The Effects of Local Banking Market Structure on the Bank-Lending Channel of Monetary Policy
35 Pages Posted: 6 May 2005
Date Written: April 2005
We study the relationship between banking competition and the transmission of monetary policy through the bank lending channel. Using business small loan origination data provided from the Community Reinvestment Act from 1996-2002 in our analysis, we are able to reaffirm the existence of the bank lending channel of monetary transmission. Moreover, we find that the impact of monetary policy on loan originations is weaker in more concentrated markets.
Keywords: Competition, monetary policy, lending channel
JEL Classification: E44, E52, G32, L1
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