Foreign Banks and International Transmission of Monetary Policy : Evidence from the Syndicated Loan Market

Demirguc-Kunt, Asli ; Horvath, Balint L. ; Huizinga, Harry

World Bank, Washington, DC

关键词: cross-border lending;    monetary transmission;    banking FDI;    bank regulation;    capital controls;   

DOI  :  10.1596/1813-9450-7937
RP-ID  :  WPS7937

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper uses loan-level data from 124countries over 1995–2015 to examine the transmission ofmonetary policy through the cross-border syndicated loanmarket. The results show that the expansion of monetarypolicy increases cross-border credit supply especially toweaker firms. However, greater foreign bank presence in theborrower country appears to reduce the potentiallydestabilizing impact of lower policy interest rates oncross-border lending, as it attenuates increases in loanvolume and maturity while magnifying increases incollateralization and covenant use. The mitigating effect offoreign banking presence in the borrowing country on thetransmission of monetary policy is robust to controlling forborrower-country economic and financial development, and arange of borrower and lender country policies andinstitutions, including the strength of bank regulation andsupervision, exchange rate flexibility, and restrictions oncapital flows. The findings qualify the characterization ofinternational banks as sources of credit instability, andsuggest that foreign bank entry can improve the stability ofcross-border credit in the face of international monetarypolicy shocks.