Contents

Bank competition and transmission of monetary policy

Kim, Youngju / Lim, Hyunjoon / Sohn, Wook

Abstract

This study investigates whether the transmission of monetary policy depends on the degree of competition in the banking sector. Applying an interacted panel VAR methodology consisting of a panel of 23 advanced economies, we find that GDP and credit respond less strongly to monetary policy shocks in economies where the bank market is more concentrated. We use the Lerner Index as a measure of banking competition and find evidence - albeit less clear - that monetary policy transmission is stronger when the banking sector is more competitive.

Issue Date
2020-04
Publisher
Chapman & Hall
Keywords Plus
LENDING CHANNEL EVIDENCE
Keywords(Author)
Monetary policy; bank competition; market Concentration; transmission mechanism; interacted panel VAR
DOI
10.1080/13504851.2020.1758615
Journal Title
Applied Economics Letters
ISSN
1350-4851
Language
English
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