| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 963157 | Journal of International Financial Markets, Institutions and Money | 2014 | 22 Pages |
Abstract
Based on a panel data set for 114 South Asian commercial banks, we find that off-balance sheet banking reduces the effectiveness of the bank lending channel of monetary transmission. That is, banks with high exposure to off-balance sheet activities are able to insulate their loan supply against a monetary policy shock thus creating a buffering effect on monetary transmission. We also suggest that these effects are substantial for small, highly-liquid and well-capitalised banks. The buffering effect of off-balance sheet banking on monetary transmission raises important policy issues, particularly with regard to the effectiveness of monetary policy and the definitions of monetary aggregates.
Related Topics
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Authors
Anil Perera, Deborah Ralston, J. Wickramanayake,