Monetary Expansion and the Banking Lending Channel

11 Pages Posted: 13 Oct 2016

See all articles by Benjamin M. Tabak

Benjamin M. Tabak

FGV/EPPG

Tito Belchior Silva Moreira

Catholic University of Brasilia

Dimas Fazio

National University of Singapore (NUS) - Department of Finance

Andre Luiz Cavalcanti

Catholic University of Brazil (UCB)

George Henrique Cunha

Catholic University of Brazil (UCB)

Date Written: October 11, 2016

Abstract

This paper examines the bank lending channel, which considers how monetary authority actions affect the variation of loans. We focus on the BRICS (Brazil, Russia, India, China and South Africa) totalizing 1254 banks from five countries in the period 2000–2012 (totalizing 13 years). The empirical results show that the effect of money supply growth on the growth of loans is non-linear and inverted U-shaped. In this context, our results show empirical evidence expansionary monetary policies do not increase the propensity of economic agents to systematically take greater risks on the market. After a certain level of money stock, increases in the money supply do not lead to increased negotiated credit.

Keywords: Bank lending channel; Monatary policy; BRICS

JEL Classification: C1; E5; G15

Suggested Citation

Tabak, Benjamin M. and Moreira, Tito Belchior Silva and Fazio, Dimas and Cavalcanti, Andre Luiz and Cunha, George Henrique, Monetary Expansion and the Banking Lending Channel (October 11, 2016). Available at SSRN: https://ssrn.com/abstract=2851016 or http://dx.doi.org/10.2139/ssrn.2851016

Benjamin M. Tabak

FGV/EPPG ( email )

SGAN Av. L2 Norte - Quadra 602 - Módulos A, B e C
Brasília, Rio de Janeiro 70830-051
Brazil

Tito Belchior Silva Moreira (Contact Author)

Catholic University of Brasilia ( email )

SGAN 916 Modulo B
Brasília, DF
Brazil

Dimas Fazio

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

Andre Luiz Cavalcanti

Catholic University of Brazil (UCB) ( email )

Brasilia, DF
Brazil

George Henrique Cunha

Catholic University of Brazil (UCB) ( email )

Brasilia, DF
Brazil

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