Affiliation:
1. Banque de France, 31 rue Croix des Petits-Champs, 75049 Paris cedex 01, France
Abstract
Abstract
US banks obtain most of their funding from a combination of low-interest deposits and high-interest deposits. Using local demographic variations as instruments for banks’ liability composition, I show that when monetary policy tightens, banks with a larger proportion of low-interest deposits on their balance sheet experience larger increases in their high-interest deposit rate and lend less. This happens because tight monetary policy reduces the supply of low-interest deposits to banks, and banks react by issuing more high-interest deposits. As it is increasingly expensive, that substitution is not complete, and leads to a reduction in lending.
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics
Reference46 articles.
1. New evidence on the lending channel,;Ashcraft;Journal of Money, Credit and Banking,2006
2. Another look at long-run money demand,;Ball;Journal of Monetary Economics,2001
3. Geographical segmentation of U.S. capital markets,;Becker;Journal of Financial Economics,2007
Cited by
5 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献