Bank Characteristics, Bank Lending Channel, and Monetary Policy Transmission in Taiwan

  • Jung Chu Lin
Cite this:
Lin, J. C. (2016). Bank Characteristics, Bank Lending Channel, and Monetary Policy Transmission in Taiwan. Journal of Business Management and Economics, 4(6), 01–13. https://doi.org/10.15520/jbme.2016.vol4.iss6.198.pp01-13
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Abstract

This study investigates the bank lending channel (BLC) as a mechanism for the monetary policy transmission in Taiwan where banks are an important source of funding. Using a panel of bank-level data over the 1993-2013 period, I examine particularly whether the influence of monetary policy impulses on bank lending differs with the three bank characteristics: bank size, capitalization, and liquidity. The empirical results demonstrate the existence of the BLC in Taiwan. They also evidence that all the three bank characteristics play an important role to capture the distributional effects of monetary policy stance, yet the capitalization seems to play the most significant role in distinguishing banks’ reactions to monetary policy changes. The results further indicate that larger and more capitalized, larger and more liquid, or less capitalized and less liquid banks are less responsive to monetary policy changes.

JEL: E52, E58

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