Paper explores monetary policy and bank liability structure
Tighter monetary policy reduces number of zero-interest deposits available to banks
A working paper published by the Banque de France provides new empirical support for the existence of the bank lending channel of monetary policy, its author argues.
In How monetary policy changes bank liability structure and funding cost, Mattia Girotti analyses the yearly data of every commercial and savings bank in the US between June 1994 and June 2008.
Banks obtain funding from a combination of zero-interest deposits and interest-bearing deposits, the author notes. Those with a larger
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