Borrower-lender ties key in policy transmission – BoE research
Stronger ties between banks and firms leads to weaker pass-through in low-rate environment, study finds
When a lender has stronger lending relationship with a particular borrower, the transmission of interest rate cuts tends to be lower, a Bank of England paper has found.
The staff working paper, published on March 21, examines how the length of time a bank has been lending to a firm affects pass-through in a low interest-rate environment.
The authors, Jin Cao, Pierre Dubuis and Karolis Liaudinskas, track bank-firm relationships in Norway from 1997 to 2019 by analysing the balance sheets and
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