Wholesale bank funding boosts policy transmission – paper
NBER study highlights trade-offs between reducing systemic risk and facilitating credit flow
Making wholesale funding more available to banks boosts monetary policy transmission but heightens systemic risk, researchers at US think-tank the National Bureau of Economic Research have found.
In a paper published this month, the authors – Kaiji Chen, Yiqing Xiao and Tao Zha – examine how monetary policy influences the funding compositions of lenders in China.
Monetary easing encourages banks to expand lending, which raises their demand for funding to meet liquidity needs and regulatory metrics
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