Foreign banks acted as 'buffer' on Korean monetary policy during the crisis

'Buffering effect’ was driven by foreign bank branches with US parent banks

Bank of Korea, Seoul

Foreign banks acted as a "buffer" to the monetary policy transmission mechanism in Korea during the financial crisis, according to a working paper published by the Bank of Korea last week.

The impact of foreign banks on monetary policy transmission during the global financial crisis of 2008–2009: Evidence from Korea finds that foreign banks reduced their lending when the Bank of Korea lowered its benchmark interest rate during the downturn.

The authors, Bang Nam Jeon, Hosung Lim and Ji Wu, say

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