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Competition in banking and the lending channel: Evidence from bank-level data in Asia and Latin America
Journal article   Peer reviewed

Competition in banking and the lending channel: Evidence from bank-level data in Asia and Latin America

María Pía Olivero, Yuan Li and Bang Nam Jeon
Journal of banking & finance, v 35(3), pp 560-571
2011
DOI: https://doi.org/10.1016/j.jbankfin.2010.08.004
Featured in Collection :   UN Sustainable Development Goals @ Drexel

Abstract

Bank lending channel Banking competition Monetary policy transmission
This paper examines how banking competition affects the transmission of monetary policy through the bank lending channel. We apply a two-step estimation procedure using bank-level panel data for commercial banks in 10 Asian and 10 Latin American countries during the period from 1996 to 2006. In the first step we measure the degree of banking competition by applying the methodology proposed by Panzar and Rosse (1987). In the second step we estimate a loan growth equation where the explanatory variables include the Panzar–Rosse measure of banking competition. The estimation results provide consistent evidence that increased competition in the banking sector weakens the transmission of monetary policy through the bank lending channel. This is especially true for banks in Latin American countries and banks of small size, low liquidity, and low capitalization. We also discuss the policy implications of the main findings of this paper.

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9 Record Views
111 citations in Web of Science
127 citations in Scopus

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UN Sustainable Development Goals (SDGs)

This publication has contributed to the advancement of the following goals:

#10 Reduced Inequalities
#8 Decent Work and Economic Growth
#9 Industry, Innovation and Infrastructure
#1 No Poverty

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Collaboration types
Domestic collaboration
Web of Science research areas
Business, Finance
Economics
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