Journal article
The role of foreign banks in monetary policy transmission: Evidence from Asia during the crisis of 2008–9
Pacific-Basin finance journal, v 29, pp 96-120
Sep 2014
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Since the 1997–8 Asian financial crisis, the level of foreign bank penetration has increased steadily in Asian banking markets. This paper examines the impact of foreign banks on the monetary policy transmission mechanism in emerging Asian economies during the period from 2000 to 2009, with a specific focus on the global financial crisis of 2008–9. We present consistent evidence that, on the whole, an increase in foreign bank penetration weakened the effectiveness of the monetary policy transmission mechanism in the host emerging Asian economies during crisis periods. We also investigate various conditions and environments, including the severity of shocks upon parent banks in the global crisis, the dependence of parent banks on the wholesale funding market, the country of origin of foreign banks, and entry modes, under which the effectiveness of monetary policy transmission is reduced more severely due to the increasing presence of foreign banks in the emerging Asian banking markets.
•We examine the impact of foreign banks on monetary policy transmission in Asia.•Foreign banks are found to weaken the effectiveness of monetary transmission.•This is more so for wholly owned foreign banks during the crisis of 2008–9.•The transmission is weaker for global foreign banks than Asia-regional foreign banks.
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Details
- Title
- The role of foreign banks in monetary policy transmission: Evidence from Asia during the crisis of 2008–9
- Creators
- Bang Nam Jeon - Drexel UniversityJi Wu - Southwestern University of Finance and Economics
- Publication Details
- Pacific-Basin finance journal, v 29, pp 96-120
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000347759400006
- Scopus ID
- 2-s2.0-84900496229
- Other Identifier
- 991019330812804721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance