Empirical evidence for the bank lending channel in Bosnia and Herzegovina: does lending differ between large and small banks?

The paper investigates transmission of different foreign and domestic shocks to bank lending activity in Bosnia and Herzegovina through the bank lending channel. The bank lending channel is analyzed in a time series cross sectional data framework for the period 2006q1- 2014q1, investigating reactions of small vs. large banks to those shocks. First, the evidence has been found that both groups of banks decreased their lending activity in the aftermath of the crisis. There is some evidence that liquidity shock after the onset of the crisis is mainly transmitted through large banks that are affiliates of the large Western European banking groups. Second, strong evidence is found that loosening of domestic monetary conditions through required reserves rate change had a positive effect on lending supply, especially for small banks operating in the country.


Publication infos:
Geneva, The Graduate Institute of International and Development Studies, 2015
Publication year:
2015
Number of pages:
41 p.
Collection:
Graduate Institute of International and Development Studies Working Paper ; no. 10/2015



 Record created 2015-07-08, last modified 2019-08-05

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