Bank Lending Channel Effectiveness and Loan Sales in the US
Michael R. Jonas, Sharmila K. King
Journal of Economics, Management and Trade · pp. 16–34 · Published 4 Oct 2013
10.9734/BJEMT/2014/6255Abstract
This paper examines whether banks that sell loans in the secondary market respond differently to a monetary policy innovation from those that do not engage in loan sales. We answer this question by measuring the policy response while controlling for loan sales activities. Using a simple theoretical model and U.S. bank-level Call Report longitudinal data for the period 1991Q1-2008 Q4, we conduct a dynamic panel regression analysis. We find that the long-run response to a typical policy shock is three times greater for mid-size banks engaging in loan sales. Given the increase in proportion of banks engaging in loan sales, this finding has strong implications for policy makers and bank industry volatility.
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Cited by 1
María Cantero Sáiz · Editorial de la Universidad de Cantabria eBooks · 2018
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