Empirical Evidence for the Bank Lending Channel in Bosnia and Herzegovina: Does Lending Differ Between Large and Small Banks?

Dejan Kovacevic
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Dejan Kovacevic: Central bank of Bosnia and Herzegovina

No 10-2015, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: 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.

Keywords: Financial crisis; monetary policy; bank lending channel; credit growth (search for similar items in EconPapers)
JEL-codes: C13 C23 E52 E58 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2015-03-17
New Economics Papers: this item is included in nep-ban, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gii:giihei:heidwp10-2015

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