Kudos to SKK GSB Professor Raunaq Pungaliya and a former SKK GSB Professor Hassan Naqvi
Prof. Hassan Naqvi and SKK GSB's Prof. Raunaq Pungaliya have had their paper "Bank size and the transmission of monetary policy: Revisiting the lending channel" accepted for publication in the Journal of Banking and Finance, a peer-reviewed academic journal covering research on financial institutions, capital markets, investments, and corporate finance. Prof. Naqvi is a former professor of finance at SKK GSB, and now teaches banking and finance at Monash University.
Abstract as below:
We model how monetary policy shocks affect the lending behavior of small and large banks. Other things being equal, small banks are riskier than large banks since the latter are more likely to be bailed out. Thus, small banks face a higher cost of non-deposit financing and are unable to finance liquidity shocks at a cost below a certain threshold. Consequently, we show that under a tight monetary regime small bank lending is more sensitive to monetary shocks. This relation reverses under loose monetary regimes where large bank lending is more responsive to monetary shocks. Our empirical results strongly support our analysis.
Bank Size; Lending Channel; Monetary Policy; Too-Big-to-Fail
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