Technological innovation and the bank lending channel of monetary policy transmission

Arbeitspapier

This paper studies whether and how banks' technological innovations affect the bank lending channel of monetary policy transmission. We first provide a theoretical model in which banks' technological innovation relaxes firms' earning-based borrowing constraints and thereby enlarges the response of banks' lending to monetary policy changes. To test the empirical implications, we construct a patent-based measurement of bank-level technological innovation, which can specify the nature of technology and tell whether it is related to the bank's lending business. We find that lending-related innovations significantly strengthen the transmission of the bank lending channel.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BOFIT Discussion Papers ; No. 9/2023

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
• Subject: Innovation ; FinTech ; Monetary Policy Transmission ; Bank Lending Channel

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hasan, Iftekhar ; Li, Xiang ; Takalo, Tuomas
• Event: Veröffentlichung
• (who): Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT)
• (where): Helsinki
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/280960
• URN: urn:nbn:fi-fe20231220156018
• Last update: 10.03.2025, 11:43 AM CET