Nonbank finance and monetary policy transmission in Asia

Arbeitspapier

Focusing on Asian economies over the period 2006 to 2019, we find that while nonbank finance appears to complement rather than substitute credit provision by the traditional banking sector, weaker regulatory quality is an important driving factor. Moreover, while we find that central bank policy rates countercyclically affect credit provision by nonbanks, impulse responses to monetary policy shocks with and without nonbank finance indicate that the effectiveness of monetary policy as a transmission channel to GDP growth, inflation, house prices, and traditional bank credit is weakened in the presence of nonbank finance. Our paper has implications for monetary policy implementation, potentially incorporating nonbanks into central bank operations and liquidity provision, as well as for financial supervisors in mitigating regulatory arbitrage.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADBI Working Paper ; No. 1303

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy ; Financial Institutions and Services: General
• Subject: nonbank finance ; fintech ; monetary policy ; Asia

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Beirne, John ; Renzhi, Nuobu ; Volz, Ulrich
• Event: Veröffentlichung
• (who): Asian Development Bank Institute (ADBI)
• (where): Tokyo
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/264163