The bank liquidity creation channel of monetary policy transmission in a multiple-instrument environment
by Van Dan Dang
International Journal of Monetary Economics and Finance (IJMEF), Vol. 15, No. 1, 2022

Abstract: The study investigates the impact of monetary policy on bank liquidity creation, a much broader concept than bank lending. Using the annual financial data of Vietnamese commercial banks from 2008 to 2018, we show that an expansionary (contractionary) monetary policy tends to increase (decrease) bank liquidity creation. Our further analysis through monetary policy indicators ranging from lending rates to primary policy instruments, including policy rates and open market operations, provides strong evidence favouring the bank liquidity creation channel. Slightly differently, we do not have much confidence in the case of the foreign exchange reserves. Besides, we also confirm the existence of the bank lending channel, which differs from the bank liquidity creation channel in terms of the magnitude of transmission, from the perspective of a multiple monetary-policy-instrument environment.

Online publication date: Fri, 18-Mar-2022

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Monetary Economics and Finance (IJMEF):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com