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Board of Governors of the Federal Reserve System (U.S.)
International Finance Discussion Papers
Financial Institutions’ Business Models and the Global Transmission of Monetary Policy
Isabel Argimon
Clemens Bonner
Ricardo Correa
Patty Duijm
Jon Frost
Jakob de Haan
Leo de Haan
Viktors Stebunovs
Abstract

Global financial institutions play an important role in channeling funds across countries and, therefore, transmitting monetary policy from one country to another. In this paper, we study whether such international transmission depends on financial institutions' business models. In particular, we use Dutch, Spanish, and U.S. confidential supervisory data to test whether the transmission operates differently through banks, insurance companies, and pension funds. We find marked heterogeneity in the transmission of monetary policy across the three types of institutions, across the three banking systems, and across banks within each banking system. While insurance companies and pension funds do not transmit home-country monetary policy internationally, banks do, with the direction and strength of the transmission determined by their business models and balance sheet characteristics.


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Isabel Argimon & Clemens Bonner & Ricardo Correa & Patty Duijm & Jon Frost & Jakob de Haan & Leo de Haan & Viktors Stebunovs, Financial Institutions’ Business Models and the Global Transmission of Monetary Policy, Board of Governors of the Federal Reserve System (U.S.), International Finance Discussion Papers 1228, 29 May 2018.
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Keywords: Monetary policy transmission ; Global financial institutions ; Bank lending channel ; Portfolio channel ; Business models
DOI: 10.17016/IFDP.2018.1228
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