Spillovers of the United States’ Unconventional Monetary Policy to Emerging Asia: The Bank Lending Channel

Ying Xu, Hai Anh LA

    Research output: Contribution to journalArticle

    2 Citations (Scopus)

    Abstract

    This paper assesses the spillover effects of the United States’ unconventional monetary policy (i.e., quantitative easing programs adopted during 2008–2014) on the Asian credit market. With a focus on cross-border bank lending, we employed firm-level loan data with regard to the syndicated loan market and measured the international bank lending channel through changes in United States dollar-denominated loans extended to Asian borrowers. We found that the growth of dollar credit in Asia increased substantially in response to quantitative easing in the United States financial market. The results of this study confirm the existence of the bank lending channel in Asia and emphasize the role of credit flows in transmitting financial conditions. The paper also provides new evidence of cross-border liquidity spillover in the syndicated loan market. We found that the overall spillover effect was large but differed significantly in Asia by types of borrowing firms, financing purposes, and loan terms at different stages of the quantitative easing programs.
    Original languageEnglish
    Pages (from-to)2744-2769
    JournalEmerging Markets Finance and Trade
    Volume53
    Issue number12
    DOIs
    Publication statusPublished - 2017

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    Unconventional monetary policy
    Bank lending channel
    Emerging Asia
    Spillover
    Asia
    Quantitative easing
    Loans
    Credit
    Cross-border
    Spillover effects
    Syndicated loans
    Credit markets
    Financial markets
    Bank lending
    Financial condition
    Liquidity
    Borrowing
    Financing

    Cite this

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    title = "Spillovers of the United States’ Unconventional Monetary Policy to Emerging Asia: The Bank Lending Channel",
    abstract = "This paper assesses the spillover effects of the United States’ unconventional monetary policy (i.e., quantitative easing programs adopted during 2008–2014) on the Asian credit market. With a focus on cross-border bank lending, we employed firm-level loan data with regard to the syndicated loan market and measured the international bank lending channel through changes in United States dollar-denominated loans extended to Asian borrowers. We found that the growth of dollar credit in Asia increased substantially in response to quantitative easing in the United States financial market. The results of this study confirm the existence of the bank lending channel in Asia and emphasize the role of credit flows in transmitting financial conditions. The paper also provides new evidence of cross-border liquidity spillover in the syndicated loan market. We found that the overall spillover effect was large but differed significantly in Asia by types of borrowing firms, financing purposes, and loan terms at different stages of the quantitative easing programs.",
    keywords = "Asian credit market, bank lending channel, International monetary spillovers, unconventional monetary policy",
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    Spillovers of the United States’ Unconventional Monetary Policy to Emerging Asia: The Bank Lending Channel. / Xu, Ying; LA, Hai Anh.

    In: Emerging Markets Finance and Trade, Vol. 53, No. 12, 2017, p. 2744-2769.

    Research output: Contribution to journalArticle

    TY - JOUR

    T1 - Spillovers of the United States’ Unconventional Monetary Policy to Emerging Asia: The Bank Lending Channel

    AU - Xu, Ying

    AU - LA, Hai Anh

    PY - 2017

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    N2 - This paper assesses the spillover effects of the United States’ unconventional monetary policy (i.e., quantitative easing programs adopted during 2008–2014) on the Asian credit market. With a focus on cross-border bank lending, we employed firm-level loan data with regard to the syndicated loan market and measured the international bank lending channel through changes in United States dollar-denominated loans extended to Asian borrowers. We found that the growth of dollar credit in Asia increased substantially in response to quantitative easing in the United States financial market. The results of this study confirm the existence of the bank lending channel in Asia and emphasize the role of credit flows in transmitting financial conditions. The paper also provides new evidence of cross-border liquidity spillover in the syndicated loan market. We found that the overall spillover effect was large but differed significantly in Asia by types of borrowing firms, financing purposes, and loan terms at different stages of the quantitative easing programs.

    AB - This paper assesses the spillover effects of the United States’ unconventional monetary policy (i.e., quantitative easing programs adopted during 2008–2014) on the Asian credit market. With a focus on cross-border bank lending, we employed firm-level loan data with regard to the syndicated loan market and measured the international bank lending channel through changes in United States dollar-denominated loans extended to Asian borrowers. We found that the growth of dollar credit in Asia increased substantially in response to quantitative easing in the United States financial market. The results of this study confirm the existence of the bank lending channel in Asia and emphasize the role of credit flows in transmitting financial conditions. The paper also provides new evidence of cross-border liquidity spillover in the syndicated loan market. We found that the overall spillover effect was large but differed significantly in Asia by types of borrowing firms, financing purposes, and loan terms at different stages of the quantitative easing programs.

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