Banking systems have rapidly grown to a point where for many countries bank assets amount to multiples of GDP. As a consequence, governmentfs capacity to provide stability-enhancing fiscal guarantees against systemic crises can no longer be taken for granted. As regulation of dynamic financial...

The present study investigates theoretically the lending responses of government-owned and private banks in the event of unexpected financial shocks. Our model predicts that public banks provide more loans to the real sector during times of crisis, compared to private banks which cut down on...

This paper explains the underlying motivation for the decision of the Central Bank of the Republic of Turkey (CBRT) to adopt a flexible monetary policy since 2010. In this context the paper provides an overview of the framework and summarizes the initial results. Specifically, the paper begins...

Monetary policy has real effects through credit supply and demand, and since these changes are mostly unobserved, the complete identification of the credit channel is generally unfeasible. Bank lending surveys by central banks, however, contain reliable quarterly information on changes in loan...

If monetary policy is to aim also at financial stability, how would it change? To analyze this question, this paper develops a general-form framework. Financial stability objectives are shown to make monetary policy more aggressive: in reaction to negative shocks, cuts are deeper but...

If monetary policy is to aim at financial stability, how would it change? To analyze this question, this paper develops a general-form model with endogenous bank risk profiles. Policy rates affect both bank incentives to search for yield and the cost of wholesale funding. Financial stability...

This paper presents the theoretical structure of MAPMOD, a new IMF model designed to study vulnerabilities associated with excessive credit expansions, and to support macroprudential policy analysis. In MAPMOD, bank loans create purchasing power that facilitates adjustments in the real economy....

The Fed’s actions before and after the housing bubble burst: discretion and mandate of central banks in an environment of financial deregulation The Fed’s actions during the development and burst of the US real estate bubble highlight a Central Bank’s dilemma when facing a financial...

This paper investigates the effect that the creation of the Monetary Policy Committee (MPC) has had on the interest rate risk which banks and life insurance companies face in the UK. By means of GARCH-M methodology, the stock returns are modelled on the CAPM and the Fama-French asset-pricing...

The pass-through of the policy rates to bank lending rate is an important subject matter because it measures the effectiveness of monetary policy to control inflation or stabilize the economy. This study investigates the long-run interest rate pass-through of the money market rate to the bank...