Based on a panel data set for 114 South Asian commercial banks, we find that off-balance sheet banking reduces the effectiveness of the bank lending channel of monetary transmission. That is, banks with high exposure to off-balance sheet activities are able to insulate their loan supply against...

Central bank financial strength has not been a significant issue for a substantial period of time. However, recent theoretical and empirical literature argues that even central banks require sufficient level of financial strength to perform functions effectively and achieve their objectives. In...