remained largely as a black-box. In this paper, we use bank-level data to explore the interaction between RR and bank lending … behavior. Our empirical findings suggest that short-term borrowing from the central bank is not a close substitute for deposits … for banks. Bank lending behavior responds significantly to reserve requirements and liquidity positions. Our analysis …

mechanism remains to be explored. Using bank level data, this study looks inside the black-box to unveil the interaction of … reserve requirement policy with bank lending. We identify a new channel that works through a decline in bank liquidity and … affect the funding needs and the liquidity position of the banking system. The consequent changes in bank liquidity have a …