—This paper empirically tests the presence of a bank lending channel of monetary policy in the Philippines. It aims to demonstrate that bank lending channel is present in the Philippines by showing that loan growth is affected by monetary policy shocks. This study uses quarterly data from 2008-2011 of the country’s 35 commercial and universal banks. The banks are segregated according to the size of their assets: >P300B(large), P200B<size<P300B(large1), P100B<size<P200B(large2), P50B<size<P100B(medium1),P25B<size<P50B(medium2) and P<25B(small). Panel ordinary least squares method is used to check the relationship between loan growth and monetary policy. Results show that loan growth of small banks is sensitive to movements in monetary policy, thus providing evidence for a bank lending channel in the Philippines. Increase in policy rates result in a decrease in loan supply of small banks. This paper also presents that bank characteristics, particularly size, can have influence in the existence of the bank lending channel.
Index Terms—Bank lending channel, loan supply, monetary policy.
Maria Josefina Angelica Aban is with the University of the Philippines, College of Business Administration, Diliman, Quezon City, Philippines (email: email@example.com).
Cite:Maria Josefina Angelica C. Aban, "Transmission of Monetary Policy through the Bank Lending Channel in the Philippines," International Journal of Trade, Economics and Finance vol.4, no.1, pp. 页码, 2013.