TY  - JOUR
AU  - Cetorelli,Nicola
AU  - Goldberg,Linda S.
TI  - Banking Globalization, Monetary Transmission, and the Lending Channel
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14101
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14101
L1  - http://www.nber.org/papers/w14101.pdf
N1  - Author contact info:
Nicola Cetorelli
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212 720 5071
Fax: 212 720 8363
E-Mail: nicola.cetorelli@ny.frb.org

Linda S. Goldberg
Federal Reserve Bank-New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-2836
Fax: 212/720-6831
E-Mail: linda.goldberg@ny.frb.org
AB  - The globalization of banking in the United States is influencing the monetary transmission mechanism both domestically and in foreign markets. Using quarterly information from all U.S. banks filing call reports between 1980 and 2005, we find evidence for the lending channel for monetary policy in large banks, but only those banks that are domestically-oriented and without international operations. We show that the large globally-oriented banks rely on internal capital markets with their foreign affiliates to help smooth domestic liquidity shocks. We also show that the existence of such internal capital markets contributes to an international propagation of domestic liquidity shocks to lending by affiliated banks abroad. While these results imply a substantially more active lending channel than documented in the seminal work of Kashyap and Stein (2000), the lending channel within the United States is declining in strength as banking becomes more globalized.
ER  -