DIFFERENTIAL DEPOSIT GUARANTEES AND THE EFFECT OF MONETARY POLICY ON BANK LENDING |
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| Authors: | TIMOTHY P. OPIELA |
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| Affiliation: | 1. Opiela: Associate Professor, Department of Economics, Kellstadt Graduate School of Business, DePaul University, 1 East Jackson Boulevard, Chicago, IL 60604. Phone 312‐362‐5584, Fax 312‐362‐5452, E‐mail topiela@depaul.edu;2. The author began this article while on a Fulbright Research Scholarship at the NBP and the Warsaw School of Economics. He thanks the NBP for supplying data and DePaul University for financial support. In particular, he thanks Marta Go?ajewska for assistance in gathering data and information, Ewa Nikiel for insightful discussions, and two anonymous referees for comments that substantially improved this paper. |
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| Abstract: | This paper utilizes differences in de jure deposit insurance coverage across banks and changes in coverage over time to identify a bank‐lending channel in Poland. Banks with partial guarantees have a stronger loan response to monetary policy than banks with full guarantees. Furthermore, the weak response of the fully guaranteed banks is attributed to their ability to raise low‐reserve, uninsured time deposits relative to the partially covered banks. When differential coverage is eliminated, there is no disparity in the loan response between the two groups. This lending channel has implications for credit control and financial system development in emerging markets. (JEL E52, G21, G28) |
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