Transmission of monetary policy and bank heterogeneity in Colombia



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Universidad EAFIT


This study provides evidence of bank heterogeneity in Colombia for the period 2002-2014 and analyzes how bank-specific characteristics determine the bank-lending channel for monetary policy -- To analyze bank heterogeneity, this study estimates technical (cost) efficiency using Stochastic Frontier Analysis, which also allows for the measurement of Returns to Scale and a Lerner Index to proxy market power in the loans market -- This study also provides measures of capitalization, liquidity, and the commonly used ratios of financial and operational efficiency with bank’s balance-sheet data -- Furthermore, using a long and unbalanced panel, this study finds evidence of the existence of a bank-lending channel and finds that this transmission mechanism is determined by bank-specific characteristics -- The results suggest higher technical and operational efficiency, capitalization,liquidity and market power, increase the sensitivity of loans disbursements to monetary policy shocks, while higher returns to scale lowers this sensitivity


Palabras clave

Técnica de frontera estocástica, Eficiencia bancaria, Competitividad bancaria, Heterogeneidad bancaria