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This paper assesses the macroeconomic effects of unconventional monetary policies by estimating a panel vector autoregression (VAR) with monthly data from eight advanced economies over a sample spanning the period since the onset of the global financial crisis. It finds that an exogenous increase in central bank balance sheets at the zero lower bound leads to a temporary rise in economic activity and consumer prices. The estimated output effects turn out to be qualitatively similar to the ones found in the literature on the effects of conventional monetary policy, while the impact on the price level is weaker and less persistent. Individual country results suggest that there are no major differences in the macroeconomic effects of unconventional monetary policies across countries, despite the heterogeneity of the measures that were taken.
This paper investigates how monetary policy affects bank profitability. We use data for 109 large international banks headquartered in 14 major advanced economies for the period 1995-2012. Overall, we find a positive relationship between the level of short-term rates and the slope of the yield curve (the 'interest rate structure', for short), on the one hand, and bank profitability-return on assets-on the other. This suggests that the positive impact of the interest rate structure on net interest income dominates the negative one on loan loss provisions and on non-interest income. We also find that the effect is stronger when the interest rate level is lower and the slope less steep, that is, when non-linearities are present. All this suggests that, over time, unusually low interest rates and an unusually flat term structure erode bank profitability.
Official interest rate changes should influence short rates on money market instruments and retail products, such as deposit accounts and mortgages, but complete pass-through is often taken for granted. This paper provides a theoretical and econometric framework for assessing the evidence for this assumption using seventeen years of monthly data for rates on thirteen deposit and mortgage products offered by individual UK financial institutions. The methodology allows for asymmetries and non-linearities in adjustment and the results show that the speed of adjustment in retail rates depends on whether the perceived 'gap' between retail and base rates is widening or narrowing.
Episodes of boom and bust in credit markets have often coincided with cycles in economic activity and property markets. The coincidence of these cycles has already been widely documented in the literature, but few studies address the issue in a formal way. In this study we analyse the determinants of credit to the private non-bank sector in 16 industrialised countries since 1980 based on a cointegrating VAR. Cointegration tests suggest that the long-run development of credit cannot be explained by standard credit demand factors. But once real property prices, measured as a weighted average of real residential and real commercial property prices, are added to the system, we are able to identify long-run relationships linking real credit positively to real GDP and real property prices and negatively to the real interest rate. These long-run relationships may be interpreted as long-run extended credit demand relationships, but we may also capture effects on credit supply. Impulse response analysis based on a standard Cholesky decomposition reveals that there is significant two-way dynamic interaction between bank credit and property prices. We also find that innovations to the short-term real interest rate have a strong and significant negative effect on bank credit, GDP and property prices. BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS.
In this study, we analyse the determinants of bank credit to the private non‐financial sector in 16 industrialized countries based on a cointegrating VAR. Cointegration analysis suggests that property prices are an important determinant of the long‐run borrowing capacity of the private sector, which needs to be taken into account to explain the long‐run movements of bank lending. Impulse response analysis reveals that innovations to property prices also have a highly significant and persistent positive dynamic effect on bank lending. This result suggests that innovations to property prices may give rise to significant and persistent cycles in bank lending and are thus a potential explanation for the persistent financial cycles observed in the past.
The transduction of electric signals from cells to electronic devices is mandatory for medical applications such as neuroprostheses and fundamental research on communication in neuronal networks. Here, the use of diamond with its advantages for biological applications as a new material for biohybrid devices for the detection of cell signals is investigated. Using the surface conductivity of hydrogen‐terminated single‐crystalline diamond substrates, arrays of solution‐gate field‐effect transistors were fabricated. The characterization of the transistors reveals a good stability in electrolyte solutions for at least 7 days. On these devices, cardiomyocyte‐like HL‐1 cells as well as human embryonic kidney cells (HEK293), which were stably transfected with potassium channels, are cultured. Both types of cells show healthy growth and good adhesion to the substrate. The diamond transistors are used to detect electrical signals from both types of cells by recording the extracellular potential. For the HL‐1 cells, the shape of action potentials can be resolved and the propagation of the signal across the cell layer is visible. Potassium currents of HEK293 cells are activated with the patch‐clamp technique in voltage‐clamp mode and simultaneously measured with the field‐effect transistors. The ion sensitivity of the diamond surface enables the detection of released potassium ions accumulated in the cleft between transistor and cell.
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