Bank capital determines lending power during monetary policy changes
The study looked at how bank capital affects the relationship between monetary policy and bank lending. Using data from Vietnamese banks, the researchers found that well-capitalized banks are less affected by tight monetary policy but benefit more from expansionary policy. They also identified a specific range of bank capital where monetary policy has no impact on bank lending during restrictions. These findings suggest that bank capital plays a crucial role in how banks respond to changes in monetary policy, with implications for policymakers.