Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264163 
Year of Publication: 
2022
Series/Report no.: 
ADBI Working Paper No. 1303
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
Focusing on Asian economies over the period 2006 to 2019, we find that while nonbank finance appears to complement rather than substitute credit provision by the traditional banking sector, weaker regulatory quality is an important driving factor. Moreover, while we find that central bank policy rates countercyclically affect credit provision by nonbanks, impulse responses to monetary policy shocks with and without nonbank finance indicate that the effectiveness of monetary policy as a transmission channel to GDP growth, inflation, house prices, and traditional bank credit is weakened in the presence of nonbank finance. Our paper has implications for monetary policy implementation, potentially incorporating nonbanks into central bank operations and liquidity provision, as well as for financial supervisors in mitigating regulatory arbitrage.
Subjects: 
nonbank finance
fintech
monetary policy
Asia
JEL: 
E5
E44
G20
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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