Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280960 
Year of Publication: 
2023
Series/Report no.: 
BOFIT Discussion Papers No. 9/2023
Publisher: 
Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT), Helsinki
Abstract: 
This paper studies whether and how banks' technological innovations affect the bank lending channel of monetary policy transmission. We first provide a theoretical model in which banks' technological innovation relaxes firms' earning-based borrowing constraints and thereby enlarges the response of banks' lending to monetary policy changes. To test the empirical implications, we construct a patent-based measurement of bank-level technological innovation, which can specify the nature of technology and tell whether it is related to the bank's lending business. We find that lending-related innovations significantly strengthen the transmission of the bank lending channel.
Subjects: 
Innovation
FinTech
Monetary Policy Transmission
Bank Lending Channel
JEL: 
E52
G21
G23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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