Relationship Banking and Monetary Policy Transmission: Evidence from India

Forthcoming in the Journal of Money, Credit and Banking

71 Pages Posted: 17 Nov 2015 Last revised: 30 Aug 2021

See all articles by Abhishek Bhardwaj

Abhishek Bhardwaj

Tulane University

Krishnamurthy Subramanian

Indian School of Business (ISB), Hyderabad

Prasanna L. Tantri

Indian School of Business

Date Written: December 31, 2019

Abstract

Though the monetary policy transmission and financial intermediation literature have highlighted the role of the “bank credit channel” and relationship banking respectively, the effect of relationship banking on the transmission of monetary policy has not been investigated. In this paper, we study the impact of relationship banking on the transmission of monetary policy. Theoretically, relationship banking could ameliorate or exacerbate the effects of monetary policy shocks. Using unique and comprehensive data on bank-borrower relationships in India, we find that firms that enjoy an exclusive banking relationship are less susceptible to monetary policy shocks than firms that bank with multiple banks.

Keywords: banks, monetary policy, central banks and their policies

JEL Classification: G21, E52, E58

Suggested Citation

Bhardwaj, Abhishek and Subramanian, Krishnamurthy and Tantri, Prasanna L., Relationship Banking and Monetary Policy Transmission: Evidence from India (December 31, 2019). Forthcoming in the Journal of Money, Credit and Banking, Available at SSRN: https://ssrn.com/abstract=2691556 or http://dx.doi.org/10.2139/ssrn.2691556

Abhishek Bhardwaj (Contact Author)

Tulane University ( email )

6823 St Charles Ave
New Orleans, LA 70118
United States

HOME PAGE: http://www.abhishek-bhardwaj.com

Krishnamurthy Subramanian

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

Prasanna L. Tantri

Indian School of Business ( email )

Hyderabad, Gachibowli 500 032
India
9160099959 (Phone)

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