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SUMMARY:The Deposits Channel of Monetary Policy
DTSTART:20160322T103000
DTEND:20160322T120000
DTSTAMP:20260428T162557Z
UID:8c5d43729e4f37a881b4da1895623708a24941a75c3b75daca6423e7
CATEGORIES:Conferences - Seminars
DESCRIPTION:Alexi SAVOV (NYU Stern)\nWe propose and test a new channel for
  the transmission of monetary policy. We show that when the Fed funds rate
  increases\, banks widen the interest spreads they charge on deposits\, an
 d deposits flow out of the banking system. We present a model in which imp
 erfect competition among banks gives rise to these relationships. An incre
 ase in the nominal interest rate increases banks' effective market power\,
  inducing them to increase deposit spreads. Households respond by substitu
 ting away from deposits into less liquid but higher-yielding assets. Using
  branch-level data on all U.S. banks\, we show that following an increase 
 in the Fed funds rate\, deposit spreads increase by more\, and deposit sup
 ply falls by more\, in areas with less deposit competition. We control for
  changes in banks' lending opportunities by comparing branches of the same
  bank. We control for changes in macroeconomic conditions by showing that 
 deposit spreads widen immediately after a rate change\, even if it is full
 y expected. Our results imply that monetary policy has a significant impac
 t on how the financial system is funded\, on the quantity of safe and liqu
 id assets it produces\, and on lending to the real economy.
LOCATION:UNIL\, Extranef\, room 109 https://planete.unil.ch/plan/?local=EX
 T-109
STATUS:CONFIRMED
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