Internal Capital Markets in Financial Conglomerates : Evidence from Small Bank Responses to Monetary Policy

@inproceedings{Campello2000InternalCM,
  title={Internal Capital Markets in Financial Conglomerates : Evidence from Small Bank Responses to Monetary Policy},
  author={M. E. S. Campello},
  year={2000}
}
This paper examines the functioning of internal capital markets within bank holding companies (BHCs) and its implications for the impact of monetary policy on banks. I find that as monetary policy is tightened, if a small bank operates jointly with a large bank (with easy access to noninsured deposits) within a BHC then the small bank’s loan growth becomes less sensitive to its own internally generated funds. In contrast, if a small bank is unaffiliated with a large BHC, its loan growth becomes… CONTINUE READING
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