BANK EFFICIENCY AND THE EFFECTIVENESS OF MONETARY POLICY |
| |
| Authors: | MICHAEL R JONAS SHARMILA K KING |
| |
| Institution: | 1. Jonas: Instructor, Department of Economics, University of San Francisco, San Francisco, CA 94117. Phone 415‐422‐6160, Fax 415‐422‐6983, E‐mail mrjonas@usfca.edu;2. This is a revision of a paper presented at the Western Economic Association 79th International Conference, Vancouver, BC, July 2, 2004, organized in a session by Yanchun Zhang, San Francisco State University. The authors thank two anonymous referees for helpful comments.;3. King: Associate Professor, Department of Economics, University of the Pacific, Stockton, CA 95211. Phone 209‐946‐2293, Fax 209‐946‐2318, E‐mail sking1@pacific.edu |
| |
| Abstract: | Advances in information technology and bank consolidation have altered the way banks operate by necessitating that banks control costs and provide services efficiently to remain competitive. Given the unique role bank operations play in the transmission of monetary policy, a key unresolved question is whether bank efficiency alters monetary policy outcomes. Using a stochastic frontier approach to measure cost‐efficiency and panel data of U.S. bank balance sheets, we show that banks with greater cost‐efficiency are more sensitive to monetary shocks. (JEL E52, E44, E51) |
| |
| Keywords: | |
|
|
