Monetary policy and the banking sector in Chile

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This paper considers the existence of a bank lending channel in Chile. Toward that, we collect a data sample of nineteen banks that operated in Chile over January 1999-December 2002. In that period, banks primarily offered loans to firms in the manufacturing and the financial-services sectors (representing 13 and 26 percent of total loans, respectively), and to households through consumption and mortgage loans (at 9 and 10 percent of total loans, respectively). Our estimation results support the existence of a bank lending channel. We find that banks respond asymmetrically to monetary shocks depending upon their own characteristics, and that monetary shocks alter loan portfolio decisions in the aggregate.

Original languageEnglish
Pages (from-to)5-36
Number of pages32
JournalEmerging Markets Finance and Trade
Issue number3
StatePublished - 2005


  • Bank lending channel
  • Dynamic panel


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