Financial institutions’ business models and the global transmission of monetary policy Isabel Argimon, Clemens Bonner, Ricardo Correa, Patty Duijm, Jon Frost, Jakob de Haan, Leo de Haan, and Viktors Stebunovs Discussion by Olena Havrylchyk

Summary Question: In the presence of international banks, does the monetary policy of the home country influence credit growth in the host country? Value added: focus on the business model of the international banking – cross-border lending or local claims. Policy relevance: Which business model ensures monetary policy independence to the host country?

Two possible identification strategies 1 home country and many host countries (first paper). 1 host country and many home countries (second paper) In monetary policy transmission studies, identification strategy is complicated by endogeneity. The problem is smaller when studying the impact on foreign markets, but … Interdependence of the ECB and Fed monetary policy The choice of the business model is endogenous (cross-border flows – “follow your customer”) Second approach would lessen even further the endogeneity problem.

Comments: interpretation of results Amount of results is indeed overwhelming! Interpretation would be easier if hypotheses were clearly stated with expected signs, based on the theory. Examples: According to the tradition bank lending channel, a tightening of the US monetary policy leads to a decline of lending in the US. Given the centralised nature of US banks, how can a tightening of the US monetary policy increase foreign exposure? 2. How can US banks with higher short term funding ratios (poor funding liquidity) increase their foreign claims in response to a tightening at home?

Comments: Internal capital markets Include an intermediate step to measure the impact of the monetary policy on the cross-border lending to banks and net intragroup funding (possible for the US) Separate foreign claims into cross-border claims (follow your customer) and local claims (new market) and study separately the impact of the US monetary policy on them

Comments: Accounting for the economic context Nonstandard measures of the monetary policy CB assets to measure quantitative easing Crisis How does the transmission of the MP change during crisis? (Gambacorta & Marques-Ibanez, 2011) How does the banking model (centralisation) impact credit supply (stability) during crisis? Securitisation

Policy implications for the host countries Which business model gives more monetary policy independence to the host country? Results are economically significant: 1 SD increase of the U.S. short-term interest rate is associated with a 1.6 pp increase in the growth rate of total claims. Is monetary policy of the home country more important than the monetary policy of the host country? Are the results symmetric for the tightening and loosening of the MP?

Anna Kruglova Discussion by Olena Havrylchyk Financial Shocks and Monetary Policy Transmission: Evidence from the Russia Anna Kruglova Discussion by Olena Havrylchyk

Summary Objective: explore changes in the transmission of the EU and US monetary policy to Russia via Russian banks Two regimes: 2000-2014 (semi-open economy) and 2014-2017 (with economic sanctions) The transmission disappears during the economic sanctions Why not comparing with the 2008-2009 crisis? The results are preliminary, but it is potentially a very interesting paper about the impact of the economic sanctions on the structure of the Russian banking sector

Exploring economic sanctions How effective were sanctions to limit foreign funding of Russian banks? A graph on cross-border liabilities would be illustrative. Was the impact heterogenerous? Have some banks escaped sanctions by finding other sources of funding?

Exploring different channels Lending was not only affected by sanctions that have cut off the access of Russian banks to the capital market, but also by Restrictions on the real economy: dual-use goods, arms, goods suited to the oil industry, etc. (banks specialized in energy) Deposits dynamics Deposit flight Fight to quality Repatriating cash from abroad in the midst of fears of an escalation of Western sanctions Bailout programme for major banks Monetary stimulus of the CBR Resolution of hundreds of banks These channels could be explored, if possible, by including interactions

Winners and losers: How have Russian banks adapted to economic sanctions? Which banks have increased their market share? State-owned due to state aid? Foreign banks due to intragroup funding? What about cross-border lending for private companies that were not sanctioned? Reallocation between foreign and domestic currency

Econometrics To study different regimes, use interaction with *Sanctions *Crisis It is not possible to compare the sign of variables when regressions are run on two different samples. When including interaction MP*C include also separately MP and C.