1. 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

2. 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?

3. 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.

4. 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?

5. 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

6. 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

7. 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?

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

9. Summary
Objective: explore changes in the transmission of the EU and US monetary policy to Russia via Russian banks
Two regimes: (semi-open economy) and (with economic sanctions)
The transmission disappears during the economic sanctions
Why not comparing with the 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

10. 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?

11. 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

12. 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

13. 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.