commercial banks and monetary policy in thailand by kobsak pootrakool
TRANSCRIPT
Commercial Banksand Monetary
Policy in Thailand
byKobsak Pootrakool
Plan of Presentation
Banks’ heterogeneity and monetary policy
Bank soundness and monetary policy
Future challenges -- changing banking and
financial systems and implications on mone
tary policy
Baseline Simulation of Monetary Transmission Mechanism
1 .01 .01 .0
0 .0
0 .2
0 .4
0 .6
0 .8
1 .0
1 2 3 4 5 6 7 8 9 10 11 12
Deviation from base (Percentage Point) Deviation from base (Percentage Point)
0 .5
0 .6 0 .60 .6
0 .7 0 .8
0 .0
0 .2
0 .4
0 .6
0 .8
1 .0
1 2 3 4 5 6 7 8 9 10 11 12
Deposit rates
Deviation from base (%)
Quarter
Deviation from base (%)
Quarter Quarter
Quarter
-0.9
-1.3 -1.4
-0.3-0.5 -0.6
-0.3
-1.5
-2.1-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1 2 3 4 5 6 7 8 9 10 11 12
Private Credit
Consumption
Investment
-1.0-1.2
-0.7-0.6-0 .5
-0 .6
-2 .5
-2 .0
-1 .5
-1 .0
-0 .5
0 .0
0 .5
1 2 3 4 5 6 7 8 9 10 11 12
GDP
Domestic Demand
Lending rates
Banks’ Heterogeneity: Lending Structures
0%
20%
40%
60%
80%
100%
ระบบสถาบ�นการเงิ�น 6 ธนาคารใหญ่� 7 ธนาคารเล็�ก สาขา ธพ. ต่�างิประเทศ บงิ. บค.
น�อยกว่�า 20 ล็�านบาท 20-100 ล็�านบาท 100-1,000 ล็�านบาท 1,000 - 5,000 ล็�านบาท 5,000 ล็�านบาทข !นไป
Banks’ Heterogeneity: Market Shares
0%
20%
40%
60%
80%
100%
ส�นเชื่$%อรว่ม น�อยกว่�า 20 ล็�านบาท 20-100 ล็�านบาท 100-1,000 ล็�านบาท 1,000 - 5,000 ล็�านบาท 5,000 ล็�านบาทข !นไป
6 ธนาคารใหญ่� 7 ธนาคารเล็�ก สาขา ธพ. ต่�างิประเทศ บงิ. บค.
I. Banks’ Heterogeneity and Monetary Policy
Changing monetary conditions can have
different effects upon different commercial
banks
Large and liquid banks will be less effected
than small banks
Large customers/firms will be less effected
than small customers/firms
Typical impacts of changing monetary conditions on banks’ balance sheet
-0.01
0.00
0.01
0.02
0.03
0.04
5 10 15 20 25 30 35 40 45
Response of LM0 to LM0
-0.005
0.000
0.005
0.010
0.015
5 10 15 20 25 30 35 40 45
Response of LCREDIT to LM0
-0.002
0.000
0.002
0.004
0.006
0.008
0.010
0.012
5 10 15 20 25 30 35 40 45
Response of LDEPOSIT to LM0
-0.002
0.000
0.002
0.004
0.006
0.008
0.010
0.012
5 10 15 20 25 30 35 40 45
Response of LSECUR to LM0
Response to One S.D. Innovations ± 2 S.E.
Large Banks v.s. Small Banks
Effect on Securities holding
QuarterQuarter
Effect on Loans
Small ____Large ……
Small ____Large ……
Large Customers v.s. Small Customers
Sale differences
Sale small firms
Sale large firms Inv. large firms
Inv. small firms
Inv. differences
II. Bank Soundness and Monetary Policy
Banks perform critical tasks in the economy
The recent banking crisis has hampered the
role of the commercial banks as a main
medium to transmit monetary policy
This argues for proper prudential
regulation policy by the central bank to
ensure the effectiveness of monetary policy
Roles of commercial banks in the monetary policy transmission
Exchange rate
Monetaryinstruments
Asset prices
Credit availability
Expectation
Domestic demand
Import prices
Inflation and output
Externaldemand
S-T rates
L-T rates
Linkages between short term rates and commercial rates (MLR)
0
10
20
30
40
92 93 94 95 96 97 98 99 00 01
Recursive C(1) Estimates ± 2 S.E.
-0.2
0.0
0.2
0.4
0.6
0.8
92 93 94 95 96 97 98 99 00 01
Recursive C(2) Estimates ± 2 S.E.
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
92 93 94 95 96 97 98 99 00 01
Recursive C(3) Estimates ± 2 S.E.
-0.20
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
92 93 94 95 96 97 98 99 00 01
Recursive C(4) Estimates ± 2 S.E.
Libor rate Interbank rate
Deposit rate 3 monthsConstant term
Less stable money supply relationship
0.0E+00
1.0E+06
2.0E+06
3.0E+06
4.0E+06
5.0E+06
6.0E+06
0.0 100,000.0 200,000.0 300,000.0 400,000.0 500,000.0 600,000.0 700,000.0Money Base
M2
Liquidity within the banking system
1996 1998 2000
RP 17,493 356,449 154,990
Government Bonds 17,895 154,192 271,393
Private Securities 90,126 104,161 176,378
Non-resident Banks 179,985 462,497 720,057 Total 305,479 1,077,299 1,322,818
III. Future challenges: Changing banking and financial systems and monetary policy
Similar to unsoundness in the banking sector,
changing financial landscapes can reduce the
effectiveness of monetary policy
The list includes issues such as
- Financial innovation
- Closer financial integration
- Entry of foreign banks, etc.
Ensuring the effectiveness of monetary policy
Distributional
impacts of
monetary policy
Bank soundness
Evolving financial
structures
Conduct detailed
analyses to complement
the macro-model
Maintain appropriate
prudential regulation
Institute a long-term
development policy
At least 3 Measures3 Issues
Conclusion An integrated approach is required by the
central bank in dealing with commercial banks to ensure effectiveness of monetary policy
These include (1) the appropriate prudential regulation and (2) a long-term development plan for the financial sector
Both will complement our ongoing work to improve the framework of monetary policy conduct and will provide foundation for a sustainable development
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Conclusion (cont.)