Impact of Banking Structure on the Efficiency of Monetary Policy

<p>&nbsp;Research in the paper is devoted to interrelation identification between structure of the banking sector and efficiency of monetary policy.</p><p>Recent world financial and economic crisis showed the importance of banks in economy. Banks play a key role in providing the credits, in payment system, in transmission of a monetary policy and maintenance of financial stability. Besides, crisis put a number of questions, which are beyond the usual monetary theory before central banks. Thus, there is actual to research a dependence between the bank competition and monetary policy.</p><p>Work purpose: identification of existence or lack of communication between the bank competition and efficiency of monetary policy.</p><p>Tasks:</p><p>1 . Systematization of available theoretical and empirical researches on monetary policy;</p><p>2 . Systematization of existing models of an assessment of the bank competition;</p><p>3 . Specification of stages of the researches of interrelation between the bank competition and a credit policy conducted earlier;</p><p>4 . Empirical research of existence, the direction and interrelation degree between extent of the bank competition and efficiency of monetary policy.</p><p>In this work were used both theoretical, and empirical methods. Also were studied articles, scientific works of domestic and foreign authors in the field of monetary policy and the bank competition. Research was based on theories and the concepts stated in modern works of economists, experts.</p><p>In the paper, we are guided on the Panzar-Rosse index, which is very widely used in empirical bank researches. This approach estimates the equation of a reduced form connecting a gross income with a vector of entry costs and other variables of control. We follow methodology offered by Goddard, Wilson (2009) and used in the empirical research Olivero M.P. Yuan Li, Jeon B.N. (2011) for measurement of extent of the bank competition. For an assessment of efficiency of monetary policy was used Malmkvist&#39;s index. The index is brought out of Farrell&#39;s approach (Farrell, 1957), estimating limit of variability of inflation and output.</p><p>For interrelation identification between bank structure and monetary policy, we constructed the chart of dispersion and regression to analyse interrelation of efficiency of monetary policy and the bank competition through the portfolio channel.</p><p>According to the received result there is a negative interrelation between efficiency of monetary policy and the bank competition, i.e. the bank competition is higher, the credit policy is less effective.</p><p>In the course of research were used such general scientific methods of knowledge as the analysis, system approach, economical and statistical and econometric methods of information processing.</p><p>Structurally work consists of the introduction, three chapters, the conclusion and the list of the used sources.</p>