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has been cited by the following article:

• TITLE: Is US Bank Lending Sensitive to Exchange Rates? A Panel Data Investigation

  AUTHORS: Michael R. Jonas

  KEYWORDS: Cross-Border Banking, Exchange Rates, Monetary Policy, Bank Lending Channel

  JOURNAL NAME: Modern Economy, Vol.5 No.8, July 14, 2014

  ABSTRACT: The goal of this paper is to examine the sensitivity of US bank lending to movements in the exchange rate. Using a panel of quarterly bank-level balance sheet observations, I show that there exists significant and meaningful exchange rate sensitivity of cross-border lending activity and total domestic loans. This relationship operates through traditional net export channels, as well as mechanisms specific to banks engaged in international lending. Further, I show that exchange rate innovations represent a source of long run lending volatility equivalent to monetary policy shocks for small banks. Lastly, exchange rate movements are shown to be associated with a four-fold increase in growth of non-performing loans for small banks, providing direct evidence of transfer risk for cross-border banks.