Heterogenous impact of monetary policy on the Philippine rural banking system

This paper shows the differential impact of monetary policy on lending behavior rural banks, with bank channel being operational in small banks. While big banks are able to protect their portfolio from contractionary by size balance sheet, less diversified funding cannot. Moreover, highly capitalized more inclined capital than expand portfolio, following tightening and higher requirement. The insignificance gross domestic product (GDP) growth may reflect weakness effective loan demand lack diversification that could have also impinged earning capacity as supported initial estimates drivers profitability. finding heterogeneous effects has a secondary implication credence principle proportionality embodied BSP’s regulatory framework.