Rafael Repullo, Professor of Economics at Center for Monetary and Financial Studies (CEMFI), will be visiting Columbia to host a two-part mini course series on the topic of “The Transmission of Monetary Policy when Banks have Market Power.” Please see the detailed information below for further course information and to RSVP.

• Part 1: Tuesday, February 25, 2025 –“The Deposits Channel of Monetary Policy: A Critical Review”
• Part 2: Thursday, February 27, 2025 -“Interest Rates, Market Power, and Financial Stability (with David Martinez-Miera)”

Abstract for Part 1:

Drechsler, Savov, and Schnabl (2017) claim that increases in the monetary policy rate lead to reductions in bank deposits, which account for the subsequent contraction in lending. This paper reviews their theoretical analysis, based on a model of imperfect competition with differentiated deposits, showing that the relationship between the policy rate and the equilibrium amount of deposits is either flat or upward sloping in the relevant range. Moreover, this is consistent with their panel regression results showing that an increase in the policy rate leads to smaller changes in deposits at branches with high market power. These results question the theoretical underpinnings of the “deposits channel” of monetary policy transmission.

Please note that an RSVP is required to attend this event. Please click here to RSVP.

Light refreshments will be served.

Information for the second lecture in the course series (on 2/27/25) can be found here.