This paper explores a transmission mechanism of an exogenous shock to domestic financial markets by investigating the potential signaling role of the Monetary Stabilization Bond (MSB) spread together with several financial variables in Korea. The MSB spread widened and became more volatile...

In the transmission of monetary policy, banks’ administered interest rates set by their market power may not coordinate well with the policy intention. In this study, we examine the effect of banks’ net interest rate spread (NIS) on real economic growth in response to changes in the...