Banks' regulatory buffers, liquidity networks and monetary policy transmission

Christian Merkl and Stephanie Stolz

No 1303, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Based on a quarterly regulatory dataset for German banks from 1999 to 2004, this paper analyzes the effects of banks' regulatory capital on the transmission of monetary policy in a system of liquidity networks. The dynamic panel regression results provide evidence in favor of the bank capital channel theory. Banks holding less regulatory capital and less interbank liquidity react more restrictively to a monetary tightening than their peers.

Keywords: Bank lending channel; Bank capital channel; Liquidity networks; Monetary policy transmission (search for similar items in EconPapers)
JEL-codes: C23 E52 G21 G28 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Banks' regulatory buffers, liquidity networks and monetary policy transmission (2009)
Working Paper: Banks' regulatory buffers, liquidity networks and monetary policy transmission (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1303

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