Bank Lending Channel in Slovenia: Panel Data Analysis

Meta Ahtik

Prague Economic Papers, 2012, vol. 2012, issue 1, 50-68

Abstract: Channels through which monetary policy affects aggregate demand can be divided into three groups: traditional interest rate channel, other asset price channels and credit channel composed of balance sheet channel (named also broad credit channel), only recently separated bank capital channel and bank lending channel. Banks face troubles in keeping their present or acquiring new financial sources, when central bank tightens its monetary policy. Banks characterized by differences in size, capitalization, liquidity and ownership face different levels of informational asymmetry and are therefore differently affected by changes in monetary policy. If larger, better capitalized, more liquid, state owned and/or domestically owned banks respond weaker to changes in monetary policy it is possible to argue that bank lending channel is effective. This hypothesis is tested on a panel of annual data for individual Slovenian banks in the period between 1993 and 2007 using general method of moments. Results largely confirm the existence of the bank lending channel in Slovenia.

Keywords: Slovenia; banking; monetary transmission mechanism; bank lending channel; panel data analysis (search for similar items in EconPapers)
JEL-codes: C23 C44 E52 G21 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (6)

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DOI: 10.18267/j.pep.410

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