The Credit Channel of Monetary Policy and Housing Markets: International Empirical Evidence

Matteo Iacoviello () and Raoul Minetti

No 14/2000, Research Discussion Papers from Bank of Finland

Abstract: This paper tests for the presence of a credit channel (particularly a bank-lending sub-channel) for monetary policy in the housing market. We argue that the importance of this channel for investment in residential housing is highly dependent on the structural features, and particularly the efficiency and institutional organization, of housing finance. We employ a VAR methodology to analyse this issue with respect to the housing markets of four European countries (Finland, Germany, Norway and the United Kingdom), which differ greatly in terms of structural features. Our results are generally consistent with the existence of a broad credit channel, whereas the bank-lending channel seems to be operational only under certain conditions. More importantly, our results are consistent with previous analyses of housing market efficiency, which strongly suggests the existence of a clear relationship between the presence of a credit (bank lending) channel, the efficiency level of housing finance, and the type of institutions that are active in mortgage provision.

Keywords: monetary transmission; bank lending channel; house prices; vector autoregressions (search for similar items in EconPapers)
JEL-codes: C22 E44 E51 E52 G21 (search for similar items in EconPapers)
Date: 2000-10-09
View citations in EconPapers

Downloads: (external link)
http://www.bof.fi/NR/rdonlyres/0B3EB0E3-D4D4-46E0-A125-3EACA70C5E61/0/0014.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhs:bofrdp:2000_014

Access Statistics for this paper

More papers in Research Discussion Papers from Bank of Finland
Address: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Contact information at EDIRC.
Series data maintained by Minna Nyman ().