Banks' regulatory buffers, liquidity networks and monetary policy transmission

Christian P. Merkl and Stéphanie Stolz

No 2006,06, Discussion Paper Series 2: Banking and Financial Studies from Deutsche Bundesbank, Research Centre

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: monetary policy transmission; bank lending channel; bank capital channel; liquidity networks (search for similar items in EconPapers)
JEL-codes: C23 E52 G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fin, nep-fmk, nep-mac, nep-mon and nep-reg
Date: 2006
View list of references

Downloads: (external link)
http://opus.zbw-kiel.de/volltexte/2006/4771/pdf/200606dkp_b.pdf (application/pdf)

Related works:
Working Paper: Banks’ Regulatory Buffers, Liquidity Networks and Monetary Policy Transmission (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Discussion Paper Series 2: Banking and Financial Studies from Deutsche Bundesbank, Research Centre
Contact information at EDIRC.
Series data maintained by ZBW - German National Library for Economics ().