The bank lending channel and monetary policy rules for Eurozone banks: further extensions

Nicholas Apergis (), Stephen Miller and Alevizopoulou Effrosyni
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Alevizopoulou Effrosyni: Banking and Financial Management, University of Piraeus, Piraeus 18534, Greece

The B.E. Journal of Macroeconomics, 2015, vol. 15, issue 1, 93-112

Abstract: The monetary authorities affect macroeconomic activity through various channels of influence. This paper examines the bank lending channel, which considers how central bank actions affect the loan supply through its main indicator of policy, the real short-term interest rate. This paper employs the endogenously determined target interest rate, emanating from the European Central Bank’s monetary policy rule, to examine the operation of the bank lending channel. Furthermore, it examines whether different bank-specific characteristics affect how Eurozone banks react to monetary shocks. That is, do sounder banks react more to the monetary policy rule than less-sound banks? The paper finds evidence of an active and statistically and economically significant bank lending channel for the Eurozone between 2000 and 2009.

Keywords: bank lending channel; Eurozone banks; GMM methodology; Monetary policy rules (search for similar items in EconPapers)
JEL-codes: C33 E52 G21 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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DOI: 10.1515/bejm-2014-0044

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