Details matter – how loan pricing affects monetary policy transmission in the euro area

Kārlis Vilerts, Sofia Anyfantaki, Konstantins Benkovskis, Sebastian Bredl, Massimo Giovannini, Florian Matthias Horky, Vanessa Kunzmann, Tibor Lalinsky, Athanasios Lampousis, Elizaveta Lukmanova, Filippos Petroulakis and Klavs Zutis

Research Bulletin, 2025, vol. 135

Abstract: We present novel empirical evidence on lending practices across all euro area countries, using AnaCredit data covering nearly seven million new loans issued to non-financial corporations in 2022-23. We document substantial variation in (a) the prevalence of fixed versus floating-rate loans, (b) rate fixation periods, and (c) reference rates. This variation results in lending rates being exposed to different segments of the risk-free rate yield curve which, in turn, influences their sensitivity to monetary policy changes. We show that loans priced using shorter-term relevant risk-free rates experience more pronounced monetary pass-through. Importantly, this effect is not purely mechanical, as part of the effect is offset by adjustments in the premium, revealing previously less explored heterogeneity in the pass-through to lending rates. JEL Classification: E52, E43, G21, E58

Keywords: fixed-rate loans; floating-rate loans; interest rate pass-through; lending rates (search for similar items in EconPapers)
Date: 2025-10
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