ECB’s unconventional monetary policy and bank lending supply and performance in the euro area

Dimitris Kenourgios and Despoina Ntaikou
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Despoina Ntaikou: National and Kapodistrian University of Athens

Journal of Economics and Finance, 2021, vol. 45, issue 2, No 1, 224 pages

Abstract: Abstract This paper examines the impact of the European Central Bank’s unconventional monetary policy (UMP) on bank lending supply and performance in the euro area, through comparing the evolution of bank-specific variables before and after the UMP implementation. By using a dynamic panel data analysis on banks across discrete country groups (euro zone, core, peripheral) and by controlling for bank-specific and country-level variables, we provide evidence that the bank lending decisions and performance of euro zone banks are not UMP driven, implying the limited ability of the ECB to enhance the effectiveness of banks’ lending channel and to affect banks’ profitability during the crisis. Our findings also suggest that different criteria determine banks’ lending strategy before the UMP period, bank credit strategies vary across the country samples, while the weaker economies’ banks seem to underestimate the impact of liquidity risk on their lending activity.

Keywords: European Central Bank; Unconventional monetary policy; Bank performance; Lending Channel; Euro zone banks (search for similar items in EconPapers)
JEL-codes: E52 G01 G21 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12197-019-09503-6

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