Financial Systems and the Role of Banks in Monetary Policy Transmission in the Euro Area

Michael Ehrmann, Leonardo Gambacorta, Jorge Martínez-Pagés, Patrick Sevestre and Andreas Worms
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Jorge Martínez-Pagés: Banco de España
Andreas Worms: Deutsche Bundesbank

No 118, Working Papers from Banco de España

Abstract: This paper offers a comprehensive comparison of the structure of banking and financial markets in the euro area. Based on this, several hypotheses about the role of banks in monetary policy transmission are developed. Many of the predictions that have been proposed for the U.S. are deemed unlikely to apply in Europe. Testing these hypotheses we find that monetary policy does alter bank loan supply, with the effects most dependent on the liquidity of individual banks. Unlike in the US, the size of a bank does generally not explain its lending reaction. We also show that the standard publicly available database, BankScope, obscures the heterogeneity across banks. Indeed, for several types of questions BankScope data suggest very different answers than more complete data that reside at national central banks.

Keywords: monetary policy transmission; financial structure; bank lending (search for similar items in EconPapers)
JEL-codes: C23 E44 E52 G21 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (169)

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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/01/Fic/dt0118e.pdf First version, 2001 (application/pdf)

Related works:
Working Paper: Fynancial Systems and the Role of Banks in Monetary Policy Transmission in the Euro area (2001)
Working Paper: Financial systems and the role of banks in monetary policy transmission in the euro area (2001)
Working Paper: Financial systems and the role of banks in monetary policy transmission in the euro area (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0118

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