 Bank-Specific Characteristics and Monetary Policy Transmission: The Case of ItalyNo 430, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area Abstract: This paper tests cross-sectional differences in the effectiveness of the bank lending channel of monetary policy in Italy from 1986 to 1998 using a panel approach. After a monetary tightening the decrease in deposits subject to reserve requirements is sharper for those banks that have less incentive to shield the effect of a monetary squeeze: small banks characterized by a higher ratio of deposits to loans and well-capitalized banks that have a greater capacity to raise other forms of external funds. As to lending, size does not affect the banks� reaction to a monetary policy impulse. This can be explained by a closer customer relationship, which provides an incentive for small banks, which are more liquid on average, to smooth the effects of a tightening on credit supplied. Banks� liquidity is the most significant factor enabling them to attenuate the effect of a decrease in deposits on lending. Keywords: monetary policy; transmission mechanisms; bank lending channel (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_430_01 Access Statistics for this paper More papers in Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC. |
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