Deposit Funding and the Credit Channel of Monetary Policy

Matthieu Bussiere, Tommaso Gasparini, Guillaume Horny and Benoit Nguyen

Working papers from Banque de France

Abstract: How does heterogeneity in deposit funding among banks influence the transmission of monetary policy to loan supply? To address this question, we exploit a bank-level panel dataset of more than 450 banks from 19 euro-area countries from 2007 to 2023. Our empirical findings reveal that banks with a higher reliance on deposit funding exhibit a more muted increase in lending rates following monetary policy tightening. These results are consistent with a mechanism in which deposit funding shapes bank loan supply.

Keywords: Banks; Deposit Pricing; Loan Supply (search for similar items in EconPapers)
JEL-codes: G14 G23 G29 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:1029

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