Bank-specific characteristics and monetary policy transmission: the case of Italy

Leonardo Gambacorta

No 103, Working Paper Series from European Central Bank

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. JEL Classification: E44, E51, E52

Keywords: bank lending channel; monetary policy; transmission mechanisms (search for similar items in EconPapers)
Date: 2001-12
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp103.pdf (application/pdf)

Related works:
Working Paper: Bank-Specific Characteristics and Monetary Policy Transmission: The Case of Italy (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2001103

Access Statistics for this paper

More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().