The bank lending channel: An empirical analysis of EU accession countries from 2004-2013

Taha Khosravi

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper a methodical empirical analysis of the bank lending channel of monetary transmission in the European Union’s 10 new member states is conducted. We specifically investigate the influence of monetary policy changes on bank lending activity and if this potential influence is contingent on bank characteristics, such as banks’ size, capital, liquidity and risk factor. Panel data compiled from a large number of banks from 2004 to 2013, and dynamic panel estimation methods are used. The results indicate the existence of a bank lending channel through bank liquidity; however, while liquidity and GDP growth maintain a beneficial and substantial impact on bank loan growth, the other bank characteristics are not considered to be important factors. Additionally, there is an indication of the effect of bank risk and liquidity from 2008 to 2010. Nevertheless, the lending channel has been weakened, serving as an additional refutation of bank-specific traits in allowing banks to maintain lending activity and growth during a financial crisis.

Keywords: Bank lending channel; EU-10 countries; Monetary policy transmission; Panel data. (search for similar items in EconPapers)
JEL-codes: C23 E51 E52 G21 (search for similar items in EconPapers)
Date: 2015-09-19
New Economics Papers: this item is included in nep-cfn, nep-eec, nep-fdg, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:66795

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