Details Matter: Loan Pricing and Transmission of Monetary Policy in the Euro Area

KÄ rlis Vilerts (), Sofia Anyfantaki (), KonstantÄ«ns Beņkovskis (), Sebastian Bredl (), Massimo Giovannini (), Florian Horky (), Vanessa Kunzmann (), Tibor Lalinský (), Athanasios Lampousis (), Elizaveta Lukmanova (), Filippos Petroulakis () and KlÄ vs Zutis ()
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KÄ rlis Vilerts: Latvijas Banka
Sofia Anyfantaki: European Central Bank
Konstantīns Beņkovskis: Latvijas Banka
Sebastian Bredl: Deutsche Bundesbank
Massimo Giovannini: Bank of Malta
Florian Horky: National Bank of Slovakia
Vanessa Kunzmann: Deutsche Bundesbank
Tibor Lalinský: National Bank of Slovakia
Athanasios Lampousis: Bank of Greece
Elizaveta Lukmanova: Central Bank of Ireland
Filippos Petroulakis: Bank of Greece
KlÄ vs Zutis: Latvijas Banka

No WP 8/2025, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: Does the maturity of the relevant risk-free rate influence the strength of monetary policy pass-through to interest rates on new loans? To address this question, we present novel empirical evidence on lending practices across all euro area countries, using AnaCredit data covering nearly seven million new loans issued to non-financial corporations in 2022–2023. We document substantial variation in (a) the prevalence of fixed- vs floating-rate loans, (b) rate fixation periods, and (c) reference rates. This variation results in lending rates being exposed to different segments of the risk-free rate yield curve which, in turn, influence their sensitivity to monetary policy changes. We show that loans linked to shorter-maturity riskfree rates experience more pronounced monetary pass-through. Importantly, this effect is not purely mechanical, as part of the effect is offset by adjustments in the premium, revealing previously less-explored heterogeneity in the pass-through to lending rates.

JEL-codes: E43 E52 E58 G21 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2025-07
New Economics Papers: this item is included in nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1123

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