Evidence on the bank lending channel in Europe (original) (raw)
2002, Journal of Banking & Finance
This paper adds to the confusion on evidence of a bank lending channel in Europe. Following the approach suggested by we use bank balance sheet to estimate the response of bank lending to changes in monetary policy stance between 1991 and 1999. In particular, we classify banks according to asset size and capital strength to see if these factors have a significant impact on the lending channel. Using a panel data approach we find that across the EMU systems, undercapitalised banks (of any size) tend to respond more to change in policy. There is little evidence to suggest that only small undercapitalised banks are the main conduit of the bank lending channel. These results, however, need to be qualified. When we look at individual country estimates for France, Germany, Italy and Spain only in the latter two countries is their evidence of a bank lending channel. By implication, it seems that the bank lending channel is more prevalent for undercapitalised banks operating in the other smaller EMU countries. Overall, our results find more evidence than and less evidence than de Bondt (1999) of a bank lending channel across Europe.
Loading Preview
Sorry, preview is currently unavailable. You can download the paper by clicking the button above.