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Monetary policy and bank lending::Evidence from German banking groups

Authors
Journal
Journal of Banking & Finance
0378-4266
Publisher
Elsevier
Publication Date
Volume
26
Issue
11
Identifiers
DOI: 10.1016/s0378-4266(02)00200-5
Keywords
  • Monetary Policy
  • Bank Lending
Disciplines
  • Economics

Abstract

Abstract This paper analyses the impact of monetary shocks on bank lending in Germany. We follow a cross-sectoral approach by looking at six different banking groups. In general, smaller banks hold a larger buffer of liquid assets which they can use to offset monetary shocks. In addition, the response of bank lending after a monetary contraction is very different across banking sectors. Lending by the credit co-operatives, which are on average the smallest banks, declines most, whereas big banks are able to shield their loans portfolio against monetary shocks. Overall, our results provide support for the existence of a bank lending channel.

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