Arbeitspapier

Monetary Policy under the Microscope: Intra-bank Transmission of Asset Purchase Programs of the ECB

With a unique loan portfolio maintained by a top-20 universal bank in Germany, this study tests whether unconventional monetary policy by the European Central Bank (ECB) reduced corporate borrowing costs. We decompose corporate lending rates into refinancing costs, as determined by money markets, and markups that the bank is able to charge its customers in regional markets. This decomposition reveals how banks transmit monetary policy within their organizations. To identify policy effects on loan rate components, we exploit the co-existence of eurozone-wide security purchase programs and regional fiscal policies at the district level. ECB purchase programs reduced refinancing costs significantly, even in an economy not specifically targeted for sovereign debt stress relief, but not loan rates themselves. However, asset purchases mitigated those loan price hikes due to additional credit demand stimulated by regional tax policy and enabled the bank to realize larger economic margins.

Language
Englisch

Bibliographic citation
Series: IWH Discussion Papers ; No. 9/2015

Classification
Wirtschaft
Financial Crises
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Interest Rates: Determination, Term Structure, and Effects
Monetary Policy
Subject
unconventional monetary policy
asset purchase programs
ECB
interest rate channel
internal capital markets

Event
Geistige Schöpfung
(who)
Cycon, Lisa
Koetter, Michael
Event
Veröffentlichung
(who)
Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
(where)
Halle (Saale)
(when)
2015

Handle
URN
urn:nbn:de:gbv:3:2-48588
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Cycon, Lisa
  • Koetter, Michael
  • Leibniz-Institut für Wirtschaftsforschung Halle (IWH)

Time of origin

  • 2015

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