Monetary policy effects on bank loans in Germany: A panel-econometric analysis

Arbeitspapier

A crucial condition for the existence of a credit channel through bank loans is that monetary policy should be able to change bank loan supply. This paper contributes to the discussion on this issue by presenting empirical evidence from dynamic panel estimations based on a dataset that comprises individual balance-sheet information on all German banks. It shows that the average bank reduces its lending more sharply in reaction to a restrictive monetary policy measure, the lower its ratio of short-term interbank deposits to total assets is. This result is robust against a broad variety of changes in the specification. A dependence on its size can be found only if explicitly controlled for this dominating effect and/or if the very small banks are excluded. Overall, the evidence is compatible with the existence of a credit channel, although it is weakened by the banks' liquidity management.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper Series 1 ; No. 2001,17

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Monetary Policy
• Subject: monetary policy transmission ; credit channel ; dynamic panel data ; Transmissionsmechanismus ; Kredit ; Bankbilanz ; Panel ; Schätzung ; Deutschland ; credit channel

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Worms, Andreas
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/19554
• Last update: 10.03.2025, 11:45 AM CET