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Did Interest Rates at the Zero Lower Bound Affect Lending of Commercial Banks? Evidence for the Euro Area

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  • Belke Ansgar

    (University of Duisburg-Essen, Essen, Germany)

  • Dreger Christian

    (DIW Berlin, Berlin, Germany)

Abstract

The paper examines the bank lending activities of banks in a low interest rate environment. External financing of small- and medium-sized enterprises in the euro area primarily takes place via bank loans and not through capital markets. Based on the Bankscope database, bank balance sheet data is utilized. Control variables are included, such as for the system of banking regulation. The panel estimation includes 706 banks from 15 Euro area member states and is conducted for the period 2000 to 2015. All models show a significant positive impact of lower interest rates on net lending. In particular, the results do not indicate that credit is restricted if interest rates move towards the zero-lower bound.

Suggested Citation

  • Belke Ansgar & Dreger Christian, 2019. "Did Interest Rates at the Zero Lower Bound Affect Lending of Commercial Banks? Evidence for the Euro Area," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(5-6), pages 841-860, October.
    • Handle: RePEc:jns:jbstat:v:239:y:2019:i:5-6:p:841-860:n:3
    DOI: 10.1515/jbnst-2018-0098
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    More about this item

    Keywords

    bank lending; banking regulation; monetary transmission mechanisms; low interest rate environment;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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