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Monetary Policy Transmission in the Euro Area: New Evidence From Micro Data on Firms and Banks

Author

Listed:
  • Jean-Bernard Chatelain

    (Banque de France LEO Université Orleans,)

  • Michael Ehrmann

    (European Central Bank, Ehrmann:)

  • Andrea Generale

    (Banca d'Italia, Generale:)

  • Jorge Martínez-Pagés

    (Banco de Espanña, Martínez-Pagés:)

  • Philip Vermeulen

    (European Central Bank, Vermeulen:)

  • Andreas Worms

    (Deutsche Bundesbank, Worms:)

Abstract

This paper presents an overview of the results of a research project on monetary transmission pursued by the Eurosystem, which has analyzed micro data on firms and banks in several countries of the euro area in great detail. There is strong empirical support for an interest rate channel working through firm investment. Furthermore, a credit channel can be identified with firm micro data. On the bank side, there is evidence that lending reacts differently to monetary policy according to bank balance sheet characteristics. In particular, banks that have a less liquid asset composition show a stronger loan supply response. This finding may be due to banks drawing on their liquid assets to cushion the effects of monetary policy on their loan portfolio, which is in line with the existence of close relationships between banks and their loan customers. (JEL: C23, E52, G21) Copyright (c) 2003 The European Economic Association.

Suggested Citation

  • Jean-Bernard Chatelain & Michael Ehrmann & Andrea Generale & Jorge Martínez-Pagés & Philip Vermeulen & Andreas Worms, 2003. "Monetary Policy Transmission in the Euro Area: New Evidence From Micro Data on Firms and Banks," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 731-742, 04/05.
    • Handle: RePEc:tpr:jeurec:v:1:y:2003:i:2-3:p:731-742
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    as
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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