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Bank-Specific Characteristics and Monetary Policy Transmission: The Case of Italy Author info | Abstract | Publisher info | Download info | Related research | Statistics Leonardo Gambacorta () (Bank of Italy, Economic Research Department)
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This paper tests cross-sectional differences in the effectiveness of the bank lending channel of monetary policy in Italy from 1986 to 1998 using a panel approach. After a monetary tightening the decrease in deposits subject to reserve requirements is sharper for those banks that have less incentive to shield the effect of a monetary squeeze: small banks characterized by a higher ratio of deposits to loans and well-capitalized banks that have a greater capacity to raise other forms of external funds. As to lending, size does not affect the banksÂ’ reaction to a monetary policy impulse. This can be explained by a closer customer relationship, which provides an incentive for small banks, which are more liquid on average, to smooth the effects of a tightening on credit supplied. BanksÂ’ liquidity is the most significant factor enabling them to attenuate the effect of a decrease in deposits on lending.
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Paper provided by Bank of Italy, Economic Research Department in its series Temi di discussione (Economic working papers) with number
430.
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Date of creation: Dec 2001Date of revision:
Handle: RePEc:bdi:wptemi:td_430_01Contact details of provider: Postal: Via Nazionale, 91 - 00184 Roma Web page: http://www.bancaditalia.it More information through EDIRC
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Keywords: monetary policy ; transmission mechanisms ; bank lending channel ; Other versions of this item:
Find related papers by 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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