Monetary transmission and bank lending in Germany
AbstractThis paper analyses the role of bank lending in the monetary transmission process in Germany. We follow a sectoral approach by distinguishing corporate lending and household lending. We find that banks respond to a monetary contraction by adjusting their securities holdings, rather than reducing their loans portfolio. Most lending categories even show an increase following a monetary tightening. The main implication of our results is that a bank lending channel is not an important transmission mechanism. On the contrary, by insulating their loans portfolio from monetary shocks, banks are more likely to weaken than to strengthen the impact of monetary policy.
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Bibliographic InfoPaper provided by University of Groningen, CCSO Centre for Economic Research in its series CCSO Working Papers with number 199906.
Date of creation: 1999
Date of revision:
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