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Capital Structure, Corporate Goverance, and Monetary Policy: Firm-Level Evidence for the Euro Area

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  • L. de Haan
  • E. Sterken

Abstract

This paper contributes to the empirical evidence on the credit channel of monetary policy in the euro area by providing firm level evidence on the relation between the impact of monetary policy on firm balance sheets and the corporate governance characteristics of the firms. A sample of half a million European firm-year observations, extending over the period 1990-1997, is analyzed. First, we present four alternative indicators of monetary policy for the 11 euro countries plus the UK. Secondly, we analyze the influence of governance structure on the monetary impact on firms' balance sheets. The results indicate that private firms, which appear to be more dependent on bank debt for external funds, are more susceptible to monetary policy shocks than public firms - quoted and unquoted.

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Bibliographic Info

Paper provided by Netherlands Central Bank, Research Department in its series WO Research Memoranda (discontinued) with number 637.

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Date of creation: 2000
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Handle: RePEc:dnb:wormem:637

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Keywords: Credit channel; Corporate governance;

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Cited by:
  1. Carmen Martínez-Carrascal & Annalisa Ferrando, 2008. "The impact of financial position on investment: an analysis for non-financial corporations in the euro area," Banco de Espa�a Working Papers 0820, Banco de Espa�a.
  2. Lünnemann, Patrick & Mathä, Thomas Y., 2001. "Monetary transmission: empirical evidence from Luxembourg firm level data," Working Paper Series 0111, European Central Bank.
  3. L. de Haan & E. Sterken, 2000. "Capital Structure, Corporate Goverance, and Monetary Policy: Firm-Level Evidence for the Euro Area," WO Research Memoranda (discontinued) 637, Netherlands Central Bank, Research Department.
  4. I. Arnold & C.J.M. Kool & K. Raabe, 2011. "Industry Effects of Bank Lending in Germany," Working Papers 11-21, Utrecht School of Economics.
  5. Martinez-Carrascal, Carmen & Ferrando, Annalisa, 2008. "The impact of financial position on investment: an anlysis for non-financial corporations in the euro area," Working Paper Series 0943, European Central Bank.
  6. Eleni Angelopoulou & Heather D. Gibson, 2007. "The Balance Sheet Channel of Monetary Policy Transmission: Evidence from the UK," Working Papers 53, Bank of Greece.
  7. Kazuo Ogawa & Elmer Sterken & Ichiro Tokutsu, 2013. "The trade credit channel revisited: evidence from micro data of Japanese small firms," Small Business Economics, Springer, vol. 40(1), pages 101-118, January.

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