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Banks’ Regulatory Buffers, Liquidity Networks and Monetary Policy Transmission

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Author Info
Christian Merkl
Stéphanie Stolz

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Abstract

Based on a quarterly regulatory dataset for German banks from 1999 to 2004, this paper analyzes the effects of banks’ regulatory capital on the transmission of monetary policy in a system of liquidity networks. The dynamic panel regression results provide evidence in favor of the bank capital channel theory. Banks holding less regulatory capital and less interbank liquidity react more restrictively to a monetary tightening than their peers.

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File URL: http://www.ifw-members.ifw-kiel.de/publications/banks2019-regulatory-buffers-liquidity-networks-and-monetary-policy-transmission-1/kap1303.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1303.

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Length: 46 pages
Date of creation: Nov 2006
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Handle: RePEc:kie:kieliw:1303

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Related research
Keywords: monetary policy transmission; bank lending channel; bank capital channel; liquidity networks;

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Find related papers by JEL classification:
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; Mortgages
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Philipp Engler & Terhi Jokipii & Christian Merkl & Pablo Rovira Kaltwasser & Lúcio Vinhas de Souza, 2007. "The effect of capital requirement regulation on the transmission of monetary policy: evidence from Austria," Empirica, Springer, vol. 34(5), pages 411-425, December. [Downloadable!] (restricted)
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