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The Transmission Of The Monetary Policy In The Euro Area: The Role Of The Banks Business Model

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  • Marco MIGLIORELLI
  • Sandro BRUNELLI

Abstract

This paper sheds some new light on the incidence of the banks’ business model as a component of the bank lending channel in the euro area. Differently from existing literature, the analysis is led on the basis of the two main macroeconomic regions that today characterize the euro area: its north-east (German-centric) and south-west halves. The observation period is 2008-2013, mainly featured by the financial and economic crisis. The empirical findings evidence that in the north-east half of the euro area the cooperative banks leveraged the effects of the reduction in the interest rates in terms of new lending. In this respect, they differentiated from commercial and savings banks, which showed a more neutral impact on the transmission of the monetary policy decisions. These results highlight the distinctive role of the cooperative banks in terms of credit provision in Germany and in the whole north-east half of the euro area. Nevertheless, this cooperative banking effect did not emerge for the south-west half of the continent, particularly hit by the crisis. This may suggest that the bank's business model tend to be neutral to the transmission of the monetary policy in economies characterized by prolonged recessions. and sustainable development.

Suggested Citation

  • Marco MIGLIORELLI & Sandro BRUNELLI, 2017. "The Transmission Of The Monetary Policy In The Euro Area: The Role Of The Banks Business Model," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 88(3), pages 303-322, September.
    • Handle: RePEc:bla:annpce:v:88:y:2017:i:3:p:303-322
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    Cited by:

    1. Marco Migliorelli & Philippe Dessertine, 2017. "Time for new financing instruments? A market-oriented framework to finance environmentally friendly practices in EU agriculture," Post-Print halshs-02103991, HAL.
    2. Fatih OKUR & Ömer AKKUŞ & Atakan DURMAZ, 2019. "The effectiveness of the monetary transmission mechanism channel in Turkey," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 10, pages 161-180, June.
    3. Marco Migliorelli & Philippe Dessertine, 2018. "Time for new financing instruments? A market-oriented framework to finance environmentally friendly practices in EU agriculture," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 8(1), pages 1-25, January.

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