IDEAS home Printed from https://ideas.repec.org/a/bpj/germec/v26y2025i2p131-192n1001.html
   My bibliography  Save this article

The Pass Through of Monetary Policy to Euro Area Bank Interest Rates

Author

Listed:
  • Michail Nektarios

    (87194 Central Bank of Cyprus , Nicosia, Cyprus)

  • Louka Kyriaki

    (87194 Central Bank of Cyprus , Nicosia, Cyprus)

Abstract

We examine the transmission of monetary policy to bank interest rates in the euro area, using a rolling estimation. The results, using various fixations for the Euribor rate and different maturities for bond yields, suggest that the pass through of policy rates to bank interest rates was relatively stable prior to the use of unconventional monetary policy measures. After the use of unconventional policies, the pass-through multiplier from the Euribor rate and the short-term bonds increased, while the pass-through from longer-term bonds markedly decreased. It appears that unconventional monetary policy operations allow for bank lending rates to further decline, which could lead to higher lending, with potential financial stability issues arising. In addition to the excess liquidity created by asset purchases, factors such as credit risk and house price growth also appear to impact the pass through.

Suggested Citation

  • Michail Nektarios & Louka Kyriaki, 2025. "The Pass Through of Monetary Policy to Euro Area Bank Interest Rates," German Economic Review, De Gruyter, vol. 26(2), pages 131-192.
    • Handle: RePEc:bpj:germec:v:26:y:2025:i:2:p:131-192:n:1001
    DOI: 10.1515/ger-2023-0084
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ger-2023-0084
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/ger-2023-0084?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:germec:v:26:y:2025:i:2:p:131-192:n:1001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.