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Details matter – how loan pricing affects monetary policy transmission in the euro area

Author

Listed:
  • Vilerts, Kārlis
  • Anyfantaki, Sofia
  • Benkovskis, Konstantins
  • Bredl, Sebastian
  • Giovannini, Massimo
  • Horky, Florian Matthias
  • Kunzmann, Vanessa
  • Lalinsky, Tibor
  • Lampousis, Athanasios
  • Lukmanova, Elizaveta
  • Petroulakis, Filippos
  • Zutis, Klavs

Abstract

We present novel empirical evidence on lending practices across all euro area countries, using AnaCredit data covering nearly seven million new loans issued to non-financial corporations in 2022-23. We document substantial variation in (a) the prevalence of fixed versus floating-rate loans, (b) rate fixation periods, and (c) reference rates. This variation results in lending rates being exposed to different segments of the risk-free rate yield curve which, in turn, influences their sensitivity to monetary policy changes. We show that loans priced using shorter-term relevant risk-free rates experience more pronounced monetary pass-through. Importantly, this effect is not purely mechanical, as part of the effect is offset by adjustments in the premium, revealing previously less explored heterogeneity in the pass-through to lending rates. JEL Classification: E52, E43, G21, E58

Suggested Citation

  • Vilerts, Kārlis & Anyfantaki, Sofia & Benkovskis, Konstantins & Bredl, Sebastian & Giovannini, Massimo & Horky, Florian Matthias & Kunzmann, Vanessa & Lalinsky, Tibor & Lampousis, Athanasios & Lukmano, 2025. "Details matter – how loan pricing affects monetary policy transmission in the euro area," Research Bulletin, European Central Bank, vol. 135.
    • Handle: RePEc:ecb:ecbrbu:2025:0135:
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    References listed on IDEAS

    as
    1. Altavilla, Carlo & Brugnolini, Luca & Gürkaynak, Refet S. & Motto, Roberto & Ragusa, Giuseppe, 2019. "Measuring euro area monetary policy," Journal of Monetary Economics, Elsevier, vol. 108(C), pages 162-179.
    2. KÄ rlis Vilerts & Sofia Anyfantaki & KonstantÄ«ns Beņkovskis & Sebastian Bredl & Massimo Giovannini & Florian Matthias Horky & Vanessa Kunzmann & Tibor Lalinský & Athanasios Lampousis & Elizaveta Lu, 2025. "Details matter: loan pricing and transmission of monetary policy in the euro area," Working Papers 345, Bank of Greece.
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    Cited by:

    1. Olivier De Jonghe & Konstantins Benkovskis & Karolis Bielskis & Diana Bonfim & Margherita Bottero & Tamas Briglevics & Martin Cesnak & Mantas Dirma & Marina Emiris & Palma Filep-Mosberger & Valentin J, 2025. "Household borrowing and monetary policy transmission: post-pandemic insights from nine European credit registers," Temi di discussione (Economic working papers) 1509, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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