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Legal structure, financial structure, and the monetary policy transmission mechanism

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  • Stephen G. Cecchetti

Abstract

Among the many challenges facing the new Eurosystem - the European Central Bank and the central banks of the eleven members of the European Monetary Union - is the possibility that participating countries will respond differently to interest rate changes. This paper provides evidence that differences in financial structure are the proximate cause for these national asymmetries in monetary policy transmission and that these differences in financial structure are a result of differences in legal structure. The author concludes that unless legal structures are harmonized across Europe, the financial structures and monetary transmission mechanisms of the European Union countries will remain diverse

Suggested Citation

  • Stephen G. Cecchetti, 1999. "Legal structure, financial structure, and the monetary policy transmission mechanism," Economic Policy Review, Federal Reserve Bank of New York, vol. 5(Jul), pages 9-28.
  • Handle: RePEc:fip:fednep:y:1999:i:jul:p:9-28:n:v.5no.2
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    More about this item

    Keywords

    Monetary policy - Europe; European Monetary System (Organization); Europe; European Central Bank;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G3 - Financial Economics - - Corporate Finance and Governance

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