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Monetary Policy Transmission in the Euro Area: New Evidence From Micro Data on Firms and Banks

  • Jean-Bernard Chatelain

    (Banque de France LEO Université Orleans,)

  • Michael Ehrmann

    (European Central Bank, Ehrmann:)

  • Andrea Generale

    (Banca d'Italia, Generale:)

  • Jorge Martínez-Pagés

    (Banco de Espanña, Martínez-Pagés:)

  • Philip Vermeulen

    (European Central Bank, Vermeulen:)

  • Andreas Worms

    (Deutsche Bundesbank, Worms:)

This paper presents an overview of the results of a research project on monetary transmission pursued by the Eurosystem, which has analyzed micro data on firms and banks in several countries of the euro area in great detail. There is strong empirical support for an interest rate channel working through firm investment. Furthermore, a credit channel can be identified with firm micro data. On the bank side, there is evidence that lending reacts differently to monetary policy according to bank balance sheet characteristics. In particular, banks that have a less liquid asset composition show a stronger loan supply response. This finding may be due to banks drawing on their liquid assets to cushion the effects of monetary policy on their loan portfolio, which is in line with the existence of close relationships between banks and their loan customers. (JEL: C23, E52, G21) Copyright (c) 2003 The European Economic Association.

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Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 1 (2003)
Issue (Month): 2-3 (04/05)
Pages: 731-742

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Handle: RePEc:tpr:jeurec:v:1:y:2003:i:2-3:p:731-742
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  17. Topi, Jukka & Vilmunen, Jouko, 2001. "Transmission of monetary policy shocks in Finland: evidence from bank level data on loans," Working Paper Series 0100, European Central Bank.
  18. Jeremy C. Stein & Anil K. Kashyap, 2000. "What Do a Million Observations on Banks Say about the Transmission of Monetary Policy?," American Economic Review, American Economic Association, vol. 90(3), pages 407-428, June.
  19. Bernanke, Ben & Gertler, Mark, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Working Papers 95-15, C.V. Starr Center for Applied Economics, New York University.
  20. Ehrmann, M. & Worms, A., 2001. "Interbank Lending and Monetary Policy Transmission: Evidence for Germany," Papers 73, Quebec a Montreal - Recherche en gestion.
  21. Farinha, Luísa & Robalo Marques, Carlos, 2001. "The bank lending channel of monetary policy: identification and estimation using Portuguese micro bank data," Working Paper Series 0102, European Central Bank.
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  23. Loupias, Claire & Savignac, Frédérique & Sevestre, Patrick, 2001. "Monetary policy and bank lending in France: are there asymmetries?," Working Paper Series 0101, European Central Bank.
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  25. Peter van Els & Alberto Locarno & Beno�t Mojon & Julian Morgan, 2003. "New Macroeconomic Evidence on Monetary Policy Transmission in the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 720-730, 04/05.
  26. Worms, Andreas, 2001. "The reaction of bank lending to monetary policy measures in Germany," Working Paper Series 0096, European Central Bank.
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