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Euroisation and the Bank Lending Channel of Monetary Policy: Evidence from Czechia

Author

Listed:
  • Zuzana Gric
  • Jan Janku
  • Simona Malovana

Abstract

We show that divergences between Czech and euro-area policy rates reshape the currency composition of corporate lending. Using loan-level data from AnaCredit for 2019–2024, we document that a widening PRIBOR–EURIBOR spread triggers a sharp reallocation toward euro-denominated credit, concentrated in new loans. The effect is asymmetric: strong when the differential widens, but only partially reversible when it narrows. It is driven mainly by large, less-capitalised banks and by larger, lower-leverage firms, while exchange-rate movements play virtually no role. These findings imply that persistent positive differentials weaken domestic monetary transmission and increase foreign-currency exposures, underscoring the need for macroprudential attention in small open economies with rising euroisation.

Suggested Citation

  • Zuzana Gric & Jan Janku & Simona Malovana, 2026. "Euroisation and the Bank Lending Channel of Monetary Policy: Evidence from Czechia," Working Papers 2026/07, Czech National Bank, Research and Statistics Department.
    • Handle: RePEc:cnb:wpaper:2026/07
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    References listed on IDEAS

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    5. Martin Brown & Ralph De Haas, 2012. "Foreign banks and foreign currency lending in emerging Europe [Capital structure and financial risk: evidence from foreign debt use in East Asia]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 27(69), pages 57-98.
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    Keywords

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    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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