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Financial structure and the interest rate channel of ECB monetary policy

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  • Mojon, Benoît

Abstract

This paper analyses persistence differences in financial structure across countries of the euro area and whether they can lead to asymmetries in the transmission of the ECB policy. First, the paper examines the pass-through of money market rates to various bank retail rates and measures how this has evolved over the past two interest rate cycles. An analysis of panel data suggests that current 'country asymmetries' in the response of bank rates to monetary policy should decrease over time by virtue of the implementation of the single monetary policy, money market integration and the growth of debt securities markets and competition among banks. Second, analysis of the balance sheet structure of households and firms shows that the income effects of monetary policy are fairly homogenous in the four largest countries of the euro area, while wealth effects could be stronger in Italy. JEL Classification: E43, E52, G21

Suggested Citation

  • Mojon, Benoît, 2000. "Financial structure and the interest rate channel of ECB monetary policy," Working Paper Series 40, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:200040
    Note: 1792986
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp040.pdf
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    References listed on IDEAS

    as
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    8. Gual, Jordi, 1999. "Deregulation, Integration, and Market Structure in European Banking," Journal of the Japanese and International Economies, Elsevier, vol. 13(4), pages 372-396, December.
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    More about this item

    Keywords

    financial structure and the interest rate;

    JEL classification:

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

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