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The international bank lending channel of unconventional monetary policy

Author

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  • Gräb, Johannes
  • Żochowski, Dawid

Abstract

We use a confidential euro area bank-level data set of close to 250 banks to assess outward and inward spillovers of unconventional monetary policies on bank lending. We find that euro area banks increase lending to the rest of the world in response to non-standard ECB monetary policy accommodation. We also find strong evidence that euro area banks increase lending to the domestic non-financial private sector in response to accommodative unconventional monetary policy measures in the US. Inward and outward spillovers are substantially stronger for euro area banks which are liquidity constrained and which rely more on internal capital markets. This suggests that bank-specific supply effects, stemming from banks’ increased ability to lend following a central bank balance sheet expansion, are a major driver of monetary policy spillovers, providing strong support to the existence of an international bank lending channel that prevails at the effective lower bound. JEL Classification: E44, E52, G01

Suggested Citation

  • Gräb, Johannes & Żochowski, Dawid, 2017. "The international bank lending channel of unconventional monetary policy," Working Paper Series 2109, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20172109
    Note: 2152671
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2109.en.pdf
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    References listed on IDEAS

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    Cited by:

    1. Buch, Claudia M. & Bussierè, Matthieu & Goldberg, Linda & Hills, Robert, 2019. "The international transmission of monetary policy," Journal of International Money and Finance, Elsevier, vol. 91(C), pages 29-48.
    2. repec:eee:jimfin:v:90:y:2019:i:c:p:175-186 is not listed on IDEAS
    3. Pierre-Richard Agénor & Luiz Awazu Pereira da Silva, 2019. "Global Banking, Financial Spillovers, and Macroprudential Policy Coordination," BIS Working Papers 764, Bank for International Settlements.
    4. Gajewski, Krzysztof & Jara, Alejandro & Kang, Yujin & Mok, Junghwan & Moreno, David & Serwa, Dobromił, 2019. "International spillovers of monetary policy: Lessons from Chile, Korea, and Poland," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 175-186.

    More about this item

    Keywords

    cross-border spillovers; international bank lending channel; monetary policy; quantitative easing;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G01 - Financial Economics - - General - - - Financial Crises

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