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Do non-financial firms react to monetary policy actions as banks do?

Author

Listed:
  • Santiago Carbó Valverde

    (Department of Economic Theory and Economic History, University of Granada)

  • Rafael López del Paso

    (Department of Economic Theory and Economic History, University of Granada)

Abstract

The theory of the bank lending channel indicates that financial institutions with larger size, higher capitalisation and higher liquidity present a greater capacity to maintain their levels of credit supply in a situation of monetary contraction. However, there is a paucity of (European) studies that analyse the bank lending channel from the non-financial firms’ perspective. This paper analyzes the impact of monetary policy actions on a large sample of Spanish firms. The empirical evidence for Spain shows that the impact of size, solvency and liquidity are similar for banks and non-financial firms.

Suggested Citation

  • Santiago Carbó Valverde & Rafael López del Paso, 2005. "Do non-financial firms react to monetary policy actions as banks do?," ThE Papers 05/03, Department of Economic Theory and Economic History of the University of Granada..
  • Handle: RePEc:gra:wpaper:05/03
    as

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    File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers05_03.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    monetary policy transmission; bank lending channel; liquidity; non-financial firms; banks.;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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