The Transmission Mechanism of Monetary Policy in Europe: Evidence from Banks’ Balance Sheets
Available studies on asymmetries in the monetary transmission mechanism within Europe are invariably based on macro-economic evidence: such evidence is abundant but often contradictory. This paper takes a different route by using micro-economic data. We use the information contained in the balance sheets of individual banks (available from the BankScope database) to implement a case-study on the response of banks in France, Germany, Italy and Spain to a monetary tightening. The episode we study occurred during 1992, when monetary conditions were tightened throughout Europe. Evidence on such tightening is provided by the uniform squeeze in liquidity, which affected all banks in our sample. We study the first link in the transmission chain by analysing the response of bank loans to the monetary tightening. Our experiment provides evidence on the importance of the "credit" channel in Europe, and thus on one possibly important source of asymmetries in the monetary transmission mechanism. We do not find evidence of a significant response of bank loans to the monetary tightening, which occurred during 1992, in any of the four European countries we have considered. However, we find significant differences both across countries and across banks of different dimensions in the factors that allow them to shield the supply of loans from the squeeze in liquidity.
(This abstract was borrowed from another version of this item.)
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Oct 1999|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (617) 253-3361
Fax: (617) 253-1330
Web page: http://econ-www.mit.edu/
More information through EDIRC
|Order Information:|| Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fernando Barran & Virginie Coudert & Benoît Mojon, 1997. "La transmission des politiques monétaires dans les pays européens," Revue Française d'Économie, Programme National Persée, vol. 12(2), pages 133-158.
- Anil K Kashyap & Jeremy C. Stein, 1997. "What Do a Million Banks Have to Say About the Transmission of Monetary Policy?," NBER Working Papers 6056, National Bureau of Economic Research, Inc.
- Anil K. Kashyap & Jeremy C. Stein & David W. Wilcox, 1991.
"Monetary policy and credit conditions: evidence from the composition of external finance,"
Finance and Economics Discussion Series
154, Board of Governors of the Federal Reserve System (U.S.).
- Kashyap, Anil K & Stein, Jeremy C & Wilcox, David W, 1993. "Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance," American Economic Review, American Economic Association, vol. 83(1), pages 78-98, March.
- Anil K Kashyap & Jeremy C. Stein & David W. Wilcox, 1992. "Monetary Policy and Credit Conditions: Evidence From the Composition of External Finance," NBER Working Papers 4015, National Bureau of Economic Research, Inc.
- Bernanke, Ben S & Blinder, Alan S, 1988.
"Credit, Money, and Aggregate Demand,"
American Economic Review,
American Economic Association, vol. 78(2), pages 435-39, May.
- Mads Kieler & Tuomas Saarenheimo, 1998. "Differences in monetary policy transmission? A case not closed," European Economy - Economic Papers 132, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Maclennan, Duncan & Muellbauer, John & Stephens, Mark, 1999.
"Asymmetries in Housing and Financial Market Institutions and EMU,"
CEPR Discussion Papers
2062, C.E.P.R. Discussion Papers.
- Maclennan, Duncan & Muellbauer, John & Stephens, Mark, 1998. "Asymmetries in Housing and Financial Market Institutions and EMU," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 54-80, Autumn.
- Stefan Gerlach & Frank Smets, 1995.
"The monetary transmission mechanism: Evidence from the G-7 countries,"
BIS Working Papers
26, Bank for International Settlements.
- Gerlach, Stefan & Smets, Frank, 1995. "The Monetary Transmission Mechanism: Evidence from the G-7 Countries," CEPR Discussion Papers 1219, C.E.P.R. Discussion Papers.
- Stephen G. Cecchetti, 1999.
"Legal structure, financial structure, and the monetary policy transmission mechanism,"
Economic Policy Review,
Federal Reserve Bank of New York, issue Jul, pages 9-28.
- Stephen G. Cecchetti, 1999. "Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism," NBER Working Papers 7151, National Bureau of Economic Research, Inc.
- Rudi Dornbusch & Carlo Favero & Francesco Giavazzi, 1998. "Immediate challenges for the European Central Bank," Economic Policy, CEPR;CES;MSH, vol. 13(26), pages 15-64, 04.
- Christina D. Romer & David H. Romer, 1997. "Reducing Inflation: Motivation and Strategy," NBER Books, National Bureau of Economic Research, Inc, number rome97-1, January.
- Anil K. Kashyap & Jeremy C. Stein, 1997. "The role of banks in monetary policy: a survey with implications for the European Monetary Union," Economic Perspectives, Federal Reserve Bank of Chicago, issue Sep, pages 2-18.
- Rudiger Dornbusch & Carlo A. Favero & Francesco Giavazzi, 1998. "The Immediate Challenges for the European Central Bank," NBER Working Papers 6369, National Bureau of Economic Research, Inc.
- Cerasi, V. & Chizzolini, B. & Ivaldi, M., 1997.
"Sunk Costs and Competitiveness of European Banks After Deregulation,"
97.473, Toulouse - GREMAQ.
- Cerasi, V. & Chizzolini, B. & Ivaldi, M., 1997. "Sunk Costs and Competitiveness of European Banks after Deregulation," Papers 97.478, Toulouse - GREMAQ.
- Anil K Kashyap & Jeremy C. Stein, 1994.
"The Impact of Monetary Policy on Bank Balance Sheets,"
NBER Working Papers
4821, National Bureau of Economic Research, Inc.
- Kashyap, Anil K. & Stein, Jeremy C., 1995. "The impact of monetary policy on bank balance sheets," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 42(1), pages 151-195, June.
When requesting a correction, please mention this item's handle: RePEc:mit:worpap:99-20. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Linda Woodbury)
If references are entirely missing, you can add them using this form.