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The Effect of Capital Requirement Regulation on the Transmission of Monetary Policy: Evidence from Austria

Author

Listed:
  • Philipp Engler

    (Free University Berlin)

  • Terhi Jokipii

    (Institute for International Integration Studies, Trinity College Dublin)

  • Pablo Rovira Kaltwasser

    (Catholic University of Leuven)

  • Christian Merkl

    (Kiel Institute for World Economics and Kiel University)

  • Lúcio Vinhas de Souza

    (Kiel Institute for World Economics.)

Abstract

This paper analyzes the role of bank capitalization on the transmission of monetary policy, using a quarterly dataset for Austrian banks spanning from 1997 to 2003. A substantial understanding of the transmission mechanism in different countries of the euro zone is not only of academic interest, but also an important prerequisite for central bankers to effectively accomplish their monetary policy goals. While we do find evidence in favor of the bank lending channel, with an important role active for capitalization, we are unable to confirm whether the bank capital channel is in force in Austria. Our results indicate some counter-cyclicality in lending activity, a finding that is in line with the existing Austrian literature.

Suggested Citation

  • Philipp Engler & Terhi Jokipii & Pablo Rovira Kaltwasser & Christian Merkl & Lúcio Vinhas de Souza, 2005. "The Effect of Capital Requirement Regulation on the Transmission of Monetary Policy: Evidence from Austria," Working Papers 99, Oesterreichische Nationalbank (Austrian Central Bank).
    • Handle: RePEc:onb:oenbwp:99
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    File URL: https://www.oenb.at/dam/jcr:a35fa769-df00-42fb-a705-f8c919a43eeb/wp99_tcm16-28885.pdf
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    Cited by:

    1. Christian Merkl & Stephanie Stolz, 2009. "Banks' regulatory buffers, liquidity networks and monetary policy transmission," Applied Economics, Taylor & Francis Journals, vol. 41(16), pages 2013-2024.
    2. Philipp Engler & Terhi Jokipii & Christian Merkl & Pablo Rovira Kaltwasser & Lúcio Vinhas de Souza, 2007. "The effect of capital requirement regulation on the transmission of monetary policy: evidence from Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(5), pages 411-425, December.
    3. de Souza, Lucio Vinhas, 2006. "Beyond the euro area: An introduction," Research in International Business and Finance, Elsevier, vol. 20(2), pages 127-130, June.

    More about this item

    Keywords

    Transmission of monetary policy; Bank capital regulation; Austria;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

    NEP fields

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