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Expansionary monetary policy and bank lending: the case of new Euro Area member states

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  • Boris Fisera
  • Jana Kotlebova

Abstract

We study the effectiveness of the bank lending channel in the transmission of the unconventional monetary policies of the European Central Bank (ECB). We use the bias-corrected LSDV estimator to study the effect of ECB's unconventional policies on bank lending to private sector on a sample of 54 banks from the 5 new Euro Area (EA) member states over the years 2008-2018. We distinguish two groups of unconventional monetary policies - the Quantitative Easing (QE) and central bank lending to commercial banks. We find that the two groups of unconventional policies did not have a statistically significant effect on bank lending in all the sampled countries. However, for Slovakia, with its comparatively healthy banking system, we find evidence that the QE did boost credit provision to private sector. Indeed, we find that both the ECB's lending to commercial banks and the QE had stronger effect on healthier banks in Slovakia.

Suggested Citation

  • Boris Fisera & Jana Kotlebova, 2020. "Expansionary monetary policy and bank lending: the case of new Euro Area member states," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 13(4), pages 383-416.
    • Handle: RePEc:ids:ijmefi:v:13:y:2020:i:4:p:383-416
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    Cited by:

    1. Deimantė Teresienė & Greta Keliuotytė-Staniulėnienė & Rasa Kanapickienė, 2021. "Sustainable Economic Growth Support through Credit Transmission Channel and Financial Stability: In the Context of the COVID-19 Pandemic," Sustainability, MDPI, vol. 13(5), pages 1-34, March.
    2. Hummaira Jabeen, 2022. "Monetary Policy Shock Transmission in Emerging Markets," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 379-390, December.
    3. António Afonso & Francisco Gomes Pereira, 2022. "Unconventional Monetary Policy in the Euro Area. Impacts on Loans, Employment, and Investment," CESifo Working Paper Series 9610, CESifo.

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