IDEAS home Printed from https://ideas.repec.org/a/taf/jecprf/v21y2018i4p319-334.html
   My bibliography  Save this article

Financial market fragmentation and monetary transmission in the euro area: what do we know?

Author

Listed:
  • Roman Horvath

Abstract

We provide a survey on the literature examining financial market fragmentation in the euro area and discuss the policy options how to reduce it. The fragmentation has increased markedly since the outbreak of the global financial crisis in 2007. It declined somewhat from late 2012 onwards, but is still above the pre-crisis level. Interest rate pass-through has become less efficient primarily because of increased mark-ups and, to a certain extent, the lower responsiveness of bank interest rates to policy rates. The effectiveness of interest rate pass-through has become more heterogeneous across euro area countries, making a common monetary policy more difficult. The unconventional monetary policy conducted by the European Central Bank has reduced financial market fragmentation notably; however, this policy was not without side effects. Enhancing financial and fiscal stability in the euro area is key for the efficient functioning of the monetary transmission mechanism.

Suggested Citation

  • Roman Horvath, 2018. "Financial market fragmentation and monetary transmission in the euro area: what do we know?," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 21(4), pages 319-334, October.
    • Handle: RePEc:taf:jecprf:v:21:y:2018:i:4:p:319-334
    DOI: 10.1080/17487870.2017.1330686
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/17487870.2017.1330686
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/17487870.2017.1330686?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kyriaki G. LouKa & Nektarios A. Michail, 2023. "The pass through of monetary policy to euro area bank interest rates," Working Papers 2023-2, Central Bank of Cyprus.
    2. Jose David GARCIA REVELO & Yannick LUCOTTE & Florian PRADINES-JOBET, 2019. "Macroprudential and Monetary Policies : The Need to Dance the Tango in Harmony," LEO Working Papers / DR LEO 2691, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    3. António Duarte Santos & Hélio Castro, 2022. "Housing and Setting Constraints: The Portuguese Evidence," Sustainability, MDPI, vol. 14(18), pages 1-14, September.
    4. Garcia Revelo, José David & Lucotte, Yannick & Pradines-Jobet, Florian, 2020. "Macroprudential and monetary policies: The need to dance the Tango in harmony," Journal of International Money and Finance, Elsevier, vol. 108(C).
    5. Thierry Warin & Aleksandar Stojkov, 2021. "Banks’ Foreign Claims in the Aftermath of the 2008 Crisis: Institutional Response, Financial Efficiency, and Integration of Cross-Border Banking in the Euro Area," JRFM, MDPI, vol. 14(2), pages 1-17, February.
    6. Horvath, Roman & Kotlebova, Jana & Siranova, Maria, 2018. "Interest rate pass-through in the euro area: Financial fragmentation, balance sheet policies and negative rates," Journal of Financial Stability, Elsevier, vol. 36(C), pages 12-21.
    7. Anna Burova & Alexey Ponomarenko & Svetlana Popova & Andrey Sinyakov & Yulia Ushakova, 2022. "Measuring Heterogeneity in Banks’ Interest Rate Setting in Russia," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(14), pages 4103-4119, November.
    8. Lukas Berend & Jan Pruser, 2024. "The Transmission of Monetary Policy via Common Cycles in the Euro Area," Papers 2410.05741, arXiv.org, revised Nov 2024.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jecprf:v:21:y:2018:i:4:p:319-334. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GPRE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.