Does Monetary Policy Affect Bank Credit Standards? Evidence from the Euro Area Bank Lending Survey

2009 ◽  
Author(s):  
Angela Maddaloni ◽  
Jose-Luis Peydro ◽  
Silvia Scopel
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Bank Lending ◽  
Bank Credit ◽  
Credit Standards

Are Bank Credit Standards Affected by the Business Cycle? Evidence from the Euro Area

2018 ◽  
Vol 64 (1) ◽  
pp. 5-16 ◽  
Author(s):  
Dimitrios Anastasiou ◽  
Konstantinos Drakos ◽  
Stylianos Giannoulakis
Keyword(s):  
Business Cycle ◽  
Euro Area ◽  
Small Firms ◽  
Bank Lending ◽  
Negative Influence ◽  
Bank Credit ◽  
Growth Trend ◽  
Macroprudential Policies ◽  
The Business Cycle ◽  
Credit Standards

Abstract The purpose of this study is to investigate the link between bank credit standards (CS hereafter) and business cycle fluctuations. This is the first empirical study which attempts to examine whether business cycle affects bank CS. We use quarterly survey-data on CS taken from the Bank Lending Survey from 2003Q1 to 2016Q1, for 14 Euro-area countries. We find that business cycle and GDP growth trend exert a negative influence on CS, and thus business cycle and trend are two major drivers of the tightening or easing of the CS. We also find that the two components (cyclical and trend) of the real GDP decomposition affect in a symmetric way CS. Moreover, symmetry of impacts was found between the CS and the business cycle and trend for large vs. small firms. Our findings could be helpful for both the European bank regulatory authorities and for the banks’ loan officers when they are designing macroprudential policies. JEL classifications: E30, E32, E44, G21 Keywords: credit standards, business cycle, bank lending survey, loan supply

Excess euro-area liquidity raises bank lending risks

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Commercial Banks ◽  
Bank Lending ◽  
Domestic Demand ◽  
Basel Iii ◽  
Content Type ◽  
Reserve Requirements ◽  
Regulatory Standards ◽  
Excess Liquidity

Significance The ECB stopped purchasing bonds this month after running its asset purchase programme (APP) since March 2015. The APP flooded commercial banks with liquidity in excess of their minimum reserve requirements, which they could use to grant new loans. The ECB achieved its goal of increasing credit to the private sector, raising domestic demand and warding off price deflation, but commercial banks have kept large amounts of excess liquidity. Impacts Euro-area banks' average profitability has improved during the APP scheme, but less accommodating monetary policy may reverse this trend. The high prudential ratios the Basel III regulatory standards require should make euro-area banks more resilient to monetary tightening. The ECB's mopping up may pose difficulties to banks relying on excess liquidity to meet the Basel III coverage liquidity ratio.

scholarly journals Monetary Policy, Credit Institutions and the Bank Lending Channel in the Euro Area

2019 ◽  
Author(s):  
Carlo Altavilla ◽  
Desislava Andreeva ◽  
Miguel Boucinha ◽  
Sarah Holton
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Bank Lending ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Credit Institutions

Effectiveness and channels of macroprudential policies: lessons from the Euro area

2017 ◽  
Vol 25 (3) ◽  
pp. 271-306 ◽  
Author(s):  
Yuanyan Zhang ◽  
Thierry Tressel
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Global Financial Crisis ◽  
Bank Lending ◽  
Panel Var ◽  
Bank Capital ◽  
Credit Growth ◽  
Content Type ◽  
Macroprudential Policies ◽  
The Impact

Purpose The design of a macro-prudential framework and its interaction with monetary policy has been at the forefront of the policy agenda since the global financial crisis. However, most advanced economies (AEs) have little experience using macroprudential policies. As a result, relatively little is known empirically about macroprudential instruments’ effectiveness in mitigating systemic risks in these countries, about their channels of transmission, and about how these instruments would interact with monetary policy. This paper aims to fill in the gap. Design/methodology/approach The authors develop a new approach using the euro area bank lending survey to assess the effectiveness of macro-prudential policies in containing credit growth and house price appreciation in mortgage markets. Estimation is performed under the panel regressions (OLS, GLS) and panel VAR setup. Endogeneity issues arising from measures of macro-prudential policies are addressed by introducing GMM estimation and various instruments. Findings The authors find instruments targeting the cost of bank capital most effective in slowing down mortgage credit growth, and that the impact is transmitted mainly through price margins, the same banking channel as monetary policy. Limits on loan-to-value ratios are also effective, especially when monetary policy is excessively loose. Originality/value With limited data on macroprudential policy measures in the AEs, this paper proposed a new methodology of using answers from bank lending survey as proxies to assess the effectiveness of specific macroprudential measures and their transmission channels.

scholarly journals Monetary policy and bank lending in euro area since the outset of the global financial crisis

2020 ◽  
pp. 10-10
Author(s):  
Agata Wierzbowska
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Euro Area ◽  
Global Financial Crisis ◽  
Banking System ◽  
Bank Lending ◽  
Liquidity Provision ◽  
The Individual ◽  
The Global Financial Crisis ◽  
The Impact

In this article, we present the impact of the monetary policy stance of the European Central Bank(ECB)since 2007 on bank lending in the euro area and compare the effects of the main measures: interest rate changes, liquidity provision, and asset purchase programmes. We also analyse the channels through which monetary policy might influence the banking system and narrow our focus to the individual countries. The main results indicate stimulating impact of ECB?s policy stance on bank lending that extends its influence mainly through interest rate cuts further supported by the liquidity provision and asset purchase programmes. However, we also find considerable differences across the member states, of ten depending on the state of the banking system and loan demand in the member state. The results support the variety of monetary policy measures introduced by the ECB, as each played its own role in supporting the banking system and encouraging bank lending in the euro area.

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