Monetary policy and bank lending:: Evidence from German banking groups

This paper analyses the impact of monetary shocks on bank lending in Germany. We follow a cross-sectoral approach by looking at six different banking groups. In general, smaller banks hold a larger buffer of liquid assets which they can use to offset monetary shocks. In addition, the response of ban...

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Bibliographic Details
Published in:Journal of banking & finance 2002-11, Vol.26 (11), p.2077-2092
Main Authors: Kakes, Jan, Sturm, Jan-Egbert
Format: Article
Language:English
Subjects:
Bank lending
Bank loans
Bank operations
Banking
Banking industry
Banks
Credit
Economic shock
Germany
Impact analysis
Monetary economics
Monetary policy
Multivariate analysis
Studies
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Summary:This paper analyses the impact of monetary shocks on bank lending in Germany. We follow a cross-sectoral approach by looking at six different banking groups. In general, smaller banks hold a larger buffer of liquid assets which they can use to offset monetary shocks. In addition, the response of bank lending after a monetary contraction is very different across banking sectors. Lending by the credit co-operatives, which are on average the smallest banks, declines most, whereas big banks are able to shield their loans portfolio against monetary shocks. Overall, our results provide support for the existence of a bank lending channel.
ISSN:0378-4266
1872-6372
DOI:10.1016/S0378-4266(02)00200-5