Monetary policy and bank lending
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Date
2024-10-02
Authors
Σαράντης, Γεώργιος
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Abstract
Monetary policy’s effects on interest rates, and through those on output and prices,
is referred to as pass-through and is an important part of monetary policy transmission.
Using data from a panel of 19 counties in the European Monetary Union,
this article analyzes the transmission of monetary policy shocks to bank loan interest
rates. By analyzing the response of interest rates to a monetary policy shock,
I find that different types of loans show different transmission rates for monetary
policy shocks, in agreement with existing literature. In addition, bank health is
also found to affect pass-through rates. These results suggest that monetary policy
shocks are not uniformly transmitted across the economy but rather affect parts
of it differently, and this work helps in identifying these differences.
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Keywords
Monetary policy, Shock, Pass-through, Loan interest rates