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Financial Systems and the Role of Banks in Monetary Policy Transmission in the Euro AreaMichael EhrmannEuropean Central Bank (ECB) Leonardo GambacortaBank for International Settlements (BIS); Bank of Italy Patrick SevestreBanque de France; Université Paris 1 - Panthéon Sorbonne - PSE Andreas WormsDeutsche Bundesbank, Economics Department Jorge Martinezaffiliation not provided to SSRN November 1, 2002 Banque de France Working Paper No. 93 Abstract: This paper offers a comprehensive comparison of the structure of banking and financial markets in the euro area. Based on this, several hypotheses about the role of banks in monetary policy transmission are developed. Many of the predictions that have been proposed for the U.S. are deemed unlikely to apply in Europe. Testing these hypotheses we find that monetary policy does alter bank loan supply, with the effects most dependent on the liquidity of individual banks. Unlike in the US, the size of a bank does generally not explain its lending reaction. We also show that the standard publicly available database, BankScope, obscures the heterogeneity across banks. Indeed, for several types of questions BankScope data suggest very different answers than more complete data that reside at national central banks.
Number of Pages in PDF File: 50 Keywords: monetary policy transmission, financial structure, bank lending JEL Classification: C23, E44, E52, G21 working papers seriesDate posted: December 21, 2010Suggested CitationContact Information
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