Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism

20 Pages Posted: 1 Aug 2007

See all articles by Stephen G. Cecchetti

Stephen G. Cecchetti

Brandeis International Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

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Abstract

Among the many challenges facing the new Eurosystem - the European Central Bank and the central banks of the eleven members of the European Monetary Union - is the possibility that participating countries will respond differently to interest rate changes. This paper provides evidence that differences in financial structure are the proximate cause for these national asymmetries in monetary policy transmission and that these differences in financial structure are a result of differences in legal structure. The author concludes that unless legal structures are harmonized across Europe, the financial structures and monetary transmission mechanisms of the European Union countries will remain diverse.

Keywords: interest rates, monetary policy transmission

JEL Classification: E5, G3

Suggested Citation

Cecchetti, Stephen G., Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism. Economic Policy Review, Vol. 5, No. 2, July 1999. Available at SSRN: https://ssrn.com/abstract=1004314

Stephen G. Cecchetti (Contact Author)

Brandeis International Business School ( email )

415 South Street
Waltham, MA 02453
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
212-720-8629 (Phone)
212-720-2630 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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