Industries and the Bank Lending Effects of Bank Credit Demand and Monetary Policy in Germany

76 Pages Posted: 8 Jun 2016

See all articles by Ivo J.M. Arnold

Ivo J.M. Arnold

Nyenrode University; Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Clemens J.M. Kool

Utrecht University - School of Economics

Katharina Raabe

Maastricht University

Date Written: 2006

Abstract

This paper presents evidence on the industry effects of bank lending in Germany and identifies the industry effects of bank lending associated with changes in monetary policy and industryspecific bank credit demand. To this end, we estimate individual bank lending functions for 13 manufacturing and non-manufacturing industries and five banking groups using quarterly bank balance sheet and bank lending data for the period 1992:1-2002:4. The evidence from dynamic panel data models shows that industry-specific bank lending growth predominantly responds to changes in industry-specific bank credit demand rather than to changes in monetary policy. In fact, conclusions regarding the bank lending effects of monetary policy are very sensitive to the choice of industry. The empirical results lend strong support to the existence of industry effects of bank lending. Because industries are a prominent source of variation in the bank lending effects of bank credit demand and monetary policy, the paper concludes that the industry composition of bank credit portfolios is an important determinant of bank lending growth and monetary policy effectiveness.

Keywords: Monetary policy transmission, credit channel, industry structure, dynamic panel data

JEL Classification: G21, E52, L16, C23

Suggested Citation

Arnold, Ivo J.M. and Kool, Clemens J.M. and Raabe, Katharina, Industries and the Bank Lending Effects of Bank Credit Demand and Monetary Policy in Germany (2006). Bundesbank Series 1 Discussion Paper No. 2006,48. Available at SSRN: https://ssrn.com/abstract=2785275

Ivo J.M. Arnold (Contact Author)

Nyenrode University ( email )

3621 BG Breukelen
Netherlands
+31-346-291270 (Phone)
+31-346-291250 (Fax)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Clemens J.M. Kool

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

Katharina Raabe

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
25
Abstract Views
294
PlumX Metrics