Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212772
Authors: 
Fungáčová, Zuzana
Solanko, Laura
Weill, Laurent
Year of Publication: 
2013
Series/Report no.: 
BOFIT Discussion Papers No. 17/2013
Abstract: 
This paper examines how bank competition influences the bank lending channel in the Euro area countries. Using a large panel of banks from 12 euro area countries over the period 2002?2010 we analyze the reaction of loan supply to monetary policy actions depending on the degree of bank competition. We find that the effect of monetary policy on bank lending is dependent on bank competition: the transmission of monetary policy through the bank lending channel is less pronounced for banks with extensive market power. Further investigation shows that banks with less market power were more sensitive to monetary policy only before the financial crisis. These results suggest that the bank market power has a significant impact on monetary policy effectiveness. Therefore, wide variations in the level of bank market power may lead to asymmetric effects of a single monetary policy.
Subjects: 
bank competition
bank lending channel
monetary policy
euro area
JEL: 
E52
G21
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-21-9
Document Type: 
Working Paper

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