Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/213860
Authors: 
Imbierowicz, Björn
Löffler, Axel
Vogel, Ursula
Year of Publication: 
2019
Series/Report no.: 
Bundesbank Discussion Paper 49/2019
Abstract: 
We investigate the transmission of changes in bank capital requirements and supranational monetary policy, and their interaction effect, on euro area bank lending and lending rates. Our results show that - for weakly capitalized banks - increases in capital requirements are in the short-run associated with a decrease in the total of domestic and cross-border bank lending. In addition, we find that there is no similar effect of capital requirements for strongly capitalized banks. Furthermore, changes in the monetary policy stance are positively related to lending rates. Regarding the interacting effect of national capital requirements and supranational monetary policy, we observe that increases in capital requirements attenuate the general effects of monetary policy on interest rates. Overall, the transmission of an accommodating monetary policy to lending rates is attenuated by contemporaneous increases in bank capital requirements which additionally imply a transitory decrease of the loan growth of weakly capitalized banks.
Subjects: 
Bank Lending
Lending Rates
Capital Requirements
Monetary Policy
International Policy Interaction
JEL: 
E52
F30
G28
ISBN: 
978-3-95729-659-7
Document Type: 
Working Paper

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