Skip to main content

Please enter a keyword and click the arrow to search the site

Bank lending and monetary transmission in the euro area


Economic Policy



Authors / Editors

De Santis R;Surico P


Publication Year



To what extent does the availability of credit depend on monetary policy? And, does this relationship vary with bank characteristics? Based on a common source of balance sheet data for the four largest economies of the eurozone over the period 1999–2011, we find that the effects of monetary policy on bank lending are significant and heterogeneous in Germany and Italy – which are characterized by a large number of banks – but are weaker and more homogeneous in Spain and France – whose banking industry has a higher degree of market concentration. In particular, monetary policy appears to exert larger effects on cooperative and savings banks with lower liquidity and lesser capital in Germany and savings banks with smaller size in Italy. Our results highlight that the transmission of monetary policy over bank lending in the eurozone is highly heterogeneous. From a policy perspective, the increased large number of cooperative and savings banks, which have had access during the last financial crisis to the refinancing operations of the European Central Bank, bodes well for the improvement of the monetary transmission mechanism. The analysis also suggests that competition policy measures aiming at reducing entry barrier might facilitate the transmission mechanism.

Available on ECCH


Select up to 4 programmes to compare

Select one more to compare
subscribe_image_desktop 5949B9BFE33243D782D1C7A17E3345D0

Sign up to receive our latest news and business thinking direct to your inbox


Sign up to receive our latest course information and business thinking

Leave your details above if you would like to receive emails containing the latest thought leadership, invitations to events and news about courses that could enhance your career. If you would prefer not to receive our emails, you can still access the case study by clicking the button below. You can opt-out of receiving our emails at any time by visiting: or by unsubscribing through the link provided in our emails. View our Privacy Policy for more information on your rights.