<abstract xmlns="http://www.w3.org/1999/xhtml"><p>In most economies the banking sector plays the major role in the financial system. Therefore, it is of great importance to analyse and understand the mechanism of transmission of monetary policy and its impact on the banking sector. One of the possible repercussions of changing the level of official interest rates is the ability to influence the size of bank lending, by means of the bank lending channel. The key aspect our research is a thorough understanding of the functioning of the bank lending channel, with the main goal of this study being an examination of the efficiency of monetary policy transmission through the bank lending channel depending on the size of banks in the sector. This paper examines the abovementioned relation using annual data from 1995-2015 by 1709 commercial and cooperative banks from 27 EU countries and analyzing them in various econometric models. The results indicate that there is a positive impact of a bank’s size on loan growth (defined as the bank size increases, the impact of changes in interest rates in the bank’s lending policy is getting smaller), however, interaction between the variables of size and the interest rate, was proved to be insignificant (in the group of all analysed banks, as well as in commercial and cooperative banks separately).</p></abstract>

In most economies the banking sector plays the major role in the financial system. Therefore, it is of great importance to analyse and understand the mechanism of transmission of monetary policy and its impact on the banking sector. One of the possible repercussions of changing the level of official interest rates is the ability to influence the size of bank lending, by means of the bank lending channel. The key aspect our research is a thorough understanding of the functioning of the bank lending channel, with the main goal of this study being an examination of the efficiency of monetary policy transmission through the bank lending channel depending on the size of banks in the sector. This paper examines the abovementioned relation using annual data from 1995-2015 by 1709 commercial and cooperative banks from 27 EU countries and analyzing them in various econometric models. The results indicate that there is a positive impact of a bank’s size on loan growth (defined as the bank size increases, the impact of changes in interest rates in the bank’s lending policy is getting smaller), however, interaction between the variables of size and the interest rate, was proved to be insignificant (in the group of all analysed banks, as well as in commercial and cooperative banks separately).

Size of Banks as a Factor Which Impacts the Efficiency of the Bank Lending Channel

Financial Internet Quarterly

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

In most economies the banking sector plays the major role in the financial system. Therefore, it is of great importance to analyse and understand the mechanism...

Size of Banks as a Factor Which Impacts the Efficiency of the Bank Lending Channel

Data publikacji: 31 mar 2020

Zakres stron: 36 - 44

Otrzymano: 17 sty 2020

Przyjęty: 19 mar 2020

DOI: https://doi.org/10.2478/fiqf-2020-0005

Słowa kluczowe
loan supply, capital ratio, monetary policy, bank lending channel, bank assets

© 2020 Filip Świtała et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Size of Banks as a Factor Which Impacts the Efficiency of the Bank Lending Channel

Data publikacji: 31 mar 2020

Zakres stron: 36 - 44

Otrzymano: 17 sty 2020

Przyjęty: 19 mar 2020

DOI: https://doi.org/10.2478/fiqf-2020-0005

Słowa kluczoweloan supply, capital ratio, monetary policy, bank lending channel, bank assets

© 2020 Filip Świtała et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Słowa kluczowe
loan supply, capital ratio, monetary policy, bank lending channel, bank assets