Kiel Working Papers, Kiel Institute for World Economics
No 1303:
Banks’ Regulatory Buffers, Liquidity Networks and Monetary Policy Transmission
Christian Merkl and Stéphanie Stolz
Abstract: Based on a quarterly regulatory dataset for German banks
from 1999 to 2004, this paper analyzes the effects of banks’ regulatory
capital on the transmission of monetary policy in a system of liquidity
networks. The dynamic panel regression results provide evidence in favor of
the bank capital channel theory. Banks holding less regulatory capital and
less interbank liquidity react more restrictively to a monetary tightening
than their peers.
Keywords: monetary policy transmission, bank lending channel, bank capital channel, liquidity networks; (follow links to similar papers)
JEL-Codes: E52,; G21,; G28,; C23; (follow links to similar papers)
46 pages, November 2006
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