Empirica

, Volume 34, Issue 5, pp 411–425

The effect of capital requirement regulation on the transmission of monetary policy: evidence from Austria

  • Philipp Engler
  • Terhi Jokipii
  • Christian Merkl
  • Pablo Rovira Kaltwasser
  • Lúcio Vinhas de Souza
Original Paper

DOI: 10.1007/s10663-007-9041-4

Cite this article as:
Engler, P., Jokipii, T., Merkl, C. et al. Empirica (2007) 34: 411. doi:10.1007/s10663-007-9041-4

Abstract

This paper analyzes the role of banks’ regulatory capitalization in the transmission of monetary policy. We use a confidential dataset for Austrian banks spanning from the first quarter of 1997 to the fourth quarter of 2003. We find evidence that Austrian banks react in an asymmetric way to monetary policy depending on their regulatory excess capitalization, i.e. low capitalized banks react more restrictively to a monetary tightening than their highly capitalized peers.

Keywords

Monetary Policy Transmission Bank Lending Channel Bank Capital Channel Austria 

JEL codes

E4 E5 

Copyright information

© Springer Science+Business Media, BV 2007

Authors and Affiliations

  • Philipp Engler
    • 1
  • Terhi Jokipii
    • 2
  • Christian Merkl
    • 3
  • Pablo Rovira Kaltwasser
    • 4
  • Lúcio Vinhas de Souza
    • 5
  1. 1.Department of EconomicsFree University of BerlinBerlinGermany
  2. 2.Department of FinanceSwedish Institute for Financial Research and Stockholm School of EconomicsStockholmSweden
  3. 3.Kiel Institute for the World EconomyChristian-Albrechts UniversityKielGermany
  4. 4.Department of EconomicsCatholic University of LeuvenLeuvenBelgium
  5. 5.European CommissionBrusselsBelgium

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