, Volume 34, Issue 5, pp 411–425 | Cite as

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

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


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.


Monetary Policy Transmission Bank Lending Channel Bank Capital Channel Austria 

JEL codes

E4 E5 



We would like to thank the Oesterreichische Nationalbank (OeNB) for financial support and provision of the database. Special thanks to Eduard Hochreiter for making the project possible and to Sylvia Kaufmann for very valuable help and suggestions. We also thank Vanessa-Maria Redak and Ralf Dobringer for compiling the database. Furthermore we acknowledge valuable suggestions of Kai Carstensen (Kiel Institute for the World Economy), Michael Ehrmann (ECB), Helmut Herwartz (Christian-Albrechts University, Kiel), Skander van den Heuvel (The Wharton School), Stéphanie Stolz, Andreas Worms and Fred Ramb (Deutsche Bundesbank), participants of the Advanced Studies seminar, especially Renatas Kyzis, the Brown Bag Seminar (Kiel), the FindEcon conference (Lodz), the International Conference on Macroeconomics and International Finance (Rethymno), a seminar at FU Berlin and the Vosta workshop (OeNB) and two anonymous referees.


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Copyright information

© Springer Science+Business Media, BV 2007

Authors and Affiliations

  • Philipp Engler
    • 1
  • Terhi Jokipii
    • 2
  • Christian Merkl
    • 3
    Email author
  • 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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