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The Bank Lending Channel of Monetary Policy: A Review of the Literature and an Agenda for Future Research

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Abstract

As members of the European Monetary Union are characterized by the same monetary policy but yet different institutional settings, this chapter will analyse the different institutional factors among member states of the European Union (EU), and will try to explain how these factors can determine how large the pass-through of monetary policy via the bank lending channel is by reviewing the existing work on this topic. The chapter begins by outlining the concepts of the bank lending channel. The authors relate these concepts to the existing empirical literature and to the institutional differences among EU member states. In the section “International Bank Lending Channels”, they define the notion of an international bank lending channel of monetary policy more formally and summarize the recent empirical literature on this topic. The section “Decomposition of Credit: The Bank Risk Taking Channel” outlines research and findings on the bank risk-taking channel of monetary policy. The section “Conclusion and Future Research” concludes and provides some suggestions for future research.

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Authors and Affiliations

  1. Department of Business Economics, Erasmus University Rotterdam, Rotterdam, Netherlands

    Mintra Dwarkasing

  2. Department of Economics, IFS, Bonn University, Bonn, Germany

    Narly Dwarkasing

  3. Department of Banking and Finance, University of Zurich, Zürich, Switzerland

    Steven Ongena

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  1. Mintra Dwarkasing
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  2. Narly Dwarkasing
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  3. Steven Ongena
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Correspondence to Steven Ongena .

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Editors and Affiliations

  1. Cass Business School, City University London Cass Business School, LONDON, United Kingdom

    Thorsten Beck

  2. Faculty of Finance, Cass Business School-City Universit Faculty of Finance, London, United Kingdom

    Barbara Casu

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Dwarkasing, M., Dwarkasing, N., Ongena, S. (2016). The Bank Lending Channel of Monetary Policy: A Review of the Literature and an Agenda for Future Research. In: Beck, T., Casu, B. (eds) The Palgrave Handbook of European Banking. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-52144-6_15

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