Bank lending margins in the euro area: Funding conditions, fragmentation and ECB's policies

Abstract

In this paper we study the determinants of lending margins paid by euro‐area corporates for their bank loans. Across two separate groups of countries (distressed and non‐distressed) we examine whether lending margins have been affected by structural changes in the banking sector, the credit and liquidity position of banks and the costs of funding in the corporate and sovereign bond markets. The role of ECB policies with respect to narrowing down the fragmentation in the bank lending channel is also investigated through a structural panel VAR model for the period 2003:1 to 2014:12.

Bank Competition and Credit Risk in Euro Area Banking: Fragmentation and Convergence Dynamics

“…By using data from all the 19 euro area countries, which have a common 1 While Italy should in principle be considered as a core country since it has been one of the EU founding members, it is classified in this study as a periphery country because of its high levels of NPLs during the crisis. A classification of Italy as a periphery country has also been made in other studies (see Al-Eyd and Berkmen 2013;Anastasiou et al 2019;Louri and Migiakis 2019).…”

Financial Statistics and Data Analytics

“…By using data from all the 19 euro area countries, which have a common currency and a single bank supervisory mechanism, a possible bias that might stem from the use of 1 While Italy should in principle be considered as a core country since it has been one of the EU founding members, it is classified in this study as a periphery country because of its high levels of NPLs during the crisis. A classification of Italy as a periphery country has also been made in other studies (see Al-Eyd and Berkmen 2013;Anastasiou et al 2019;Louri and Migiakis 2019).…”