The transmission of bank capital requirements and monetary policy to bank lending in Germany

Imbierowicz, Björn; Löffler, Axel; Vogel, Ursula

doi:10.1111/roie.12500

Cited by 17 publications

(9 citation statements)

References 35 publications

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“…For instance, Niepmann et al (2020) find for the case of the US that bank lending to EMEs in the effective lower bound era would have been larger in the absence of CCAR stress tests. And Imbierowicz et al (2020) find that, for (only) less strongly capitalized banks, increases in capital requirements are, in the short run, associated with a decrease in total domestic and cross-border bank lending.…”

Section: Discussionmentioning

confidence: 81%

“…The second paper from a core country perspective, Imbierowicz et al (2020), also investigates the role of domestic prudential policies, in this case bank capital requirements in Germany, and the interaction with euro-area monetary policy. The authors find that, for less strongly capitalized banks, increases in capital requirements are in the short run associated with an immediate decrease in the total of domestic and cross-border bank lending.…”

Section: Resultsmentioning

confidence: 99%

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The Interaction Between Macroprudential Policy and Monetary Policy: Overview

et al. 2020

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This paper presents the main findings of an International Banking Research Network initiative examining the interaction between monetary policy and macroprudential policy in determining international bank lending. We give an overview on the data, empirical specifications and results of the seven papers from the initiative. The papers are from a range of core and smaller advanced economies, and emerging markets. The main findings are as follows. First, there is evidence that macroprudential policy in recipient countries can partly offset the spillover effects of monetary policy conducted in core countries. Meanwhile, domestic macroprudential policy in core countries can also affect the cross-border transmission of domestic monetary policy via lending abroad, by limiting the increase in lending by less strongly capitalised banks. Second, the findings highlight that studying heterogeneities across banks provides complementary insights to studies using more aggregate data and focusing on average effects. In particular, we find that individual bank characteristics such as bank size or G-SIB status play a first-order role in the transmission of these policies. Finally, the impacts differ considerably across prudential policy instruments, which also suggests the importance of more granular analysis.

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Section: Discussionmentioning

confidence: 81%

Section: Resultsmentioning

confidence: 99%

The Interaction Between Macroprudential Policy and Monetary Policy: Overview

et al. 2020

View full text Add to dashboard Cite

show abstract

“…The second paper from a core country perspective, Imbierowicz et al (2020), also investigates the role of domestic prudential policies, in this case bank capital requirements in Germany, and the interaction with euro‐area monetary policy. The authors find that, for less strongly capitalized banks, increases in capital requirements are in the short run associated with an immediate decrease in the total of domestic and cross‐border bank lending.…”

Section: Resultsmentioning

confidence: 99%

“…And Imbierowicz et al. (2020) find that, for (only) less strongly capitalized banks, increases in capital requirements are, in the short run, associated with a decrease in total domestic and cross‐border bank lending.…”

Section: Discussionmentioning

confidence: 99%

The interaction between macroprudential policy and monetary policy: Overview

Bussière

Cao²,

Haan

et al. 2020

Rev International Economics

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This paper presents the main findings of an International Banking Research Network initiative examining the interaction between monetary policy and macroprudential policy in determining international bank lending. We give an overview on the data, empirical specifications and results of the seven papers from the initiative. The papers are from a range of core and smaller advanced economies, and emerging markets . The main findings are as follows. First, there is evidence that macroprudential policy in recipient countries can partly offset the spillover effects of monetary policy conducted in core countries. Meanwhile, domestic macroprudential policy in core countries can also affect the cross‐border transmission of domestic monetary policy via lending abroad, by limiting the increase in lending by less strongly capitalized banks. Second, the findings highlight that studying heterogeneities across banks provides complementary insights to studies using more aggregate data and focusing on average effects. In particular, we find that individual bank characteristics such as bank size or GSIB status play a first‐order role in the transmission of these policies. Finally, the impacts differ considerably across prudential policy instruments, which also suggests the importance of more granular analysis.

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“…De Jonghe et al [25] did not explicitly calculate the capital buffers, but they followed similar idea, as they model various measures of credit expansion using required and actual capital ratio at once. Finally, Imbierowicz et al [37] are the first (to our knowledge), who dig deeper and broaden utilise the risk density (ratio of risk-weighted assets to total assets) to capture a bank's total regulatory capital requirement related to corporate lending. They stressed out that the key reason behind applying this approach was the fact that banks with a lower average risk weight of assets are less exposed to a change in capital requirements.…”

Section: Measurement Of Capital Requirements In Economic Literaturementioning

confidence: 99%

Measuring the restrictiveness of (macro)prudential policy: the case of bank capital regulation in Poland

Czaplicki

2021

J Bank Regul

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The heterogeneity of the banking sector is a vital problem both in case of the conduct of macroprudential policy, as well as the assessment of its effectiveness. To address this issue, we construct a new measure of macroprudential policy restrictiveness, the bank’s free lending capacity ratio (the quotient of a new lending a bank can extend given its capital surplus above capital requirement, and its current volume of loans). We describe its advantages over the measures used in the previous research. Finally, employing first difference GMM method on (dynamic) panel data series, we explain the drivers of changes in lending growth of stock-listed banks in Poland between 2010 and 2020. We show that the free lending capacity ratio displays the most convincing results among the examined variables, pointing at its usefulness both in explaining and evaluating the impact of prudential regulation on banking activity, as well as in understanding potential issues in the transmission of monetary policy via the banking sector, resulting from its heterogeneity. Finally, we draw practical and policy-related conclusions, as regards the measurement of macroprudential policy restrictiveness. Supplementary Information The online version contains supplementary material available at 10.1057/s41261-021-00164-2.

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The transmission of bank capital requirements and monetary policy to bank lending in Germany

Cited by 17 publications

References 35 publications

The Interaction Between Macroprudential Policy and Monetary Policy: Overview

The Interaction Between Macroprudential Policy and Monetary Policy: Overview

The interaction between macroprudential policy and monetary policy: Overview

Measuring the restrictiveness of (macro)prudential policy: the case of bank capital regulation in Poland

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