Does bank ownership affect lending behavior? Evidence from the Euro area |
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| Institution: | 1. LUMSA University Rome, Italy;2. University of Vaasa, Finland;3. Aalto University School of Business, Finland;1. University of Naples “Federico II”, Department of Economics, Management, Institutions, Campus Universitario Monte S. Angelo, Via Cinthia 26, 80126 Naples, Italy;2. Second University of Naples, Department of Economics, Corso Gran Priorato di Malta 2, 81043 Capua, Italy;1. Federal Reserve Board, Division of International Finance, 20th Street and Constitution Avenue NW, Washington, DC 20551, United States;2. Johns Hopkins University, School of Advanced International Studies, 1717 Massachusetts Avenue NW, Washington, DC 20036, United States |
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| Abstract: | We analyze the differences in lending policies across banks characterized by different types of ownership, using micro-level data on Euro area banks during the period 1999–2011 to detect possible variations in bank lending supply responses to changes in monetary policy. Our results identify a general difference between stakeholder and shareholder banks: following a monetary policy contraction, stakeholder banks decrease their loan supply to a lesser extent than shareholder banks. A detailed analysis of the effect among stakeholder banks reveals that cooperative banks continued to smooth the impact of tighter monetary policy on their lending during the crisis period (2008–2011), whereas savings banks did not. Stakeholder banks’ propensity to smooth their lending cycles suggests that their presence in the economy has the potential to reduce credit supply volatility. |
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| Keywords: | European banks Monetary policy transmission Commercial banks Savings banks Cooperative banks Lending cyclicality |
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