Work

The bank lending channel and the deposit channel of monetary policy: an empirical analysis of Eurozone banks

Year: 2025

Type: article

Abstract: This study analyzes the deposit channel, emphasizing how positive and negative deposit spreads affect the impact of monetary policy changes on loan supply differently. Using a sample of 703 banks from 11 countries in the Eurozone between 2010 and 2023, we find evidence supporting the deposit channel in markets with high concentrations when deposit spreads are positive, partially validating this deposit channel. However, when deposit spreads are negative, our results do not support the deposit channel. These findings suggest that when deposit spreads are positive, the European Central Bank should consider the effects of the deposit channel in its decisions to achieve smoother transmission of monetary policy .

Source: Finance research letters

DOI: 10.1016/j.frl.2025.107473

Authors: Sergio Sanfilippo-Azofra, María Cantero-Saiz, Begoña Torre-Olmo, Violeta Bringas-Fernández

Institutions: Universidad de Cantabria, Fundación de la Universidad de Cantabria para el Estudio y la Investigación del Sector Financiero, Santander Financial Institute

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,730

OpenAlex ID: W4409708897

FWCI: 1.935

Cites: 30

Cited by: 1

Related to: 10