Do non-financial firms react to monetary policy actions as banks do?
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Universidad de Granada. Departamento de Teoría e Historia Económica
Monetary policy transmissionBank lending channelLiquidityNon-financial firmsBanks
Carbó Valverde, S.; López del Paso, R. Do non-financial firms react to monetary policy actions as banks do?. Universidad de Granada. Departamento de Teoría e Historia Económica (2005). (The Papers; 05/03). [http://hdl.handle.net/10481/31464]
The theory of the bank lending channel indicates that financial institutions with larger size, higher capitalisation and higher liquidity present a greater capacity to maintain their levels of credit supply in a situation of monetary contraction. However, there is a paucity of (European) studies that analyse the bank lending channel from the non-financial firms’ perspective. This paper analyzes the impact of monetary policy actions on a large sample of Spanish firms. The empirical evidence for Spain shows that the impact of size, solvency and liquidity are similar for banks and non-financial firms.