Comparison of monetary policy effects on lending channel in EMU and non-EMU countries: Evidence from period 1999-2012

Current study has focused on the bank lending channel of monetary transmission in EU countries. The aim of the paper is to carry out an empirical investigation of the bank lending channel of monetary transmission in EMU and non-EMU countries. As estimation method we use GMM model with pooled annual data as it was used in previous studies. Our estimation period is from 1999 to 2012. Contribution of the study is in three major ways: (i) we investigated independently panel of EMU and non-EMU countries; (ii) we examined the interaction terms between the bank characteristics and both monetary policy indicators, shortterm interest rates and monetary aggregate M2; (iii) we discussed about possible quantitative easing by the European Central Bank. We have proved some differences between the bank lending channels of monetary transmission of both, the EMU and non-EMU. It has also been proved a higher impact of M2 development than a development of short-term interest rates. Finally, there are definitely some monetary policy implications, too.