The paper is a narrative on monetary policy and the banking sector during the two recent euro area recessions. It shows that while in the two episodes of recession and financial stress the ECB acted aggressively providing liquidity to banks, the second recession, unlike the first, has been...

This paper presents a New Keynesian model that dwells on the role of banks in the cost channel of monetary policy. Banks extend loans to firms in an environment of monopolistic competition by setting the loan rate according to a Calvo-type staggered price setting approach, which means that the...

This paper provides a micro-foundation of the behavior of the banking industry in a Stochastic Dynamic General Equilibrium model of the New Keynesian style. The role of banks is reduced to the supply of loans to ¯rms that must pay the wage bill before they receive revenues from sell- ing...

This paper presents a New Keynesian model that dwells on the role of banks in the cost channel of monetary policy. Banks extend loans to firms in an environment of monopolistic competition by setting the loan rate according to a Calvo-type staggered price setting approach, which means that the...

It has recently been arg ued that a prolonged period of low interest rates under benign economic conditions tends to produce excessive risk taking in financial markets. The mechanism by which monetary policy affects investors’ risk positions has been called the “risk-taking channel” of...

The aim of this paper is to identify the relationship between macroeconomic shocks and financial vulnerability in the Argentine case for the period 1977-2004, by using VEC models. The results show that falls in the deposit-currency ratio (indicator of crisis or financial vulnerability) would be...

Risky investment projects make the coordination among small, uninformed investors hard to achieve, and generate inefficient low levels of investment. Several authors have pointed out the benefits to an economy from multiple avenues of financial intermediation. This paper explains endogenously...

This article analyses the role of the banking system in financing the impressive process of growth undergone by the Basque economy since 1980, with particular emphasis on the latest cycle that ended with the great recession. The analysis shows that in spite of the relative solvency of its...

The main aim of this article is to present the influence of investment funds on the economic growth in Romania between 2007 and 2010. Unfortunately some of the main findings of the paper are: insignificant share of investment funds in GDP, low correlation between inflation rate and the net...