The role of bank capital as a propagation channel of shocks is strongly pronounced in recent macroeconomic models. In … this paper, we show how the evolution of bank capital depends on the share of non-state-contingent assets in banks’ balance …

that well-functioning credit markets would reflect a bank channel for monetary policy at work, we test whether a change in … and the associated change in interest rate does not affect change in bank credit, change in total debt and the proportion … of bank credit in total debt for any of the firms. We discuss the policy implications of the findings. …