The effect of ECB monetary policy after the financial crisis of 2008

Abstract

Ιn the current thesis, we examine the efficiency of European Central Bank's monetary policy during the 2008 financial crisis. We analyze the channels used for monetary policy transmission and we conduct a panel data analysis to determine the impact of several variables on bank performance, risk-taking and bank lending system, to assess the monetary policy efficiency. We use data for the period 2007-2015 for 10 Eurozone countries. Moreover, we conduct panel data analysis for three different groups: Northern Eurozone countries, Southern Eurozone countries and the Eurozone as a whole. We find that, when bank credit relevant to bank deposits and the ratio of foreign banks amongst total banks increase then the risk of default for the whole banking system increases. As bank credit relevant to bank deposits increase, it affects the bank performance negatively. An increase of the assets of the three largest commercial banks has a positive impact on nonperforming loans, whereas when GDP, the number of foreign banks in relation to domestic one's and Euribor increase it is the opposite.