INCOME INEQUALITY AS LONG-TERM CONDITIONING FACTOR OF MONETARY TRANSMISSION TO BANK INTEREST RATES IN EA COUNTRIES
INCOME INEQUALITY AS LONG-TERM CONDITIONING FACTOR OF MONETARY TRANSMISSION TO BANK INTEREST RATES IN EA COUNTRIES
| Author: | Ing. Boris Fišera PhD. Tomas Domonkos Maria Siranova |
|---|---|
| Type: | IES Working Papers |
| Year: | 2021 |
| Number: | 15 |
| ISSN / ISBN: | |
| Published in: | IES Working Papers 15/2021 |
| Publishing place: | Prague |
| Keywords: | interest-rate pass-through, interacted PMG, income inequality, standard monetary policy, unconventional monetary policy |
| JEL codes: | D31, E21, E52, E58 |
| Suggested Citation: | Domonkos T., Fisera B. and Siranova M. (2021): “Income Inequality as Long-term Conditioning Factor of Monetary Transmission to Bank Interest Rates in EA Countries” IES Working Papers 15/2021. IES FSV. Charles University. |
| Abstract: | In this paper we investigate the effect of income inequality on the transmission of standard and unconventional monetary policy shocks to bank loan rates. We hypothesize that income inequality might encapsulate important characteristics of credit market demand. We use an interacted panel error correction model to examine a set of EA countries over the years 2008-2016. Our findings suggest that higher income inequality hinders the transmission of standard monetary policy to consumer loans and limits the use of unconventional monetary policy in the housing loans segment. Conversely, more unequal societies are characterized by stronger monetary transmission in the small firm loans segment. |
| Download: | wp_2021_15_domonkos, fisera, siranova.pdf |
