Research On The Heterogeneity Of Interest Rate Pass-through In The Euro Area

Since the establishment of the euro area 20 years ago,new member countries have been joining in.The economic and financial structures of the member countries have been greatly different,which has caused the heterogeneity of the transmission of interest rates in the euro area among different member countries.The international financial crisis and European sovereign debt crisis have adversely affected the transmission of monetary policy interest rates,making the difference in loan interest rates between euro zone member countries larger,increasing the heterogeneity of interest rate transmission among euro area member countries,and making it harder to implement the monetary policy of the European Central Bank.This paper starts from the transmission of monetary policy interest rates to bank loan interest rates,studies the member states of the euro area,and divides them into core and peripheral areas to study the heterogeneity of interest rate transmission in the euro area.First,the monetary policy system of the euro area is analyzed and summarized from the aspects of monetary policy objectives,monetary policy instruments,and the practice of monetary policy interest rate adjustment.The characteristics of the policy interest rate transmission are analyzed in combination with the characteristics of the financial structure of the euro area and the loan interest rate.Then,the theory of monetary policy interest rate transmission to bank loan interest rate is summarized.And then,the error correction model is used to quantitatively analyze the heterogeneity of monetary policy interest rate transmission in the euro area before and after the financial crisis.Finally,the influence factor for the heterogeneity of interest rate transmission in the euro area's monetary policy are explained and analyzed,and also some corresponding recommendations are put forward.The main conclusions of the study are as follows:(1)The interest rate transmission of monetary policy is not smooth after the financial crisis,and the unconventional monetary policy adopted by the European Central Bank helps to improve this situation.(2)The heterogeneity of monetary policy interest rate transmission before the financial crisis in the euro area was not very serious,and the heterogeneity after the financial crisis was more significant,mainly reflected in the difference in long-term pass-through of policy interest rate.(3)The differences in the degree of bank competition and capital market development among member countries can explain the heterogeneity of interest rate transmission in monetary policy.However,an effective explanation cannot be made for a few member states.It is difficult for bank stability to effectively explain the differences in the transmission of policy interest rates.Sovereign debt risk,real economy risk factors,and legal factors also cause the heterogeneity of policy interest rate transmission.