10/2005 Danny Pitzel and Lenno Uusküla. The effect of financial depth on monetary transmission

Working Papers of Eesti Pank. No 10, 2005

Several papers have looked at the relationship between country-specific factors and the strength of monetary transmission. Cecchetti (1999) concentrated on legal aspects, De Grauwe and Storti (2004) more on the financial structure of the economy. The objective of this paper is to measure how financial development variables influence the strength of monetary transmission in European countries. This paper employs a meta-analysis technique that has gained much popularity in recent years. According to the results, monetary transmission in Europe is strongly influenced by financial depth and structure.
JEL Code: E3, E4, E5, E6
Keywords: monetary transmission, financial depth, meta-analysis

*  The authors would like to thank all the participants of the seminars at Eesti Pank and Estonian Economic Association.

Authors' e-mail addresses: danny.pitzel [at] web.de, lenno.uuskyla [at] epbe.ee

The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank.


1. Introduction
2. Financial Depth and Monetary Transmission
3. Description of the Data
4. Analysis of the Strength of Monetary Transmission
5. Conclusions

The Effect of Financial Depth on Monetary Transmission, Working Papers of Eesti Pank No 10, 2005 (PDF*)

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